I’m sure you’re familiar with the Basic Retirement Sum, Full Retirement Sum and Enhanced Retirement Sum by now…
But I bet this is a Sum that you don’t really know about!
CPF has just announced the latest Basic Healthcare Sum for individuals turning 65 in 2021 and it’s currently set at $63,000.
Mmhmm, I see question marks popping around you, so here’s a quick summary of the Basic Healthcare Sum.
TL;DR – All You Need To Know About Your Medisave Account’s Basic Healthcare Sum
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, which I’d say is a good thing, since it’s most likely mean that you’re very healthy and didn’t have to make use of it!
But yes, 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.
Sky’s the limit, then?
Nah, for your MediSave Account, the Basic Healthcare Sum is your limit.
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 2021 has recently been set for $63,000.
| Age in 2020 | Year when Cohort turned age 65 | Cohort's BHS |
|---|---|---|
| 64 | 2021 | $63,000 |
| 65 | 2020 | $60,000 |
| 66 | 2019 | $57,200 |
| 67 | 2018 | $54,500 |
| 68 | 2017 | $52,000 |
| 69 & 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.
| 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% |
| 2030 | $97,734 | Projected 5% increase p.a. |
| 2040 | $159,198 | |
| 2050 | $259,317 | |
| 2060 | $422,399 |
Ahem, don’t come knocking on my door many years later, okay, the amounts above are based on a projected increase of 5% per annum.
The rate of adjustment might change in the future based on healthcare trends, but it’s good to have a rough estimate to work towards.
What Happens After I Hit The Basic Healthcare Sum In My MediSave Account?
Haven’t you heard?
Topping up CPF for the purpose of meeting the Full Retirement Sum or other reasons seems to be one of the most popular topics of late!
So it’s hardly a surprise that the younger generation will eventually be able to meet the Basic Healthcare Sum before they reach age 65.
And I’m just assuming here that you’ll still be working even if your CPF savings are more than sufficient, which means you’ll still be making mandatory CPF contributions.
So the contributions that are supposed to go into your MediSave, where do they go?
| 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!
Though it seems like letting your MediSave savings with a 4% interest go to our Ordinary Account with a 2.5% interest instead may be somewhat of a downgrade?
Remember, plan your top-ups wisely!
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…
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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