Encouraging Employers and Employees to Shift to Portable Medical Benefits

Ms K Thanaletchimi asked the Minister for Manpower (a) to date, how many companies have implemented portable medical benefits for their employees; (b) how can it be made more pervasive and attractive for both employers and employee to support such initiatives; and (c) apart from contributing to Medisave, whether portability of medical benefits can be in the form of reimbursements to employees for the premium that they pay for standard medical insurance.

Mr Ong Teng Koon asked the Minister for Manpower (a) whether the tripartite work group has been successful in encouraging employers and employees to shift to portable medical benefits; and (b) whether the Ministry will consider legislation to mandate that corporate outpatient medical insurance plans become portable in order to protect employees who may be unable to qualify for a subsequent insurance plan due to pre-existing conditions.

The Minister for Manpower (Mr Lim Swee Say): Mdm Speaker, may I have your permission to take Question Nos 1 and 2 together, please.

Mdm Speaker: Yes, please.

Mr Lim Swee Say: Mdm Speaker, at the national level, the Government ensures that Singaporean workers have portable medical benefits through mandatory Medisave contributions by employers and employees. At the company level, more than 90% of employers provide additional medical benefits. Among them, some employers provide portable medical benefits on a voluntary basis. Our last survey in 2013 showed that about 4% of companies employing about 20% of our local workers do so. These companies may enjoy higher tax deductions for their medical expenses if they meet the qualifying conditions.

With the introduction of MediShield Life in 2015, all Singaporeans now have portable medical insurance. Tripartite partners are, therefore, promoting MediShield Life as the platform for voluntary portable benefits. MediShield Life is universal and employees can use Medisave contribution to pay for premiums for MediShield Life, as well as Integrated Shield Plans which build on top of MediShield Life.

With MediShield Life, all our local workers can be assured that their medical coverage, including for pre-existing illnesses, would follow them regardless of any change in employment status or employer. More importantly, the annual claim limit has been raised significantly, and the lifetime claim limit has been removed.

Our focus going forward is to encourage employers to shift from providing non-portable medical benefits, such as the Group Hospital and Surgical (GHS) insurance, to making additional contributions to employees' Medisave accounts. The tripartite partners have, for a start, included this recommendation in the Tripartite Guidelines on the Re-employment of Older Employees released in May 2016. We will continue to encourage more employers to shift towards offering voluntary portable medical benefits which leverage on MediShield Life.

Ms K Thanaletchimi (Nominated Member): I thank the Minister for the reply. I just wish to clarify with a supplementary question. Since the take-up rate is rather slow, about 4%, is there something more that we can do to entice employers to contribute more to Medisave? The second point I would like to make is that, benefits, besides being extend to the individual employee, employers do extend some benefits to their family members. Thus, I wish to ask whether there can be some other incentives to allow employers to contribute to the immediate family members of the employee's family.

Mr Lim Swee Say: Mdm Speaker, the reason why the take-up rate has been low is both because of the employers' preferences as well as the union's preferences.

On the part of the employers, many of them found it more effective for them to attract and retain the workers that they want; in other words, they can tailor their company medical scheme as an attraction. Secondly, most of their workers at the working age are mostly healthy. As a result, employers adopt the shorter term perspective. It is more cost effective for them to continue the current practice.

On the part of the unions, they also find it a challenge to convince the workers to move towards portable medical benefits because for most of the company-provided medical insurance schemes, the payment starts from the first dollar. So, there is no co-payment needed from the first dollar.

The challenge for the tripartite partners is to convince both the employers as well as the unions and workers to adopt a longer term perspective. Today, there are already financial incentives for employers to move towards portable medical benefits. For example, the tax deduction can be up to 2% of the payroll, instead of 1%. There are incentives in place. But I would say that the hurdles – in terms of how we overcome this short-term perspective of the workers and employers – would be something we would continue to work at through tripartite efforts.

Mr Ong Teng Koon (Marsiling-Yew Tee): I thank the Minister for the reply. Part of the question is whether employees have the opportunity to apply for portability. Many times, it is not a case of the employee not wanting to pay for the additional portability, but it is that they are not even given the opportunity by the employer. There are certain countries who mandate or legislate this portability. For example, US through the Health Insurance Portability and Accountability Act.

My second clarification: especially with our economy going into a bit of a slowdown and we hear of retrenchments going on, aside from the peace of mind that employees will get, sometimes also, because their family members have pre-existing conditions, for example, their wives or children who may be tagged along to these corporate insurance schemes. So, it would help them very much if they can at least have the option of opting for this portability. I would like the Minister to consider this point.

Mr Lim Swee Say: Mdm Speaker, I thank the Member for raising the two points. Firstly, on the part of the employers, he asked why can they not offer this option to the individual employees. Basically, the schemes offered by the companies, or by the employers to the workers, would be through the Group Hospital and Surgical scheme. The economy of scale is important. For example, if a company were to offer their employees portability, there would be the option for the employee to either come under the group scheme or the individual scheme. First, they will face a self-selection problem. The healthier ones may go for the individual scheme. Secondly, from the point of view of the employers, the costs would go up because once the group of employees is divided, the size of the group is smaller, there is no economy of scale. From that point, I can understand why most employers would not offer this individual option.

But more importantly, Mdm Speaker, I would like to highlight that Singapore has a feature which is quite different from most other countries, which is the MediShield Life. MediShield Life is for everyone, including the family, children and spouses of the workers. Secondly, it is for life, from the day you are born to the day the person passes on. MediShield provides that medical safety net for everyone, not just the workers, but also their families. This is the reason why the tripartite partners have decided to channel our energy to encourage companies, employers to move from non-portable schemes to a portable scheme, but building on MediShield Life.

Mr Ong Teng Koon: Mdm Speaker, I thank the Minister for providing MediShield Life for the workers. The problem is MediShield Life only extends to inpatient insurance. What happens if the employee or the family members have huge, large like tens or hundreds of thousands of outpatient hospital bills? How are they going to pay for it without portable insurance?

Mr Lim Swee Say: Mdm Speaker, MediShield Life is primarily targeted at hospitalisation. However, to my understanding, and the Minister for Health can correct me if I am wrong, for outpatient treatments which are longer term and expensive, such as dialysis and cancer treatment, they are covered under the MediShield Life. If there are other areas of expensive and long-term outpatient treatment which the Member feels should be included in MediShield Life, he may wish to file a separate Parliamentary Question (PQ) to the Health Minister.

Ms K Thanaletchimi: I just wish to again clarify with the Minister that in unionised companies, unions keep putting in effort to ensure that employers embrace portability through contributions to Medisave, but the concern is that there are many un-unionised companies. I also understand that there is a gap of understanding. MediShield Life has been very pervasive and people do understand what MediShield Life is. However, the part about portability, the contribution by the employers to the Medisave, it is that part that we need to create more awareness for. We need to ensure that people also know the advantage of having the money in the Medisave, as it can earn interest, it is long term, it is portable and it grows.

Mdm Speaker: Ms Thanaletchimi, can you put forward the question?

Ms K Thanaletchimi: Yes, I am sorry. So, I think we should do more and we need to have a concerted effort to educate and create awareness, both to the employees as well as employers. Unions are already educated.

Mr Lim Swee Say: Mdm Speaker, I agree to everything that Ms Thanaletchimi had mentioned. Yes, we need to step up awareness promotion and education, both for the employers and the employees. May I also add that we should cover both the unionised and the non-unionised sector as well because the adoption rates for the unionised sector and the non-unionised sector are equally low. We need to work on both sides.