Who is paying for juniors’ MediShield Life premiums? The straight and simple answer is the Government. Yup, you heard right. Through the MediSave Grant for Newborns, the Government is helping to pay juniors’ MediShield Life premiums.
The Government has it all thought out. Before implementing MediShield Life in 2015, they introduced MediSave Grant for Newborns in 2012.
Every Singapore citizen newborn receives a MediSave Grant of $4000. Upon registration of a child’s birth, the government opens a CPF MediSave account for the child. The grant is credited automatically into this account.
The MediSave Grant and the 5% compound interest it earns a year are enough to pay for MediShield Life premiums until the child is 21.
MediSave Grant for Newborns (MGN)
Introduced on 26 Aug 2012, MGN started at $3000. Subsequently, the government enhanced it to $4000 for citizen babies born from 1 January 2015. Children who are non-citizen at birth but obtained Singapore citizenship before 2 years old receive pro-rated amounts. This pro-rated amount is based on the age when the child became a citizen.
MediSave account earns 5% interest per annum for juniors
No kidding. This is the interest rate for juniors’ MediSave account. And it’s compound interest.
The floor rate for MediSave Account (MA) is 4%. CPF pays an extra 1% interest for a combined balance (OA + SA + MA) of up to $60,000. Hence, for children, their MA earns an extra 1% interest making it 5% altogether.
Here’s how much a Singaporean child has to pay in MediShield Life premiums a year.
The revised premium is $145 a year – before subsidies.
At 5% interest a year, the interest earned on $4000 MediSave grant is $200.
This is higher than the annual premium before subsidies. With premium subsidies, the actual amount paid by each child is less than $145 a year. For the lower income families, the premium is $101 after subsidy.
The interest alone is more than enough to pay for premiums. There is even interest left over to grow with compound interest.
Free vaccinations and childhood developmental screening
Let’s not forget that children under 18 receive free vaccinations. These vaccinations are those recommended under the National Childhood Immunisation Schedule (NCIS).
With free vaccinations, unless a child is born with a weak disposition or medical conditions, there is little chance of the child depleting his/her MediSave money.
Who is eligible for the MediSave grant?
All babies who are Singapore citizens are eligible for the MediSave Grant for Newborns (MGN). They include adopted children as well as children born to divorced or unwed mother. Children who are born overseas qualify for the grant upon registration of their birth with ICA directly or through relevant Overseas Missions.
A brilliant and thoughtful idea
See the picture now? MGN is a thoughtful and brilliant idea.
It helps ensure every newborn start out in life with enough MediSave to pay for their MediShield Life premiums from birth till 21. It provides healthcare insurance for children without putting any financial strain on their parents. Parents have peace of mind knowing that their children’s healthcare needs are being supported.
Measures like free vaccinations and the MGN are part of efforts to make Singapore the best and safe place to bring up a child.