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Understanding Your MediSave Account in 2024 & How to Make the Most of It

basic healthcare sum
basic healthcare sum

No one ever wants to get sick. Apart from the horrid feeling and inconvenience, general treatments can take a pinch out of your pocket. Healthcare costs have been on a startling rise, jumping from 8.44% just two years ago to 10.67% today. 

Here’s where MediSave cushions the blow. Usually, 8% to 10.5% of your salary is credited into your MediSave for future healthcare needs. Moreover, the government is constantly stepping up measures to enhance its interest rates, bonuses, and wage contribution ceilings—all to help Singaporeans and PRs secure better medical coverage.

In this guide, we’ll review everything you need to know about MediSave and answer your burning questions about the new policy changes announced during Budget 2024

What is a MediSave account & Where to find it? 

Central Provident Fund (CPF) savings plays a huge role in our social security system. A set of mandatory savings accounts is opened for every citizen and Permanent Residents (PR) as follows:

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  • Ordinary Account (OA): You can use the savings contributed to pay for housing, education, and investments. 

  • Special Account (SA): Money in this account is saved up for your retirement, and can be used for certain investments such as Singapore Government Bonds (SGBs) or Treasury Bills. 

  • MediSave Account: Used primarily for healthcare and medical bills, private insurance premiums and upgrading your public healthcare schemes such as the MediShield Life (covering costly outpatient and inpatient treatments for mental illnesses) or ElderShield (for severe disabilities).

  • Retirement Account (RA): As you reach the age of 55, your OA and SA will merge into the Retirement Account, and the combined funds will then be used as your retirement funds. 

To check the balance in your MediSave and other CPF-related accounts, simply log in to the official website using your Singpass.

How much do you need to contribute to MediSave? 

Every month, a portion of your salary gets deducted and deposited into your CPF account. The bulk of your contributions will go into your OA.

Employee’s age (years) 

Contribution rates (from 1 January 2024) 

(Monthly wages > $750) 

By employer

By employee

Total

55 and below

17%

20%

37%

Above 55 to 60 

15%

16%

31%

Above 60 to 65

11.5%

10.5%

22%

Above 65 to 70

9%

7.5%

16.5%

Above 70

7.5%

5%

12.5%

Source: CPF Board 

What you’re contributing every month is under the “By Employee” section. If you’re under 55 years old, 20% of your salary gets deducted monthly and deposited into your three CPF accounts. 

Example: Your salary is currently $4,500. This means $900 (20% x $4,500) will be deducted monthly and deposited into your CPF accounts. Thus, your take-home pay will be $3,600. 

As you get older, the percentage that goes into your OA and SA decreases down to only 1%. Meanwhile, your MediSave contributions will gradually increase and maintain at 10.5% once you reach 35. 

Here’s what the full scope of CPF allocation rates looks like in each account: 

Age

Ordinary Account 

Special Account

MediSave Account

35 and below

23%

6%

8%

Above 35 to 45

21%

7%

9%

Above 45 to 50

19%

8%

10%

Above 50 to 55

15%

11.5%

10.5%

Above 55 to 60

12%

8.5%

10.5%

Above 60 to 65

3.5%

8%

10.5%

Above 65 to 70

1%

5%

10.5%

Above 70

1%

1%

10.5%

Source: CPF Board 

How does money get deposited into your MediSave account? 

Well, it mostly depends on your employment situation. 

Source: MoneySmart 

For salaried employees

One of the perks of being an employee is that your employer will have to top up 7.5% to 17% in addition to your contributions by the end of each month. Should your employer fail to make the necessary contributions you are entitled to a daily interest rate of 1.5%, starting from the late payment date. 

For self-employed individuals

Self-employed folks are not required to contribute to their CPF Ordinary or Special Accounts. However, MediSave contributions are compulsory so long as you earn more than $6,000 per year (after deducting all allowable business expenses, capital allowances and trade losses as approved by IRAS). 

Below is the MediSave contribution rate for self-employed persons, as of 2024: 

Net Trade Income

Below 35 Years

35 to below 45 Years

45 to below 50 Years

50 Years and above

Above $6,000 to $12,000

4%

4.5%

5%

5.25%

Above $12,000 to $18,000

4% to 8%

4.5% to 9%

5% to 10%

5.25% to 10,5%

Above $18,000

8% (max. $6,528) 

9% (max. $7,344) 

10% (max. $8,160) 

10,5% (max. $8,568)

Source: CPF Board 

Nonetheless, if you become overwhelmed by the numbers and jargon, you can always rely on the Self-Employed Medisave Contribution Calculator to calculate the amount required each month. 

What’s the interest rate you earn from MediSave?  

Currently, your MediSave, Special, and Retirement accounts earn an interest rate of 4.05% per annum. It’s an extremely attractive rate for a risk-free investment.

Is there a contribution limit to MediSave?

Why not contribute more than the regular monthly amounts then? Especially since the interest rates are so attractive. After all, healthcare expenses tend to increase with age, so a larger buffer can be beneficial for the golden years. 

Unfortunately, there’s a limit. You can only top up to the Basic Healthcare Sum (BHS). This amount is adjusted annually. It currently stands at $71,500 for those under 65. Once you hit 65, the BHS is fixed for the rest of your life.  

What happens if you exceed the BHS? 

Assume that your contributions exceed the BHS, those excess funds will go directly to your SA (if you are under 55) or RA (if you are 55 or older). Regardless, you still enjoy the favourable rate of 4.05%. 

Notable New CPF Accounts Bonuses for Lower-Income Seniors 

Are you a senior earning less than the minimum contribution of $6,000? These bonuses are tailored for you. Set to roll out in 2024 and early 2025, the Majulah Bonus package provides a one-time allowance for the ‘young’ seniors (50 to 60 years old), Pioneer, and Merdeka generations. Here’s what you can expect: 

MediSave Bonus (MSB) 

If you were born in 1973 or earlier (with one property of $25K annual value or less), you are entitled to S$1,500 in bonus.

Source: CPF Board

Earn & Save Bonus (ESB) 

If you are earning less than the stipulated monthly income (table below), you are eligible for an ESB of up to $1,000, with the bonus deposited in your RA or SA by March 2025.

Retirement Saving Bonus (RSB) 

Furthermore, If your retirement savings fall below the BRS threshold of $99,400, you can expect to receive a bonus of S$1,000 to S$1,500—directly deposited into your RA or SA this December.

Source: CPF Board

What MediSave can be used for? 

This is the question we all have in mind: Can we use our MediSave for any general consultation?

We wish. We are only allowed to tap into our MediSave funds for specific treatments, even then there are limitations to how much you can withdraw. Specific uses include:

  • Hospitalisation & surgery

  • Non-acute hospital stays

  • Outpatient treatments

  • Chronic disease management

  • Health screenings

  • Vaccinations

  • Having a baby

  • Senior care

  • Health insurance (MediShield + Integrated Shield) premiums

  • Disability insurance (CareShield + Supplement) premiums

In case you’re trying to find a loophole, it has been clearly defined what you can and cannot use MediSave for. Here’s a quick snapshot of what healthcare services are eligible:

Inpatient care:

  • Minimum 8-hour admission – up to $550 for first 2 days, $400 per day from third day onwards

  • Psychiatric episodes – up to $150 per day, maximum of $5,000 per year

  • Day surgeries – up to $300 per day including surgical limit ($250-$7,550)

  • Approved community hospital – up to $250 per day, maximum of $5,000 per year

  • MediSave Maternity Package – up to $550 for first 2 days and $400 per day from third day onwards + $900 for pre-delivery medical expenses

Outpatient care:

  • MediSave500/MediSave700 Scheme – simple chronic conditions: up to $500; complex chronic conditions: up to $700 per patient

  • Selected childhood and adult vaccinations

  • Health screenings – mammograms for women above 50 years old and newborn screening tests in outpatient setting

  • Patients above 60 years old + spouse – $300 per patient per year

  • Renal dialysis treatment – $450 per month

  • Radiotherapy – $80-$2,800 per treatment

  • Radiosurgery treatment – Up to $7,500 per course

  • Chemotherapy – Up to $1,200 per month with MediShield Life claim limit above $5,400. Up to $600 per month for other treatments

  • Anti-retroviral treatment for HIV – up to $550 per month per patient

  • Immuno-suppressants after organ transplants – $300 per month per patient

  • Autologous bone marrow transplant – up to $2,800 per year per patient

Long-term care:

  • Inpatient hospice palliative care services – up to $250 per day (general palliative care) and up to $350 per day (specialised palliative care)

  • Home palliative and day hospice care – combined lifetime withdrawal limit of $2,500 per patient

  • MediSave Care – withdraw up to $200 per month for long-term care needs.

Can you pay insurance premiums with MediSave? 

Even if you are young and in perfect health, your MediSave funds can still come in handy. It can be used to pay for your MediShield Life and Integrated Shield Plan premiums

MediShield Life premiums are fully deductible from MediSave. However, if you choose to upgrade to an Integrated Shield Plan (IP), you can use your MediSave to pay for the private insurance premiums (up to the Additional Withdrawal Limits):

Age 

Additional Withdrawal Limits for Private Insurance Component of IPs:

40 and under 

$300 

41 to 70

$600

71 and above 

$900

Source: MOH

IPs are available from 7 private insurers, including AIA, Great Eastern, Income, AXA, FWD, Prudential and Allianz. Check out our guide on the best health insurance in Singapore here

Furthermore, MediSave can be used to pay for CareShield Life, the national disability income insurance scheme that kicks in when you hit 30. Should you choose to upgrade your CareShield Life to get higher disability payouts, you can use up to $600/year on those CareShield Supplement premiums.

How to make claims from MediSave?

When seeking medical services, fill out the Medical Claims Authorisation Form to authorise the medical institution to use your MediSave to cover treatments. If you intend to use MediShield Life or an Integrated Shield Plan, there is also paperwork to be done: Medical Claims Authorisation Form (Multiple Institutions)

While the paperwork is aplenty, most medical institutions have helpful staff to assist and process the paperwork. Generally, these plans can be used across multiple medical institutions in Singapore. This extends to most hospitals, polyclinics, as well as the National Cancer, Dental, Heart, Skin, and Eye centres.

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It pays to know what you can use MediSave for!

For starters, Integrated Shield Plan (IP) premiums can be paid in part with MediSave. We highly recommend getting one as medical care in Singapore is not cheap and relying on MediShield Life and MediSave alone is risky.

The post Understanding Your MediSave Account in 2024 & How to Make the Most of It appeared first on the MoneySmart blog.

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The post Understanding Your MediSave Account in 2024 & How to Make the Most of It appeared first on MoneySmart Blog.

Original article: Understanding Your MediSave Account in 2024 & How to Make the Most of It.

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