Goods and Services Tax on MediShield Premiums

Date: 21 October 2013

Parliamentary Question by Mr Christopher de Souza:

To ask the Deputy  Prime  Minister  and Minister for Finance (a) what is the rationale for imposing the Goods and Services Tax on MediShield premiums; and (b) whether the Ministry will consider waiving this tax, particularly for the elderly or low-income workers.

Reply by DPM and Finance Minister Tharman Shanmugaratnam:

We have a broad-based GST system, with minimal exemptions. We have chosen this approach so as to keep the GST rate relatively low, while we help the lower income group through subsidies and grants that are targeted at benefiting them.

In healthcare, we provide significant subsidies to Singaporeans who are less well-off. We also absorb the GST for all subsidised patients, whether in polyclinics, public hospitals or the intermediate and long-term care sector. In effect, a subsidised patient in a hospital will have GST deducted from his total bill regardless of whether it is paid by MediShield, MediSave or cash.

Further, the Government’s assistance to our lower-income and elderly Singaporeans through the GST Voucher (GSTV) and Workfare Income Supplement (WIS) includes top-ups to their MediSave accounts. Lower-income and elderly residents are therefore getting help to pay for their MediShield premiums and other medical expenses.

For example, a retiree household in a 3-room flat can receive a total of $500 in GSTV – Medisave a year which covers more than 40% of their current MediShield premiums. This year, with the GSTV – MediSave Special Payment, and the one-off $200 MediSave top-up for all older Singaporeans, the total MediSave top-up for the household will be $1,400, which will more than offset their MediShield premiums.

Likewise, a typical working, lower-income household in a 3-room flat can receive more than $500 in MediSave benefits a year through their Workfare payouts. This will more than offset the household’s total MediShield premiums.

With the introduction of MediShield Life, which will provide universal coverage and greater assurance for Singaporeans, further Government support will be provided to help older and less well-off Singaporeans pay their MediShield premiums and keep premiums affordable.