Background

As the Singapore economy evolves over time, it is apparent that employment patterns are changing. Lifetime employment with a single employer is no longer common, instead the average employee will have changed jobs several times during his career life.

Employees may not enjoy continuity of inpatient/hospitalisation cover traditionally provided under group hospital and surgical insurance schemes. This problem is further compounded by the more frequent periods of “in-between employment” of the modern worker.

To meet the needs of changing employment trend, two alternative arrangements have been proposed for employers’ consideration:

• Portable Medical Benefits Scheme (PMBS) and
• Transferable Medical Insurance Scheme (TMIS)

In the 2003 Budget, the Government announced that employers could continue to enjoy tax deductibility for medical expenses of up to 2% of payroll if any one of the above arrangements is adopted from April 2004.

What is PMBS

PMBS is a scheme that rides on the Medisave/Medishield framework. Employers, in lieu of existing inpatient benefits, make additional Medisave contribution of at least 1% of employee’s salary, subject to a minimum amount of 1% of Employment Act salary limit and a maximum amount of 1% of CPF contribution ceiling. Employees will be responsible for their inpatient/hospitalisation expenses or they can use their CPF Medisave Accounts to purchase the CPF Medisave approved insurance products. These products offered by private insurers are structured on the same basis as MediShield.

What is TMIS

TMIS policy is an employer sponsored group hospitalisation and surgical insurance program with two key features: transferability and continuation coverage. The coverage applies when:

• Employees move from one employer to another;
• Employees are in-between employment for whatever reasons, including retrenchment, resignation and medical grounds up to a maximum period of 12 months.

(please refer to “How TMIS works ” for details)

What is in it for your company to adopt TMIS

• Your company continues to enjoy tax deductibility up to 2% of payroll; and
• Pre-existing conditions exclusion will be waived if your employees have been insured under a TMIS policy continuously for 12 months or more.

How much will it cost your company to adopt TMIS

a) If you have an existing group H&S insurance

To convert your existing group H&S insurance policy to a TMIS policy, the current premium will be increased to provide for the additional TMIS Benefits. The average premium of a TMIS policy will remain at about 0.5% to 1.5% of annual payroll. If you are a large company, the amount is likely to be lower. The additional premium for TMIS policy can be partially offset by the tax deductibility (up to 2% of annual payroll) if more than 50% of your local employees are provided with TMIS Benefits.

b) If your H&S benefits are currently self-funded

Depending on your employees’ age-profile, group size, claims experience and benefit level, the premium for a group H&S insurance policy may range from 0.5% to 1.5% of your total annual payroll.

The advantage is that the premium paid for TMIS policy will be offset by the 2% tax deductibility, whereas only 1% tax deductibility is allowed if your company continues with the self-funded benefits.

Difference between PMBS and TMIS

Although your company will enjoy the 2% tax deductibility by implementing PBMS, the features of both schemes should be studied to decide which scheme serves your company needs better.

Under PMBS, the employees use the additional Medisave contributions to purchase Medishield or other CPF Medisave approved insurance products offered by private insurers. These products provide medical coverage during the lifetime of the employee up to the age of 80 years old. They continue to be available when employees are between jobs as well as when they remain out of jobs.

These CPF Medisave approved products have deductibles and co-payment features, which will not reimburse in full the actual medical expenses incurred. Treatment for pre-existing illnesses is also typically excluded in these products.
Most TMIS policies do not have such deductible and co-payment features. Pre-existing conditions are waived when employees change job and where both employers have introduced TMIS Benefits. Under TMIS, your company continues to have full control over the H&S policy and the level of benefits can be structured in accordance with your corporate Employee Benefit philosophy.

Who are the insurers that offer TMIS

TMIS policies are available from the following insurers:

Allianz Insurance Co of Singapore Pte Ltd
American International Assurance Co Ltd
Asia Insurance Co Ltd
Asia Life Assurance Society Ltd
Aviva Ltd
AXA Insurance Singapore Pte Ltd
Great Eastern Life Assurance Co Ltd
HSBC Insurance (Singapore) Pte. Limited
Liberty Insurance Pte Ltd
NTUC Income Insurance Co-op Ltd
Prudential Assurance Co Singapore (Pte) Ltd
QBE Insurance (International) Ltd
UOB Life Assurance Ltd

You can contact us for any assistance.
You may refer to the write-up on “How TMIS works ” for more information.