As an employer, you can qualify for tax deductions or exemptions by implementing portable medical benefits. These schemes will enable your employees to keep their medical benefits should they change jobs.
What are portable medical benefits
Portable medical benefits are medical benefits that employees can bring with them if they change employers. This is different from non-portable medical benefits, which are lost when employees stop working or change employers.
Incentives
If you implement any of the 3 portable medical schemes, you will get a higher tax deduction for medical expenses of total employees’ remuneration. The normal tax deduction limit is 1%.
The amount of tax-deductible medical expenses, together with other tax-deductible expenses incurred, will be deducted against your income in determining your taxes payable.
How it works
You can choose from 3 portable medical benefits options for your employees:
- Portable Medical Benefits Scheme (PMBS)
- Transferable Medical Insurance Scheme (TMIS)
- Providing a Shield plan
Portable Medical Benefits Scheme (PMBS)
Under PMBS, you make an additional contribution to your employees’ MediSave account every month.
Employees will be able to use the MediSave contributions to pay for the premiums of MediShield Life or Integrated Shield Plans, which can help to cover their inpatient needs.
Qualifying for the 2% tax deduction limit
You need to implement PMBS for at least 20% of your local employees as at the first day of the financial year being assessed and for all local employees who start their employment during that financial year.
For full-time employees, the additional monthly contribution to their MediSave account should be at least 1% of the gross monthly salary, subject to a minimum amount of $16 per calendar month.
For part-time employees, the additional monthly MediSave contribution should be calculated based on 1% of their actual gross salary for the calendar month.
Local employees refer to Singapore citizens or permanent residents employed on a full time or part-time contract of employment, regardless of the number of hours worked.
Transferable Medical Insurance Scheme (TMIS)
TMIS is an enhanced group hospitalisation and surgical insurance that you can buy for your employees. It extends inpatient coverage up to a maximum period of 12 months when an employee leaves employment.
Employees covered under TMIS plans will be treated as continuously insured when they join a new employer who has also purchased a TMIS plan. They will not be excluded from coverage even if they have a pre-existing illness before joining the new employer.
Qualifying for the 2% tax deduction limit
You need to implement TMIS for at least 50% of local employees as at the first day of the financial year being assessed.
Providing a Shield plan
Under this scheme, you can provide your employees with inpatient medical benefits in the form of a Shield plan, either MediShield Life or an Integrated Shield Plan.
You will pay the premium of the Shield plan on behalf of your employees. You can either pay the insurance company directly or reimburse the amount of premium into your employees’ MediSave accounts. Premiums may be pro-rated based on the period of employment for employees who do not work the full 12 months of the financial year.
If an employee has already bought an Integrated Shield Plan provided by another insurance company and does not want to change the plan, you can credit the amount of premium of the Integrated Shield Plan the company has chosen into the employee’s MediSave account.
Qualifying for the 2% tax deduction limit
You need to provide Shield plans for at least 20% of your local employees as at the first day of the financial year being assessed and for all local employees who start their employment during that financial year.
You need to pay the Shield plan premiums on behalf of your employees, either by paying the insurance company directly or reimbursing the amount of premium into your employees’ MediSave accounts.
Tax deduction for ad-hoc MediSave contributions
To encourage ad-hoc MediSave contributions, you can get an additional tax deduction beyond the 1% limit for the amount of ad-hoc MediSave contributions you make, even if you are not adopting any of the portable medical benefits schemes.
Additional contributions are subject to a limit of $2,730 per employee per year.
Overall tax deductions for medical expenses are subject to an overall cap of 2%. These contributions are tax-free for employees.
If you wish to make additional MediSave contributions for your employees, you need to apply for a new CPF Submission Number (CSN) with the Employer and Accounts Management Section of CPF Board.
Find out more
For more info, read the related questions on portable medical benefits.
Contact the following Government bodies for further enquiries: