Portable Medical Benefits for Employees

Portable Medical Benefits Scheme and Transferable Medical Insurance Scheme
In a volatile business environment, an employee can expect to change employers more frequently in his working life.  With each change, the employee may lose his medical benefits provided by the respective employers.  The Economic Review Committee, therefore recommended the introduction of the Portable Medical Benefits Scheme (PMBS) and the Transferable Medical Insurance Scheme (TMIS) so that employees can receive continuous medical coverage. The Government has accepted the ERC recommendations.  A tripartite working group comprising representatives from National Trades Union Congress, Singapore Business Federation/Singapore National Employers Federation, Monetary Authority of Singapore, Ministry of Finance, Ministry of Health and Ministry of Manpower was formed to look into the operational details and implementation of the 2 schemes.

2  The PMBS and TMIS are both designed for the provision of inpatient/hospitalisation medical benefits.  Both PMBS and TMIS are based on medical insurance scheme - PMBS rides on the Medisave / Medishield framework while TMIS is a company-based medical insurance scheme. The features of the 2 portable medical benefits schemes are given in Annex 1. 

Additional Medisave Contribution and Tax Exemption for Employees
3   To cater for the additional Medisave contribution under PMBS and other outpatient options recommended by the ERC (details given in Annex 2), the limit of additional Medisave contribution has been raised to $1,500 per year with effect from 1 January 2003. The tax exemption limit for employees for additional Medisave contribution is also raised to $1,500 per year from Year of Assessment 2004.

4   An employer who wishes to implement the PMBS for his employees may register with the Collection Planning & Registration Section of CPF Board for a new employer reference number for the additional Medisave contribution under the scheme.

Tax deduction on medical expenses for employers
5 Presently, medical expenses incurred by employers are tax deductible, up to 2% of the total payroll. To encourage employers to adopt the PMBS or the TMIS, the 2% tax deduction limit would continue to apply if they implement the PMBS or TMIS and if they can meet the qualifying conditions. For employers who choose not to implement either the PMBS or TMIS, their tax deductibility in respect of medical expenses will be reduced from the present 2% to 1% of the total payroll. 

6 The above changes will take effect from 1 Apr 2004.  Companies with financial year starting on or after 1 Apr 2004 will be subjected to the new tax deduction limit. For employers whose financial year starts in January to March 2004, the new tax deduction limit will come into force only in their next financial year starting in 2005.

7 To claim for the 2% tax deduction, employers who implement PMBS or TMIS must meet the following qualifying conditions as at 1 April 2004 or the 1st day of their financial year, whichever is later.
 

Qualifying Conditions For Tax Deduction On Medical Expenses Incurred By Employers

Employers implementing PMBS
i) For employers implementing PMBS, the scheme must cover at least 20% of the local employees recruited before 1 Apr 2004 as well as all local employees¹  recruited after 1 Apr 2004.

ii) For full time employees, the monthly contribution to Medisave account should be of at least 1% of an employee's monthly salary, subject to:
a minimum amount:  1% of the Employment Act salary ceiling and
a maximum amount: 1% of the CPF contribution ceiling. 

iii) For part-time employees² , the monthly Medisave contribution should be computed based on 1% of their actual salary, subject to a maximum amount of 1% of the CPF contribution ceiling.

Employers implementing TMIS
  For employers implementing TMIS, the scheme must cover at least 50% of its local employees.

Enquiries
Enquiries can be made with:
- Ministry of Manpower at 6438 5122.
- CPF Employee Call Centre at 1800-227 1188.
- Inland Revenue Authority of Singapore at 1800-3568300 (individual income tax), 1800-3568622 (corporate income tax) and 1800-3568611 (business income tax)

  ¹ Local employees refer to Singapore citizens or PRs employed on a full time or part-time contract of employment, regardless of the number of hours worked.

  ² The definition of part time employees will follow that in the Employment Act. 

 Annex 1

MAIN FEATURES OF THE PORTABLE MEDICAL BENEFITS SCHEME AND THE TRANSFERABLE MEDICAL INSURANCE SCHEME

Both the Portable Medical Benefits Scheme (PMBS) and the Transferable Medical Insurance Scheme (TMIS) are designed for the provision of hospitalisation / inpatient medical benefits. 

Portable Medical Benefits Scheme (PMBS)

· The PMBS rides on the Medisave/Medishield framework.

· In lieu of the existing inpatient benefits, employer makes additional contribution to employee's Medisave account every month for him to purchase medical insurance to cover his inpatient needs.

· The additional Medisave contribution rate is to be negotiated between employers and unions/employees based on the existing level of medical benefits provided by employer.  Minimum contribution rate is 1% of monthly salary.

· Employee must use the additional Medisave contribution to purchase Medisave-approved medical insurance products. The products currently available are Medishield/Medishield Plus, NTUC IncomeShield, AIA HealthShield Plus, NTUC Income Managed Healthcare System, Great Eastern Life Assurance SupremeHealth, Overseas Assurance MaxHealth and Asia Life Asia PreferredCare.  Information is available at CPF website (URL: www.cpf.gov.sg) and MOH website (URL: www.moh.gov.sg).

· Under any of these insurance scheme, the CPF members/employees continues to be medically insured even though he is not employed as long as the premium is paid up.

· Any remaining Medisave contribution would accumulate in employee's Medisave account and earn interest at the Medisave interest rate (currently 4% p.a.). Employee can use the savings in the Medisave account to meet his future medical needs or that of his dependants.

Transferable Medical Insurance Scheme (TMIS)

· The TMIS is an enhancement of the existing employer-sponsored group medical insurance outside the CPF Medisave framework.

· The TMIS is available to group size of at least 11 and above.

· It provides inpatient medical benefits coverage up to prevailing retirement age (currently 62 years old).

· TMIS offers extension of inpatient coverage up to a maximum period of 12 months when an employee leaves employment due to any reasons, as long as the premium is paid.

· Employee covered under TMIS plans will be treated as continuously insured when he joins a new employer who has also purchased a TMIS plan.  An employee will not be excluded from coverage even if he is having a pre-existing illness before joining the new employer.

· There are 13 insurance companies providing TMIS plans.  They may provide various insurance plans under TMIS with different levels of benefits and premiums.  The 13 companies are:

1 Allianz Insurance Co of Singapore Pte Ltd
2 American International Assurance Co Ltd
3 Asia Insurance Co Ltd
4 Asia Life Assurance Society Ltd
5 Aviva Ltd
6 AXA Insurance Singapore Pte Ltd
7 Great Eastern Life Assurance Co Ltd
8 HSBC Insurance (Singapore) Pte. Limited
9 Liberty Insurance Pte Ltd
10 NTUC Income Insurance Co-op Ltd
11 Prudential Assurance Co Singapore (Pte) Ltd
12 QBE Insurance (International) Ltd
13 UOB Life Assurance Ltd


 Annex 2

OUTPATIENT OPTIONS RECOMMENDED BY THE ERC

Options A: Co-payment with Annual Individual Budget
· Employers and employees co-pay outpatient expenses, say in the ratio of 85%:15%.

· Employers to set aside an annual outpatient budget for each employee from which the employer's portion of the outpatient bill would be drawn.

· Unused portion of the lump sum would be credited into employees' Medisave accounts.

· Once the lump sum is exhausted, employees would be responsible for the entire outpatient bill.

Option B: Direct co-payment with additional Medisave contribution as trade off
· Employees co-pay outpatient expenses of say 20-25%.

· As a trade-off, employers could make an additional contribution to employees' Medisave account, say 0.5% to 1% of employee's monthly salary.

Option C: Direct co-payment with cash incentives as trade off
· Employees co-pay outpatient expenses of say 20-25%.

· As a trade-off, employers could grant employees cash incentives.