Explain when your MediSave can pay a family member's healthcare bills or premiums.
Paying a relative's medical costs from your own MediSave is easy to do. MediSave can cover hospital bills and some insurance premiums for close relatives, and at the hospital the payment can come down to ticking a box on a form. Being able to pay family bills is one of the most useful things about MediSave. It is also one of the easiest ways to drain the account without realising, because the effect on your own cover and your retirement savings may not show for years.
For approved medical bills, MediSave can be used for your immediate family members. This means your spouse, your children, your parents, your grandparents and your siblings. Your spouse, children and parents can be of any nationality, but your grandparents and siblings must be Singapore Citizens or Permanent Residents. You can find the usual withdrawal limits in lesson 5.1, "What MediSave pays for, and the withdrawal limits". Using a family member's MediSave can also come with its own limit, set per patient for that patient's lifetime. Check the CPF Board website for the current figure.
Premiums work a little differently. Within the yearly limits, you can use MediSave to pay some premiums for family. Examples are MediShield Life and the part of an Integrated Shield plan that MediSave can cover. The relatives whose premiums you may pay are not always the same as the relatives whose bills you may pay. Before you count on any particular use, look it up on the CPF Board website.
If a relative is admitted to hospital, the hospital's financial counsellor can tell you which accounts may be used and the order they are drawn on. The patient's own MediSave normally goes first. After that, a family member's account can be used if that person agrees.
Linda (an invented example) faced this when her mother fell and ended up in hospital. Her mother's MediSave was low and Linda's was full, and the hospital form had a box for paying from a family member's account. Linda paid the MediSave portion of the bill herself without much thought. Some time afterwards she started to wonder how many times she would tick that box in the coming ten years, and why nobody had ever asked her brother.
Any amount you pay from your MediSave for another person is money you no longer have for your own needs later on. During your working years, new contributions keep topping the account up, which makes the cost easy to miss. Once you reach your sixties, contributions end and your own premiums go up, and the account then has to cope without the money that went out earlier.
Suppose Linda pays S$1,200 a year towards her mother's premiums and about S$1,000 a year towards bills. S$1,200 + S$1,000 = S$2,200 a year. Over ten years, S$2,200 x 10 comes to S$22,000. Had the money stayed in her account at 5% a year (an example rate, not the current one), S$2,200 a year would have built up to about S$27,671.36 after ten years. This larger figure is the true size of what Linda gives her mother over the ten years.
Lesson 1.3 explained overflow. When your MediSave is at the Basic Healthcare Sum, contributions that would have gone into MediSave are sent to your Special Account instead.
At that level, spending on family does not show up as a lower MediSave balance. Each dollar you pay out is replaced by a contribution that would otherwise have gone to your Special Account, so part of the overflow stops. Your MediSave stays where it was, and your retirement savings absorb the cost.
Linda is in this position. Her MediSave is at the Basic Healthcare Sum, so what she pays for her mother cuts into her overflow. The cost is carried by her Special Account and her retirement savings, while her MediSave statement shows no change.
None of this means you should stop helping your family. The aim is to know the figure in advance and decide to pay it, so you do not discover it years from now.
In a lot of families, a parent's medical costs end up with the child who lives closest, earns the most or picks up the phone first. Where MediSave is involved, it tends to be the child with the fullest account. That can be a fair outcome, but families seldom talk about it, and resentment grows when one sibling's retirement savings have been quietly covering a parent's costs for years.
A short written plan, agreed early, avoids most of this:
Talk early, before your parent's needs increase, and keep the conversation short. Settle who pays which premiums and how bills are divided, from MediSave or from cash. Put the agreement in a message that everyone has seen. Agree to revisit it if your parent's health or anyone's situation changes. If one sibling's MediSave is bearing more, even it out: the others can pay more of the cash part, top up that sibling's MediSave, or top up the parent's MediSave.
Linda raised it with her brother, who until then had never been asked to contribute. They agreed that Linda carries on paying their mother's premiums from her MediSave, and her brother covers the cash part of any hospital bill plus their mother's rider. If their mother ever needs long-term care, they will meet again before either of them pays anything.
The people who draw on your MediSave usually shift as you get older. In your thirties they are often a spouse and young children, whose bills tend to be smaller and are partly met by their own accounts. In your forties and fifties they are more likely to be your parents, whose needs are often bigger and go on for longer. Some people have both at the same time. From your sixties onward, with contributions stopped and your own premiums higher, whatever left the account earlier counts for more.
Write down the family members who might need your MediSave over the next ten years. Next to each name, put a rough yearly amount your MediSave might pay, split into premiums and bills. Then carry these figures into your yearly MediSave list in lesson 5.4.
Write down which family members might use your MediSave in the next ten years and roughly how much.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).