Budget 2014: Healthcare Initiatives

     **Updated Timeline for Pioneer Generation Package [5 March 2014]:

DPM/Minister for Finance Mr Tharman Shanmugaratnam rounded up the debate for Budget 2014. He announced various revisions to the timeline for the Pioneer Generation Package (PGP), as follows:

(A) Enhancing Healthcare Affordability

(A1) MediShield Life Subsidies

To ensure that premiums for the new MediShield Life remain affordable, the Government will provide permanent subsidies for lower- and middle-income groups so that they can fully pay their remaining premiums out of regular Medisave contributions.

To ease the transition into MediShield Life, the Government will also provide subsidies to offset premium increases for the first few years. Details of the subsidies will be finalised after the MediShield Life Committee has completed its work.

(A2) Specialist Outpatient Clinics (SOC) Subsidies

• The subsidies for SOC services for lower- and middle-income Singaporeans, currently at 50%, will be increased to 70% and 60% respectively. This will be implemented from September 2014.

• Subsidies for medication will be similarly enhanced. The enhancements will be introduced early next year. The Ministry of Health will update on the details at a later date.

Update [5 March 2014] The implementation of SOC subsidies has been brought forward to September 2014.

(A3) Increase in CPF Medisave Contribution Rates

To help Singaporean workers save for their healthcare needs, the employer CPF contribution rate will be increased by 1 percentage point for all workers. This increase will be channelled into the Medisave Account.

To alleviate the impact on businesses, employers will receive a one-year Temporary Employment Credit to offset 0.5 percentage points of wages up to the CPF salary ceiling of $5,000.

These changes will take effect from January 2015.

(A4) More Flexible Use of Medisave for Elderly Singaporeans

Elderly Singaporeans will be allowed to use a portion of their Medisave more flexibly across a range of outpatient treatment, on top of the existing Medisave withdrawal limits for specific chronic conditions and other treatments.

More details will be provided at the Ministry of Health’s Committee of Supply.

(B) Honouring our Pioneer Generation

To honour and recognise the Pioneer Generation for their contributions to nation-building, the Pioneer Generation will receive support for their healthcare needs for the rest of their lives.

(B1) Additional Subsidies for Outpatient Care

The Pioneer Generation will receive further subsidies for outpatient care in polyclinics, SOCs and General Practitioner clinics on the Community Health Assist Scheme (CHAS).

• A further 50% discount off their subsidised bills at SOCs and polyclinics.

• All in the Pioneer Generation will be placed on CHAS, regardless of income or housing type. Those already on CHAS will receive additional subsidies.

• Members of the Pioneer Generation who have moderate to severe functional disabilities will receive cash assistance of $1,200 a year under the Pioneer Generation Disability Assistance Scheme.

The subsidies for SOC and polyclinic services, and Pioneer Generation Disability Assistance Scheme, will be implemented in September 2014. The additional CHAS benefits will be implemented in January 2015. More details will be provided at the Ministry of Health’s Committee of Supply.

Update [5 March 2014] The implementation of the CHAS benefits has been brought forward from Jan to Sep 2014.

(B2) Medisave Top-Ups

The Government will provide annual Medisave Top-Ups of $200 to $800 for all in the Pioneer Generation, with higher amounts for older Pioneer Generation cohorts. It will be paid out from August 2014.

Update [5 March 2014] The Medisave top-ups will be credited on Jul instead of Aug 2014.

(B3) MediShield Life Subsidy

To provide the Pioneer Generation with the assurance that their premiums will be affordable as they grow older, all Pioneer Generation members will enjoy subsidies starting from 40% at age 65, rising to 60% at age 90. This will be implemented at the end of 2015, when MediShield Life is rolled out.

(B4) Pioneer Generation Fund ($8 billion)

An $8 billion Pioneer Generation Fund will be set up to meet the full estimated cost of the Pioneer Generation Package over time.

(C) Further Help for Older Singaporeans

(C1) 5-Year CPF Medisave Top-Up ($440 million)

Singaporeans who were born on or before 31 Dec 1959 (i.e. aged 55 and above in 2014) and who do not enjoy Pioneer Generation benefits will receive an annual Medisave top-up of $100 to $200 over the next five years. The amount an eligible Singaporean will receive is based on the value of his/her home:

The Medisave top-up will be paid out from August 2014.

(C2) Increase in CPF Contribution Rates for Older Workers

To boost the retirement adequacy of older Singaporeans, the Government will raise their CPF contribution rates. These are on top of the increase in employer CPF contribution rates for the Medisave Account for all workers. All increases in employer contributions will be allocated to the Special Account. The 0.5 percentage point increase in contribution rate from employees aged 50 to 55 years will go to the Ordinary Account.

To help employers adjust to this increase, the Government will provide a one-year increase in the Special Employment Credit of up to 0.5 percentage points. This comes on top of the existing Special Employment Credit of 8% of wages, and will offset the increase in older worker contribution rates.

The changes will take effect from January 2015.

(C3) Enhancement of Parent Reliefs ($27 million per year)

To give greater encouragement and recognition to individuals supporting their parents, grandparents, and great-grandparents (including in-laws), the Parent Relief and Handicapped Parent Relief will be enhanced as follows:

In recognition that the care for these elderly dependants is a shared responsibility among family members, IRAS will allow apportionment of the Parent Relief and Handicapped Parent Relief from Year of Assessment (YA) 2015.

(D) Additional Support for Singaporean Households

(D1) One-off GST Voucher (GSTV) – Cash: Seniors’ Bonus ($170 million)

To help seniors with their cost of living, the Government will provide a one-off GSTV – Cash: Seniors’ Bonus for all eligible Singaporeans aged 55 and above. This means that they will get double the GSTV – Cash payment in 2014. About 675,000 seniors will benefit.

(E) Other Measures

(E1) Increase in Tobacco Excise Duties ($70 million per year)

Excise duties for cigarettes and other manufactured tobacco products will be increased by 10% to $388 per kg or 38.8 cents for every gram or part thereof of per stick of cigarette, from $352 per kg or 35.2 cents for every gram or part thereof of per stick of cigarette. This will take effect from 21 February 2014.

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