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3.12 As workers get older and change jobs more
frequently, it becomes more important for them
to have portable medical benefits. This will provide
them with medical coverage not only when they
are in employment, but also when they are in between
jobs. Furthermore, if a worker develops a long
term medical condition, without portable medical
benefits he will face difficulties finding another
employer willing to take him on and incur the
expense of treating his medical condition.
3.13 To address this problem, the ERC recommended
that the Portable Medical Benefits Scheme or the
Transferable Medical Insurance Scheme be developed.
3.14 The Portable Medical Benefits Scheme will
involve additional contributions to the CPF Medisave
account by employers. To encourage employers and
workers to switch to the new scheme, I have decided
to raise the tax exemption limit for additional
Medisave contributions for private sector employees
from 1% of an employee's monthly salary at present,
to a lump-sum of $1,500 per employee per year.
This will take effect from YA 2004.
3.15 Presently, medical benefits are tax deductible
expenses for employers, up to a limit of 2% of
payroll. From 1 April 2004, employers who implement
either of the new schemes will continue to enjoy
a 2% deduction limit. However, employers who do
not implement these schemes will only be allowed
to deduct 1% of their total payroll for medical
expenses.
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