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Background of Initiative
The shorter employment tenure and increasing job mobility has meant that more workers are expected to switch jobs several times in their career. If the medical benefits provided by employers are company-based, it will cease when an employee leaves employment. The employee will be subject to underwriting for medical benefits when they join a new company. He may be excluded from coverage if he is having a pre-existing illness.
The tripartite partners, i.e. the employers, unions and government share the view that portable medical benefits are more beneficial to workers as they can enjoy continuous medical coverage not only during employment but also in between jobs and after retirement.
Key initiatives/Milestones
As a motivation, the Government has, since 2004, allowed employers implementing portable medical benefits to enjoy a higher tax deduction for medical expenses of up to 2% of their employees’ remuneration, compared to 1% for other companies.
To encourage employers to help enhance employees’ Medisave adequacy for meeting future medical needs, additional tax deduction beyond the 1% limit is allowed for the amount of ad-hoc Medisave contributions made by employers, even if employers are not adopting portable medical benefits. The overall tax deduction for medical expenses is subject to the overall cap of 2%.
Portable Medical Benefits Arrangements
The following portable medical benefits arrangements will allow employers to enjoy higher tax deduction limit:
a) Portable Medical Benefits Scheme
b) Transferable Medical Insurance Scheme
c) Provision of Shield plan
For more information such as the qualifying conditions for higher tax deductions and FAQs, please refer to this Circular.
Contact information
Enquires can be made with:
Ministry of Manpower
Tel: 63171154
Email: mom_lrd@mom.gov.sg
CPF Board
Tel:1800-227-1188
Email: employers-accounts@cpf.gov.sg
Portable Medical Benefits Scheme (PMBS)
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The PMBS rides on the Medisave/MediShield framework.
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In lieu of the existing inpatient benefits, employer makes additional contribution to employee’s Medisave account every month for him to purchase Shield plan (Medishield or other Medisave-approved medical insurance) to cover his inpatient needs. Shield plan will allow employees to enjoy continuous medical coverage even though he is not employed as long as the premium is paid up.
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Any remaining Medisave contribution would accumulate in employee’s Medisave account and earn interest at the Medisave interest rate. Employee can use the savings in the Medisave account to meet his future medical needs or that of his dependants.
Qualifying Conditions for Higher Tax Deduction for Medical Expenses
Employers implementing PMBS can enjoy tax deduction for medical expenses up to 2% of total employees’ remuneration if they meet the following qualifying conditions:
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Employers must implement PMBS for at least 20% of the local employees employed by them as at the first day of the financial year being assessed and all local employees who commence their employment during that financial year;
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For full time employees, the additional monthly contribution to Medisave account should be of at least 1% of an employee’s gross monthly salary, subject to a minimum contribution of $16 per calendar month;
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For part-time employees, the additional monthly Medisave contribution should be computed based on at least 1% of the employee’s gross rate of pay for the
Transferable Medical Insurance Scheme (TMIS)
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The TMIS is an enhancement of the existing employer-sponsored group medical insurance outside the CPF Medisave framework.
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It provides inpatient medical benefits coverage up to prevailing retirement age (currently 62 years old).
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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.
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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.
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There are 18 insurance companies providing TMIS plans. They may provide various insurance plans under TMIS with different levels of benefits and premiums. The 18 companies are:
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Allianz Insurance Co of Singapore Pte Ltd
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American International Assurance Co Ltd
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Asia Insurance Co Ltd
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Asia Life Assurance Society Ltd
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Aviva Ltd
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AXA Insurance Singapore Pte Ltd
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Great Eastern Life Assurance Co Ltd
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HSBC Insurance (Singapore) Pte. Limited
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Liberty Insurance Pte Ltd
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NTUC Income Insurance Co-op Ltd
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Prudential Assurance Co Singapore (Pte) Ltd
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QBE Insurance (International) Ltd
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UOB Life Assurance Ltd
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Tokio Marine & Fire Insurance Co
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Nipponkoa Insurance Co Ltd
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Mitsui Sumitomo Insurance (S) Pte Ltd
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Royal & Sun Alliance Insurance (Singapore) Limited
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MSIG Insurance (Singapore) Pte Ltd
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Qualifying Conditions for Higher Tax Deduction for Medical Expenses
Employers implementing TMIS can enjoy 2% tax deduction if they implement the scheme for at least 50% of the local employees who are employed by them as at the first day of the financial year being assessed.
Provision of Shield Plan
With effect from the Year of Assessment 2008, employers providing their employees with Shield plan (i.e. MediShield or Medisave-approved private integrated plan can claim tax deduction for medical expenses incurred, up to 2% of total employees’ remuneration, if they meet the following qualifying conditions:
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provide Shield plans for at least 20% of their local employees as at the first day of the financial year being assessed and all local employees who commence their employment during that financial year; and
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pay Shield plans premium on behalf of their employees directly to the insurance company or reimburse the premium into their employees’ Medisave accounts.
However, the additional tax deduction mentioned above excludes premiums for “Riders on Shield plans” that cover deductibles and co-payments. This is because the Government does not want to incentivise employers to take up such riders that can potentially result in an over-consumption of healthcare services.
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