If you’re reading this, you’re probably (somewhat) familiar with CPF (Central Provident Fund) as well as the various Sums like the Basic Retirement Sum, Full Retirement Sum and Enhanced Retirement Sum.
But I bet there’s one Sum that you don’t really know much about!
It’s… the Basic Healthcare Sum!
FYI: CPF has just announced the latest Basic Healthcare Sum for individuals turning 65 in 2022 and it’s currently set at $66,000.
Mmhmm, I see question marks popping around you…
So here’s a quick summary of the Basic Healthcare Sum and what it means to you!
TL;DRL: All You Need To Know About Your Medisave Account’s Basic Healthcare Sum
The Basic Healthcare Sum (BHS) is the estimated savings needed for basic subsidised healthcare in old age.
This BHS is adjusted yearly for members below 65 years old in order to keep pace with the growth in MediSave use.
But once you hit 65 years old, your BHS will be fixed for the rest of your life.
From 1 January 2022,
- For members below 65 years old, their BHS will be raised from $63,000 to $66,000
- For members who turn 65 years old in 2022, their BHS will be fixed at $66,000 and will not change thereafter
FYI: the BHS is the cap to the MediSave Account (MA), so any excess will be automatically transferred to your other CPF accounts
If you have less than the BHS, you don’t need to top up your MA.
And you can still withdraw from your MA to pay for approved medical expenses.
What Is The Basic Healthcare Sum?
Don’t worry, this is not another milestone in CPF that you definitely have to hit, by hook or by crook.
The Basic Healthcare Sum (BHS) is simply an estimation of an amount you should keep handy in your CPF MediSave account to take care of your healthcare needs in your retirement years.
Some of you may not be that familiar with MediSave.
And I’d say that that’s a good thing because it means that you’re safe and healthy.
But just in case you ever need to use it (touchwood) your MediSave can be used for:
- A range of approved treatments and healthcare needs
- Paying for the various healthcare insurance such as MediShield, Integrated Shield Plan, Eldershield and the upcoming CareShield
How Much Is The Basic Healthcare Sum?
It works differently from the three Retirement Sums in your Retirement Account that allows you to purchase your CPF LIFE plan.
There is no minimum balance that you need to maintain in your MediSave Account.
“So… the sky’s the limit,” you ask?
Nope.
For your MediSave Account, the Basic Healthcare Sum is your cap.
Just like the Retirement Sums, CPF adjusts the Basic Healthcare Sum regularly as it has to take into consideration inflation and the rising cost of healthcare.
Since it’s for healthcare needs post-retirement, your BHS will be fixed when you turn 65 years old.
The BHS for individuals turning 65 years old in 2022 is set at $66,000.
| Age in 2022 | Year when Cohort turned age 65 | Cohort's BHS (fixed for life) |
|---|---|---|
| 65 | 2022 | $66,000 |
| 66 | 2021 | $63,000 |
| 67 | 2020 | $60,000 |
| 68 | 2019 | $57,200 |
| 69 | 2018 | $54,500 |
| 70 | 2017 | $52,000 |
| 71 and above | 2016 or earlier | $49,800 |
Looks pretty manageable, right?
But just like the FRS, by the time you turn 65, the Basic Healthcare Sum will definitely be way higher.
“So… how much higher,” you ask?
| 65th Birthday in | Basic Healthcare Sum (BHS) | Percentage Increase |
|---|---|---|
| 2016 | $49,800 | - |
| 2017 | $52,000 | 4.42% |
| 2018 | $54,500 | 4.81% |
| 2019 | $57,200 | 4.95% |
| 2020 | $60,000 | 4.90% |
| 2021 | $63,000 | 4.87% |
| 2022 | $66,000 | 4.65% |
| 2030 | $97,734 | Projected 5% increase p.a. |
| 2040 | $159,198 | |
| 2050 | $259,317 | |
| 2060 | $422,399 |
Looking at the current rate of increase, we’re looking at about an average increase of 4.8% per annum.
Just for the sake of it, let’s say we do a projected increase of 5.0% per annum.
Not so manageable now huh?
Disclaimer: this is JUST a projection, I’m sure the government will make adjustments accordingly
What Happens After I Hit The Basic Healthcare Sum In My MediSave Account?
Topping up your CPF for the purpose of meeting the Full Retirement Sum or other reasons is always a hot topic amongst Singaporeans.
Even if you choose not to make top-ups, and you keep working after your CPF savings are more than sufficient.
It’ll come to a point where you’ll STILL be making mandatory CPF contributions.
So what happens to the money that’s supposed to go into your MediSave?
Where do they all go now that you’ve hit your Basic Helathcare Sum?
| Age | Condition | Account that Mandatory Contributions & Interest Goes To |
|---|---|---|
| Below 55 years old | If you've not met the prevailing FRS in your Special Account | Special Account |
| If you've already met the prevailing FRS in your Special Account | Ordinary Account | |
| 55 years old & above | If you've already met your FRS (or BRS with a property) in your Special Account | Ordinary Account |
Don’t worry guys, your money won’t disappear!
However, it seems like letting your MediSave savings (which get a 4% interest) go to your Ordinary Account (which only gets 2.5% interest) instead seems like you’re being shortchanged…
What Happens If I Don’t Meet The Basic Healthcare Sum?
Remember that you can withdraw some monies from your CPF accounts when you turn 55 years old, depending on your CPF balances?
While the Retirement Sum is something you must hit for your CPF LIFE plan, the Basic Healthcare Sum is more of a good to have…
It’s NOT a must for you to meet it.
So if you can’t hit the BHS for your cohort, it’s fine!
You’re not required to top up with cash to fulfil the BHS when you make your first withdrawal at age 55 or when the BHS is fixed for you at age 65.
Now, just like how we’ve always been saying that you shouldn’t let CPF LIFE be your entire retirement portfolio, the same goes for your healthcare expenses!
Treat the Basic Healthcare Sum like a bonus to supplement the various safety nets you’ve set in place to take care of you in the event that you fall sick.
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