You will build a list of everything your MediSave pays each year and compare it with your contributions.
Linda could now name every premium her MediSave paid, the share of her mother's costs she had agreed to carry, and the withdrawal limits that left cash to find. What she couldn't yet answer was the question underneath all of it: is my MediSave growing or shrinking, and when does that change? This exercise answers it in one sheet. It takes about twenty minutes.
You need your CPF transaction history for the last year, your insurers' renewal notices, your notes from lessons 5.2 and 5.3, and the current Basic Healthcare Sum and MediSave interest rate from cpf.gov.sg. The figures in the worked example are made up.
Make one row for each premium paid from your MediSave: MediShield Life, the MediSave part of any Integrated Shield plan, and CareShield Life or ElderShield if you have them. Take the amounts from last year's transaction history, where each one appears as a deduction.
Then add rows for bills you expect MediSave to pay in a normal year: chronic condition management, screenings, any regular outpatient treatment. If you rarely see a doctor, leave this as a small allowance. Hospital stays are not regular, so don't put a yearly figure in for them. Note them separately as a risk.
Linda's own rows: S$560 for MediShield Life, S$700 for the MediSave part of her Integrated Shield plan, and S$300 for CareShield Life. Her own expected bills are close to nil.
Add a row for each premium or bill you pay from your MediSave for someone else, using the estimates from lesson 5.3, Using MediSave for family members.
Linda adds two: S$1,200 for her mother's premiums and about S$1,000 for her mother's expected bills.
Total the outflow column. Linda's is S$560 plus S$700 plus S$300 plus S$1,200 plus S$1,000, which comes to S$3,760 a year.
MediSave has two inflows: contributions and interest. Your yearly MediSave contributions are in your transaction history, or you can take them from your worksheet in lesson 1.4. For interest, multiply your balance by the current MediSave rate.
Linda's contributions to MediSave are S$4,800 a year, and her balance of S$68,000 earns about S$3,400 at an example rate of 5%, which is not the current rate. Her inflow is S$8,200, against an outflow of S$3,760. The difference, S$4,440, would push her above the Basic Healthcare Sum, so in practice it overflows to her Special Account.
Write one line under the totals: growing, shrinking or overflowing. Linda's is overflowing.
This is the step that makes the list useful. Two things will change: premiums rise with age, and contributions stop when you stop working.
For each premium, look up your insurer's premium table at the ages you will reach, and write the premium at the age you expect to stop work and ten years later. For family members, think about whether their costs will rise or end.
Then find the year when your outflow will be higher than your interest alone. While you work, contributions mask any gap. After you stop, interest is all that comes in, so if your outflows are larger than the interest, your balance starts to fall.
Linda plans to stop working at 65. Using her insurers' tables at today's prices, her own MediSave-paid premiums at 70 come to about S$2,600 a year. She assumes she will still be paying around S$800 a year towards family costs by then. That is S$3,400 of outflow. If her balance is still around S$68,000, interest at the example rate is also about S$3,400. Her line reads: "Overflowing now. Roughly break-even around 70 if nothing else changes. Shrinking after that."
Yours is done when it shows every premium and expected bill paid from your MediSave, including family members, with a yearly total, your yearly contributions and interest, one word for where you stand today, and the age at which outflow may overtake inflow. Note beside it which figures came from insurers' tables and which are your own guesses, so you know what to check first when you update it.
If your list shows a shrinking balance soon, that is useful to know early. It may change how you think about riders, about family costs, or about a voluntary contribution from lesson 3.3.
Complete the list with your own premiums, family costs, contributions and interest, and write down whether your balance is growing or shrinking and when that might change.
Complete the yearly MediSave list and write whether your balance is growing or shrinking and when that might change.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).