BHS increase to $52K from 1 Jan 2017

kehyi4

Senior Member
Joined
Aug 31, 2010
Messages
1,420
Reaction score
36
Some simple analysis:

2015 - 48,500
2016 - 49,800 (+2.7%)
2017 - 52,000 (+4.4%)
2018 - 54,500 (+4.8%)

Projections of future BHS might want to take into account the trend of rising rate of increase

Also bear in mind that: "BHS will therefore be adjusted yearly in January to keep pace with the growth in Medisave use by the elderly" (source: MOH)
 

BBCWatcher

Arch-Supremacy Member
Joined
Jun 15, 2010
Messages
20,117
Reaction score
3,014
I expected $54,000 in 2018, so this is a minor surprise.

Please note that, while you can top up your Medisave Account in January, 2018 (and with tax relief), your top up must fit within your CPF Annual Limit of $37,740. The Annual Limit is the total of all your compulsory CPF contributions (employer and employee) plus all your voluntary Medisave and "All 3" top ups (including SA portion). If you bust the CPF Annual Limit then the top up overage will be returned to you in early 2019 with zero interest.

Voluntary top ups directed only to your Special Account (or Retirement Account) do not count toward the CPF Annual Limit.

Anyway, make sure you have a reasonably clear forecast of your CPF Annual Limit for 2018 and whether you have any room below it (and how much). Watch your Medisave Account balance in early January after 2017 interest crediting, then see if you can swoop in with a top up. Good luck!

If your regular monthly salary in 2018 (12 months) is $6,000 or more and if your total variable/bonus salary is $30,000 or more, then (unless you are on new PR reduced contribution rates) you definitely will not have any room below the CPF Annual Limit. As another example, if you earn $10,000/month for 12 months and receive no variable/bonus compensation, then you should have some room below the CPF Annual Limit.
 
Last edited:

iamalwaysin

Senior Member
Joined
Oct 13, 2006
Messages
567
Reaction score
0
Actually the increase is not that much given the 4% interest for Medisave account. The actual real increase is less than 1%
 

BBCWatcher

Arch-Supremacy Member
Joined
Jun 15, 2010
Messages
20,117
Reaction score
3,014
Actually the increase is not that much given the 4% interest for Medisave account. The actual real increase is less than 1%
I guess you could look at it that way if you're somebody who has already hit the Basic Healthcare Sum. Another way to look at it is that the government is raising the cap fairly aggressively, and that's a good thing because it means you can save that much more into an account paying above market interest. Within reason, I certainly don't think it's bad. The BHS is not an obligation, just a limit to that subaccount.

I don't actually know how Medisave interest crediting works. I know the bonus interest is credited into the Special Account. I assume the 4% Medisave interest is credited after the BHS is raised each year. Is that correct?

If that is correct, for those of you lucky to have $52,000 in your Medisave Accounts for all of 2017, you should wake up on January 1, 2018, and see $54,080 in your Medisave Account, to reflect the 4% interest on $52,000 for all 12 months. (OK, it might be a dollar or two less than that since you probably weren't able to get interest credit on the full $52,000 in January, 2017, but it'll be close.) So then you might be able to swoop in and add $420+, to get you back up to the new BHS ($54,500). A $420 top up is not a tremendously big one, no -- you might have that much room (or more) below your CPF Annual Limit. If you can get that little bit more of tax relief, sure, great idea.
 
Last edited:

luvalist

Senior Member
Joined
Feb 8, 2006
Messages
1,743
Reaction score
15
If I rem correctly, the interest will go to SA and have to reaccumulate for the new ceiling
 

kehyi4

Senior Member
Joined
Aug 31, 2010
Messages
1,420
Reaction score
36
... I assume the 4% Medisave interest is credited after the BHS is raised each year. Is that correct?
From my personal experience:

Interest is credited before the limit is raised, even if the actual crediting takes place a few days into the new year. Any amount above the old BHS is transferred (to SA or OA as the case may be), then the new BHS is applied
 

BBCWatcher

Arch-Supremacy Member
Joined
Jun 15, 2010
Messages
20,117
Reaction score
3,014
Interest is credited before the limit is raised, even if the actual crediting takes place a few days into the new year. Any amount above the old BHS is transferred (to SA or OA as the case may be), then the new BHS is applied
OK, interesting (for those at the BHS limit). So there's a window when a $2,500 top-up is possible (difference between 2018 and 2017 BHS), assuming the CPF Annual Limit is respected.

Do you happen to know if you must wait for the December payroll cycle's compulsory contribution to hit Medisave? Or is it OK for those in this situation to rush in before the December cycle pops up? I haven't really understood that part of CPF, ever -- whether (for purposes of limits, like the CPF Annual Limit and BHS) CPF goes by when CPF receives the funds or how the funds are "tagged" with the payroll month.
 

elnewbie

Senior Member
Joined
Nov 1, 2015
Messages
2,121
Reaction score
1
No, interest for this year is credited before the BHS is raised. Its on Dec 31st on the cpf statement.

I guess you could look at it that way if you're somebody who has already hit the Basic Healthcare Sum. Another way to look at it is that the government is raising the cap fairly aggressively, and that's a good thing because it means you can save that much more into an account paying above market interest. Within reason, I certainly don't think it's bad. The BHS is not an obligation, just a limit to that subaccount.

I don't actually know how Medisave interest crediting works. I know the bonus interest is credited into the Special Account. I assume the 4% Medisave interest is credited after the BHS is raised each year. Is that correct?

If that is correct, for those of you lucky to have $52,000 in your Medisave Accounts for all of 2017, you should wake up on January 1, 2018, and see $54,080 in your Medisave Account, to reflect the 4% interest on $52,000 for all 12 months. (OK, it might be a dollar or two less than that since you probably weren't able to get interest credit on the full $52,000 in January, 2017, but it'll be close.) So then you might be able to swoop in and add $420+, to get you back up to the new BHS ($54,500). A $420 top up is not a tremendously big one, no -- you might have that much room (or more) below your CPF Annual Limit. If you can get that little bit more of tax relief, sure, great idea.
 

heng_ah

Arch-Supremacy Member
Joined
Sep 10, 2015
Messages
10,314
Reaction score
1,138
So, if someone already hit BHS, he/she has only little window to play, taking into the consideration of:

(a) MA Interest crediting for 2017. Value date is 31 Dec 2017 (but actual amount only will be known a few days later).

(b) CPF mandatory contributions for Dec, which usually will be credited on the first week of the Jan.

Amount for MA voluntary contribution will be $2500 minus (a) estimated interest amount of MA in 2017.

Must be done on Jan 1, else will be hit by (b).
 

zumaba

Senior Member
Joined
Jul 4, 2012
Messages
2,298
Reaction score
20
If your regular monthly salary in 2018 (12 months) is $6,000 or more and if your total variable/bonus salary is $30,000 or more, then (unless you are on new PR reduced contribution rates) you definitely will not have any room below the CPF Annual Limit. As another example, if you earn $10,000/month for 12 months and receive no variable/bonus compensation, then you should have some room below the CPF Annual Limit.

For the CPF Annual Limit of $37,740, the income cap of $102K (6Kx12+30K) is only for those below 55 yrs old with 37% contribution. For thsoe above 55+ with 26% contribution, the income cap is $145K.
 

henrylbh

Arch-Supremacy Member
Joined
Mar 9, 2004
Messages
15,777
Reaction score
702
OK, interesting (for those at the BHS limit). So there's a window when a $2,500 top-up is possible (difference between 2018 and 2017 BHS), assuming the CPF Annual Limit is respected.

Do you happen to know if you must wait for the December payroll cycle's compulsory contribution to hit Medisave? Or is it OK for those in this situation to rush in before the December cycle pops up? I haven't really understood that part of CPF, ever -- whether (for purposes of limits, like the CPF Annual Limit and BHS) CPF goes by when CPF receives the funds or how the funds are "tagged" with the payroll month.

From what I know -

Interest is earned and credited on 31 Dec and if the sum of BHS plus interest exceed 52k, the difference would be transferred to OA/SA and you start off the year 2018 with 52k.

Your Dec's contribution would normally be credited sometimes in Jan. But that contribution would be considered to determine 2017 contribution limit.

As such you can top up 2500 in early Jan 2018 to the new ceiling before Dec's contribution is credited in Jan. If after, the gap is smaller. Subsequently, mandatory contributions in 2018 would flow into OA/SA since BHS is at limit.

If your mandatory contributions in 2018 (including Dec's 2018 credited in Jan 2019) hit 2018 annual limit, your top up of 2500 will be refunded. But I don't know whether those MA contributions that went to OA/SA because of the ceiling would be reversed or reinstated.
 
Important Forum Advisory Note
This forum is moderated by volunteer moderators who will react only to members' feedback on posts. Moderators are not employees or representatives of HWZ. Forum members and moderators are responsible for their own posts.

Please refer to our Community Guidelines and Standards, Terms of Service and Member T&Cs for more information.
Top