Employers now can claim tax deductions of up to 2 per cent of total employee remuneration if they introduce medical benefits or coverage for staff which are portable, meaning workers continue to get the benefits even if they leave the company.
Tax breaks under the Portable Medical Benefits Scheme (PMBS) or Transferable Medical Insurance Scheme (TMIS) encourage employers to have portable medical benefits. Despite this, not many companies have adopted PMBS, and insurance coverage often ceases when the individual leaves the company.
A review is timely to understand the reasons why companies are not enthusiastic about providing portable medical coverage and if the current tax reliefs and incentives can be tweaked to facilitate a higher adoption rate.
As for individuals, a few changes would be helpful to promote individual responsibility for one's health, reducing the need for state subsidies.
Right now, tax concessions and reliefs to assist individuals with their healthcare and medical costs in Singapore are few and far between, and may be dated and no longer adequate or relevant. For instance, taxpayers may enjoy a tax relief of up to S$5,000 per year for the purchase of life insurance coverage.
However, this is only for workers whose mandatory employee CPF contributions are below S$5,000 per annum; which disqualifies a large majority of working Singaporeans and permanent residents.
Instead, the government can look into granting a separate tax relief which individuals can claim when they purchase additional life and medical insurance and this relief will supplement the current tax relief of up to S$5,000 which is tied to the mandatory employee CPF contributions.
This can hopefully act as an incentive to encourage Singaporeans and permanent residents to review their situation and purchase additional life and medical coverage if necessary. It will also encourage personal responsibility for healthcare costs.
The government can also consider giving a tax relief to people who buy medical and life insurance coverage for their elderly parents, to reduce the latter's reliance on government subsidies; and extend a similar relief to defray the cost of purchasing life insurance plans for dependents.
The writers are respectively director of tax and tax senior manager, Deloitte Singapore.
