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CPF – F1 or F9 : Pay up to 22% to use MediSave?

Posted by theonlinecitizen on July 6, 2007

By Leong Sze Hian

According to the Ministry of Health’s (MOH) website, the Central Provident Fund (CPF) Board has been recovering the cost of Medisave deduction transactions to pay patients’ medical bills through an administrative fee of $3.05 ever since Medisave was introduced in 1984.

Information technology was still in its infancy 22 years ago and the number of Medisave accounts and transactions were much fewer than today.

With today’s advancements in information technology systems and economies of scale, how can the cost of a Medisave bill deduction transaction be still $3.05 plus another 70 cents to cover the cost of National Computer Systems, which in total is even higher than the $3.05 in 1984?

What was the total Medisave administrative fee collected by the board in 1984 compared to now?

MOH states that the fee ‘is levied on all institutions, which may choose to absorb it as part of their running costs’.

How many health-care providers have been absorbing the fee over the last 22 years?

Why is it that a fee is charged for Medisave withdrawals, but not for housing loan, investment, education and retirement annuity withdrawals from CPF?

More affluent Singaporeans probably do not need the $300 a year use of Medisave for out-patient treatment under the new chronic diseases scheme. It is the needy and lower-income who may have no choice but to use Medisave.

The flat $3.75 administrative fee penalises those who need it most, because they may typically incur smaller medical fees for each treatment.

For example, if the medical cost is $50, the amount that can be deducted from Medisave after the $30 deductible and 15 per cent co-insurance is only $17. In this example, the fee works out to be 22 per cent of the deduction amount.

If you are poor and cannot afford to pay in cash, what choice do you have, even though it does not make much sense to pay 22 per cent? This is simply not right.

I would like to suggest that charging on a percentage basis instead of levying a flat fee be considered.

For example, if the percentage is, say, 1 per cent, those making a $50 deduction will pay 50 cents, and $3 for a $300 deduction.

Alternatively, patients could be allowed to transfer the maximum $300 a year in one go to the health-care provider, so as not to incur multiple fees for each treatment.

We often see replies from government agencies justifying an existing practice by saying that it has been around for a very long time.

Instead, perhaps we could try to ask the question – Why are we still doing it the same way after 22 years?


3 Responses to “CPF – F1 or F9 : Pay up to 22% to use MediSave?”

  1. Vincent said

    Under CPF Investment Scheme, whether Ordinary Account or Special Account, funds can be transferred without “transaction” charges. How come then, medical expenses paid through MediSave Account incur “transaction” charges?

  2. Get hold of your life. Don’t depend on the government. Your fate is in your hand. Whatever you eat will reflect on your health. Whatever you do will reflect on your family.
    Ask why LKY has an albino grandson ?

  3. liberal wealth said

    there are two extremes in the cpf controversy. often, we are more concern for those with too little monies accumulated for subsistence. on the other extreme, there are those with more than enough cpf to retire comfortably.

    what is not obvious, however, is the impact on the economy by those who have accumulated enough savings to earn the right to retire EARLY.

    let me explain.

    currently, the property market is experiencing two extremities( home prices at one end has exceeded ’96 peak and at the other extreme end, it has lagged considerably). today, many homes are still on the cheap (relative to rising income). because of projected optimism in the economy, incomes will continue to rise accordingly and thus, many of these cheaper homes will become even cheaper still. if prospective homeowners are wise with their purchases, they can easily service a loan in perhaps ten to fifteen years or so ( if they buy a modest home or have bought one before the market had risen). thereafter, they can manage their savings for early retirement.

    for most of us, home mortgage is our greatest liability. to be able to service the loan early would mean a heavy financial load off our back. with no liabilities couple with prudent money management, a highly educated and well paid workforce can safely retire early.

    in other words, this financial freedom will enable more to opt out of the rat race without can then have more time for meaningful pursuits instead of being SLAVE TO ENTERPRISATION.

    if this becomes a favored trend, their exodus will be severely felt in the business world. it may even become ONE of the greatest source of economic shakening in an economy which has become intricately RELIANT on talents!!!

    in the game of unequal wealth and greed, the table may just be turned on the powerful rich corporations and institutions who will then be at the mercy (or pander to the whims of a powerful labor force) of the vast pool of financially LIBERATED talents!

    one wonders now with the goverment interfering with the rising housing market – though its intend are well conceived – will they, unwittingly, create a dichotomize insolubility of those who can’t retire, because of economic liabilities, and for those who can retire early – freed from economic obligations?

    an aging workforce will have its set of problems. the majority in this group who have to work into their greying years are probably semi skilled and below. if talent is essential for a thriving economy, their wealth may post a greater problem than the former in an aging workforce.

    ps: i know of many young talented couples under 40 who can easily service a $600k to $700k under ten years with their regular pay and with no financial help. anything that’s about half a million dollar is a piece of cake for many!

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