Understanding MediSave and the Basic Healthcare Sum: What Happens When You Hit the Limit?

Hey there! Let’s have a quick chat about something super important for everyone who’s got a MediSave Account under the CPF system — the Basic Healthcare Sum, or BHS for short. If you’ve been wondering what happens when your MediSave savings hit this limit, you’re in the right place. I’ve got the lowdown on two key things you should know about your MediSave savings once they reach the BHS. Ready? Let’s dive in!

So, what exactly is the Basic Healthcare Sum?

The Basic Healthcare Sum is basically the estimated amount you need to have in your MediSave Account to cover your basic subsidised healthcare needs when you grow older — think hospital stays and approved medical insurance. It’s also the maximum amount you can hold in your MediSave.

In other words, once your MediSave hits this cap, any extra savings won’t stay in your MediSave Account. Instead, they’ll flow into your other CPF accounts, depending on your age and retirement status. Pretty neat, right?

What’s the BHS that applies to me?

If you’re under 65, the BHS amount changes every year. This makes sense because healthcare costs generally go up, and the ways you can use your MediSave expand over time. This adjustment ensures your healthcare savings keep pace with these changes by the time you retire.

Once you hit 65, your BHS is fixed for life — no more yearly changes, just peace of mind knowing that your healthcare sum is set.

To check out the latest BHS figures applicable to you, you can always visit the official CPF website. They keep everything up to date.

Why even have a Basic Healthcare Sum?

Good question! The BHS cap exists to prevent you from over-saving in your MediSave Account. Why? Well, the Medisave is designed for healthcare expenses, but if you have too much there, your CPF savings might not be optimally allocated for retirement and other needs.

Think of it like this — the BHS encourages a smart distribution of your CPF savings across your Ordinary Account, Special Account, and Retirement Account, depending on your need and age. This setup helps safeguard your healthcare expenses while boosting your retirement savings. So it really is a win-win!

What happens when your MediSave hits the Basic Healthcare Sum?

This is the juicy bit. Once your MediSave Account reaches the BHS, here are the two things that happen with your additional MediSave contributions:

1. Excess contributions flow to your Special Account (SA) or Retirement Account (RA)

• If you’re under 55 years old, any extra savings will be diverted to your Special Account.
• Once you cross 55, excess contributions head to your Retirement Account.

This helps to boost your retirement savings while making sure your healthcare savings stay just right.

2. Contributions flow to your Ordinary Account (OA) when you’ve exceeded your Full Retirement Sum

If your SA or RA has already reached your Full Retirement Sum, guess what? Any extra MediSave contributions will then flow into your Ordinary Account instead.

This arrangement gives you a flexible way to maximise your savings for various needs — housing, investments, and more — further down the road.

Want to top up your MediSave Account to the Basic Healthcare Sum?

Great news — you can make voluntary contributions to your MediSave Account! This helps you beef up your healthcare savings, which can be used for stuff like premiums for MediShield Life, Integrated Shield plans, CareShield Life, and their supplements.

To start topping up, just visit the official “Top up MediSave Account” page on the CPF website. Quick heads-up though — top-ups are irreversible, so be sure before you commit.

TIP: If you make cash top-ups in a calendar year, you’re eligible for tax relief of up to $16,000! That’s $8,000 for contributions to yourself and another $8,000 for top-ups to your loved ones’ accounts. Sweet deal, right? Just remember, terms and conditions apply.

Setting aside your Basic Healthcare Sum with MediSave savings

Maintaining your Basic Healthcare Sum is a smart way to ensure you have enough for your medical and retirement needs. Once you’ve got your BHS set, any extra savings can continue helping you in other ways through your different CPF accounts, tailored to your stage of life.

Curious to learn more about healthcare and retirement planning? Check out more articles on the CPF website, and stay up to date with the latest info and tips.

Note: The information provided here is accurate as of the publication date. Always double-check with official CPF sources for the latest details.

That’s it for now! Hopefully, this clears up how your MediSave savings work once you reach that important Basic Healthcare Sum. Managing your CPF savings this way really helps you stay on top of your healthcare needs and retirement planning. Stay savvy and take care!