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Enforcing Medisave self-employed contributions

Country: 
Singapore
Partner Institute: 
Department of Epidemiology and Public Health, National University of Singapore
Survey no: 
(4)2004
Author(s): 
Meng-Kin Lim
Health Policy Issues: 
Funding / Pooling
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no no yes no no

Abstract

Medisave is an employment-based medical savings scheme mandated by an Act of Parliament to help Singaporeans and permanent residents meet their health-care expenses. The scheme was extended to the self-employed in 1992. By 2004, the number of self-employed in arrears of medisave payment has ballooned to 144,000 with a large outstanding sum of $413 million. The Central Provident Fund Board, which enforces compliance with Medisave contributions, has decided to tighten up enforcement.

Purpose of health policy or idea

Medisave is an employment-based medical savings scheme mandated by an Act of Parliament.to help Singaporeans and permanent residents meet their health-care expenses. Introduced in 1984 for all employees, the scheme was extended to the self-employed in 1992.

Over the years, the CPF Board had allowed self-employed members much latitude in their contributions to their Medisave accounts. There had been no known instance of concerted enforcement of contributions from the self-employed..By 2004, the number of self-employed in arrears of medisave payment has ballooned to 144,000 with a large outstanding sum of $413 million.

On Sept 16 2004, the Central Provident Fund Board, which has regulatory powers to enforce compliance with medisave contributions, announced that it would begin imposing fines of $2,500 to $10,000 and take defaulters to court if they refused to top up their accounts. Those who have difficulty in complying immediately could do so in 12 monthly installments. There was even a threat that business licences could be revoked.

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Characteristics of this policy

Degree of Innovation traditional traditional innovative
Degree of Controversy consensual neutral highly controversial
Structural or Systemic Impact marginal rather fundamental fundamental
Public Visibility very low high very high
Transferability strongly system-dependent neutral system-neutral

Political and economic background

A need or cause was not stated as such, but the current action could have been prompted by a need to clear the way for a national compulsory health insurance scheme that is being put in place, which might involve part payment from Medisave accounts.

Purpose and process analysis

Current Process Stages

Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no no yes no no

Stakeholder positions

The sudden action to catch up with self-employed Medisave defaulters by the CPF Board drew the ire of many self-employed (ranging from taxi drivers and sole proprietors of small businesses to lawyers, doctors and stock brokers) that received the compliance demands but were reluctant to pay up. Many claimed that they had been struggling financially since the recent economic downturn, and forcing them to pay up now would not only be a blow for them personally but would prove counterproductive to Singapore's economic recovery.

Other members of the public have join in the debate, urging the authorities to  exercise compassion and flexibility. Members of parliament been urging the CPF Board to look into extending payment terms and deadlines for those who are genuinely in dire circumstances. Trade Union representatives also expressed concern about the Board's threat to tie the renewal of vocational licences to the topping up of Medisave accounts.

Adoption and implementation

In response to the protests, the board promised it would be sympathetic towards those with genuine financial difficulties. 

For instance, it will arrange instalment plans for them to settle outstanding amounts  over  a  reasonable  period.  They will also be granted licences to continue their work so they can continue to earn an income to pay into their Medisave account. But they must make regular contributions while working. 

The Board took the opportunity to emphasize that "just because  a  person is self-employed does not mean he will need less medical care  or  have  lower  hospitalisation  expenses. All working Singaporeans, employees  and  self-employed alike, must therefore contribute regularly to their Medisave.

Expected outcome

References

Author/s and/or contributors to this survey

Meng-Kin Lim

Suggested citation for this online article

Meng-Kin Lim. "Enforcing Medisave self-employed contributions". Health Policy Monitor, 14 October 2004. Available at http://www.hpm.org/survey/sg/a4/5