Setting Medisave Minimum Sum by Cohort

The Senior Minister of State for Health (Dr Amy Khor Lean Suan)(for the Minister for Health): The Medisave Minimum Sum (MMS) is the amount a CPF member needs to set aside in his Medisave account to ensure adequate savings for his own and his dependants'

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healthcare expenses, including MediShield and ElderShield premiums, during old age.

The MMS needs to be adjusted yearly for healthcare inflation. With Singaporeans living longer and Medisave use regularly expanded, we must also review the MMS regularly to more accurately reflect how much elderly Singaporeans need for their healthcare expenses in retirement. To help Singaporeans save more, the Government has also helped to top up Medisave accounts through GST Vouchers and Workfare, and increased employers' Medisave contributions by one percentage point from the start of this year.

Last year, the Government appointed a CPF Advisory Panel to study ways to improve the CPF system to provide greater peace of mind and flexibility for Singaporeans in retirement. My Ministry will review the MMS, taking into consideration the healthcare needs of our current and future elderly and the broader changes to the CPF system. We will provide more details when our review is completed.

Thank you, Mdm Speaker. The Senior Minister of State has explained that the Minimum Sum for Medisave is adjusted for inflation reasons. But for the CPF Minimum Sum, there is no adjustment applied to cohorts that come after the Minimum Sum that is set for that year. I wonder whether that could also be applied.

My second question is: given the current adjustment on a yearly basis, does the CPF member keep on topping up the difference, or when they utilise part of the minimum Medisave and it falls below the Minimum Sum, would they have to keep on topping up the amount?

The next question is: for members who have comprehensive healthcare insurance policies, is it possible for them to apply for full or partial exemption of the Minimum Sum? Can the Ministry consider this because this should be akin to CPF where members with annuity plans can apply for partial or full exemption?

My last question is: with MediShield Life, where there is more coverage and also lower co-insurance rates, will this Medisave Minimum Sum be revised downwards?

With regard to the first question on why the Medisave Minimum Sum is not cohort-based, the design of the CPF Minimum Sum and the Medisave Minimum Sum is different.

The Minimum Sum is drawn down as a constant stream of fixed payouts from age 65 and it is fixed at age 55. You can compute the Minimum Sum in advance, fix it at age 55. And then, thereafter when it is drawn down fixed payments, you do not account for inflation

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thereafter.

But for the Medisave Minimum Sum, it is different because healthcare expenses are uncertain, as well as the fact that you can utilise your Medisave anytime for approved healthcare expenses. We have had to revise and review our Medisave Minimum Sum, adjust it for healthcare inflation on a yearly basis and also to regularly review it to take into account longer life expectancies, as well as new Medisave users, such as the upcoming Flexi-Medisave.

As I have said, we know the need for more certainty, more flexibility for Singaporeans in retirement, give them greater peace of mind. In line with the broader changes to the CPF system that we are making, we will also be reviewing the Medisave Minimum Sum and we will provide Members with more details when it is completed.

Regarding the second question about whether you need to top up your Medisave Minimum Sum when you utilise it, there is no need to top up the Medisave Minimum Sum in order to use Medisave for approved healthcare expenses. This is applicable for all ages. But if the member wishes to withdraw his CPF savings in excess of the Minimum Sum at age 55 or after age 55, he will first have to top up his Medisave to the Medisave Minimum Sum. Then, he can withdraw the excess CPF savings.

Subsequently, if he continues to work and he continues to contribute to CPF, then of course, he will have fresh Special Account (SA) and Ordinary Account (OA) amounts, as well as contribute to his Medisave. If he then wants to apply again to withdraw this excess cash savings, he would then have to again top up his Medisave Minimum Sum to the prevailing Medisave Minimum Sum, before he can withdraw.

Regarding the third question, which relates to, if you have a comprehensive insurance plan, then can you have partial or full waiver of Medisave Minimum Sum. As I have said, the Medisave amounts can be used for various approved healthcare expenses, not just inpatient bills, but also some outpatient approved chronic disease treatment, as well as new users – Flexi-Medisave, the upcoming one, as well as for outpatient scans from start of this year. And in addition, it can be used to pay healthcare insurance premium – MediShield and ElderShield. When you have an insurance plan, likelihood if it is an Integrated Shield Plan, you will pay part of it — at least part of it — using your Medisave. Basically, Medisave Minimum Sum is still required to ensure that the members have enough to pay for their healthcare expenses, including for healthcare insurance premium in their old age. There is no decision to waive this Medisave Minimum Sum.

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The last question is: because of MediShield Life, the implementation of MediShield Life, does it mean that you can do away with Medisave Minimum Sum? I have more or less given the answer in relation to question three. Even as we implement MediShield Life with better coverage protection for all, for life, so better benefits, there will be some increase in the premiums. And as I have said, your Medisave can be used to pay for these premiums.

In addition, we need to take into account healthcare inflation; we need to take into account new Medisave users and longer life expectancy which means that it is unlikely that healthcare expenses will go down — much as we will try to contain cost and healthcare inflation, working together with every individual Singaporean. So, it is unlikely, even as we review the Medisave Minimum Sum Scheme that we will adjust the Medisave Minimum Sum downwards.