Medisave



Medisave is a national savings scheme in which individuals contribute part of their monthly wages to their Medisave accounts to meet their personal or immediate family’s hospitalisation expenses.1 Implemented on 1 April 1984 by the Ministry of Health, the scheme was designed to enable individuals to pay their medical expenses through their own savings.2 The government opted for this self-financing mechanism as a way of balancing the supply and demand for healthcare services to keep healthcare costs in check.

Contribution rate and minimum sum
When Medisave was introduced, the mandatory monthly contribution from wages was 6 percent: 3 percent from the employee and 3 percent from the employer. The Medisave contribution was set aside from the monthly Central Provident Fund (CPF) contribution which, in 1984, was 46 percent of wages: 23 percent from the employee and 23 percent from the employer. Individuals on reaching the age when they could withdraw their CPF savings had to retain a minimum sum of S$5,000 in their Medisave accounts.3


Over the years, revisions have been made to the Medisave contribution rate as well as the minimum sum that must be retained in this account. As of 1 September 2012, the monthly contribution rate to the Medisave account varies between 7 and 9.5 percent depending on the individual’s age.4 Since 1 July 2013, the minimum sum that individuals have to retain in their Medisave accounts upon withdrawal age is S$40,500.5

Usage of Medisave
When Medisave was first implemented, the funds could only be used for medical expenses incurred in a government hospital. Specifically, the funds could be used to pay for all expenses incurred for stays in Class B2 or Class C wards and part of the bill for stays in Class A and B1 wards. Individuals staying in Class B2 and C wards who had insufficient funds in their Medisave accounts were also allowed to pay their outstanding bills using their future Medisave contributions.6 On 1 January 1985, the usage of Medisave funds was extended to cover bills incurred in private hospitals.7


The use of Medisave funds for outpatient services was initially restricted to certain treatments such as hepatitis B vaccinations, assisted conception procedures, renal dialysis treatments, radiotherapy and chemotherapy for cancer patients, and HIV anti-retroviral and immuno-suppressant drugs. In 2006, the use of Medisave funds was liberalised to cover outpatient treatment for several chronic medical conditions, namely stroke, diabetes, high blood pressure and high cholesterol.8

On 1 July 1990, an optional low-cost insurance scheme called Medishield was introduced as a supplement to Medisave in order to provide individuals with additional healthcare coverage.9 Medifund, an endowment fund, was set up on 1 April 1993 for those individuals whose medical expenses cannot completely be met by Medisave and Medishield.10



References
1. Central Provident Fund Board. (1985). Annual Report 1984. Singapore: The Board, p. 13. (Call no.: RCLOS 354.595706825 CPFBSA)
2. Ministry of Health. (1983). The National Health Plan. Singapore: Ministry of Health, p. 10. (Call no.: RSING 362.1095957 SIN)
3. Beng, T. (1984, March 31). Medisave made easy. The Straits Times, p. 8. Retrieved from NewspaperSG.
4. Central Provident Fund Board. (2013, March 22). CPF contribution and allocation rates from 1 September 2012. Retrieved from http://mycpf.cpf.gov.sg/Members/Gen-Info/Con-Rates/ContriRa.htm
5. Central Provident Fund Board. (2013, June 28). Medisave minimum sum. Retrieved from http://mycpf.cpf.gov.sg/CPF/my-cpf/reach-55/Reach55-4.htm
6. Central Provident Fund Board. (1985). Annual Report 1984. Singapore: The Board, p. 13. (Call no.: RCLOS 354.595706825 CPFBSA)
7. Tong, Y. T. (1985, December 28). Medisave to be extended from Jan 1. The Straits Times, p. 13. Retrieved from NewspaperSG.
8. Koh, T., et al. (Eds.). (2006). Singapore: The encyclopedia. Singapore: Editions Didier Millet in association with the National Heritage Board, p. 344. (Call no.: RSING 959.57003 SIN-[HIS])
9. MediShield adds to existing benefits. (1990, May 31). The Straits Times, p. 20. Retrieved from NewspaperSG.
10. Medifund can be used from tomorrow. (1993, March 31). The Straits Times, p. 1. Retrieved from NewspaperSG.


Further resources
Beng, T. (1984, March 4).  Medisave can be used to pay bills from April. The Straits Times, p. 10. Retrieved from NewspaperSG.

Debate hots up but ends well. (1983, September 1). The Straits Times, p. 12. Retrieved from NewspaperSG.

Former health minister attacks scheme. (1983, August 31). The Straits Times, p. 11. Retrieved from NewspaperSG.

Medisave passed with concessions. (1983, September 1). The Straits Times, p. 1. Retrieved from NewspaperSG.

Medisave will start next April. (1983, October 27). The Straits Times, p. 8. Retrieved from NewspaperSG.

Medishield, higher CPF rate and easier flat selection from today. (1990, July 1). The Straits Times, p. 16. Retrieved from NewspaperSG.

Some facts about the scheme by Chok Tong. (1983, August 30). The Straits Times, p. 15. Retrieved from NewspaperSG.

The Medisave debate. (1983, August 30). The Straits Times, p. 1. Retrieved from NewspaperSG.

'There will be hospital care for all'. (1983, September 3). The Straits Times, p. 13. Retrieved from NewspaperSG.



The information in this article is valid as at 19 August 2013 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.

Subject
Medisave (Singapore)
Central Provident Fund (Singapore)