Portable Medical Benefits Scheme Updated

The Singapore government's 2008 budget has made several amendments to the Portable medical benefits.

Current (Prior to Budget 2008)

Tax deduction limit for medical expenses:

Employers who participated in Portable Medical Benefits Scheme (PMBS) or Transferable Medical Insurance Scheme (TMIS)

Changes to Portable Medical Benefits

The 2% tax deduction limit is extended to employers who provide their employees with inpatient medical insurance benefits in the form of portable medical shield plans, either by paying the insurance premiums on behalf of their employees to the insurance companies directly or by reimbursing the premiums into employees’ Medisave accounts.

To qualify, the portable medical shield plans must be provided for at least 20% of existing local employees at the first day of the basis period for the YA and every local employee who commences his employment during the basis period for that YA.

1% tax deduction limit lifted for ad-hoc contribution to employees’ Medisave account (subject to a cap of $1,500 per employee per year), but is subject to the cap of 2% of total wage bill for total medical benefits expenses.

Technical / Business Considerations for Portable Medical Benefits

Changes introduced are additional steps taken by the Government to encourage more employers to provide portable medical benefits, especially through contributions to employees’ Medisave accounts.

There is likely administrative ease to provide medical benefits in the form of portable medical shield plans than to administer an actual medical expenses reimbursement system. Coupled with the additional 1% tax deduction, businesses should give serious thought to converting their existing medical benefit scheme to one that relies on portable medical shield plans.

Contact Us at PayrollServe

To get detailed advice on the eligibility & implementation of this new Portable Medical Benefits scheme, get in touch with our experienced Payroll Consultants in Singapore at PayrollServe.