August 24th, 2012

Make income tax relief and MediShield more inclusive

In response to calls for public consultation on proposed changes to the Income Tax (Amendment) Bill and MediShield, AWARE submitted the following recommendations

Give caregivers income tax relief

The Ministry of Finance recently sought public feedback on 30 proposed legislative amendments under the draft Income Tax (Amendment) Bill 2012.

One of the key changes in this Bill is Enhancements to the Earned Income Relief (EIR). As an incentive for the elderly and handicapped persons to stay employed, they will be eligible for up to $8,000 and $12,000 of EIR respectively.

EIR refers to the sum that is deducted from an individual’s taxable income, thus resulting in lower tax payments.

AWARE suggests that the Enhancements to the Earned Income Relief be expanded to include caregivers who return to the workforce after leaving to care for dependents.


1. Leveling the playing field for female caregivers

Caregiving in Singapore is significantly gendered. A recent study found that caregiving at home is carried out mainly by female family members (excluding domestic help): 43% by daughters, compared to 17% by sons; and 12% by wives, compared to 3% by husbands.

Dropping out of paid employment affects women adversely. Although year-on-year growth of women’s average net CPF balance has been increasing, the CPF balance of females has been consistently lower than that of males over the last 15 years.

The significant difference in CPF between men and women, greater in the age groups of 46 – 50 and 51 – 54, is probably due to women dropping out of the workforce. 2011 labour statistics show that women make up nearly two-thirds of economically inactive residents in Singapore.

Women are also earning less than men, and at retirement have less than half of the CPF that men have. This means women also have less Medisave, which may be insufficient for their medical bills. Singapore women are living longer than men. The combination of insufficient Medisave and increasing health needs of the elderly impacts drastically on older women.

Expanding the scope of the Enhancement to the Earned Income Relief to caregivers will thus help compensate women for the income and CPF they would have lost by leaving the workforce to care for their dependents.

2. An incentive for caregivers to return to the workforce

Extending EIR to caregivers will align with other policies that seek to attract caregivers, especially women, to return to the workforce after leaving it. This will tap our latent pool of local manpower.

To ensure affordability and sustainability, we suggest that caregivers returning to the workforce receive EIR for the same number of years that he or she has been out of the workforce.

For EIR to work effectively as an employment incentive for caregivers, we believe that the current allocation of EIR according to age group should be re-examined.

Under the current Enhancements, the elderly and handicapped are eligible for a larger sum of EIR if they are older. In the case of the elderly, for example, those below 55 can receive up to $1,000, while those aged 55-59 can receive up to $6,000, and those aged 60 and above can receive up to $8,000.

AWARE suggests that in the case of caregivers returning to the workforce, the same amount of EIR should be given uniformly to the three different age groups of below 55, 55 – 59, and 60 and above.

Most women who drop out of the workforce to care for dependents are in the below 55 group. To encourage these women to return to the workforce as soon as possible, substantial EIR should be given to them at an earlier age.

Extend MediShield coverage by risk-pooling across the population

The Ministry of Health also recently sought public feedback on proposed changes to the MediShield scheme. These include considering an extension of MediShield to cover congenital and neonatal conditions.

AWARE applauds this proposed extension. Singapore’s healthcare system is internationally acclaimed, but the current exclusion of neonatal and congenital defects is in stark contrast to other Commonwealth countries. In the UK, Canada and Australia, health care of children with neonatal and congenital defects is covered by the National Health Service and Medicare respectively after registration of the baby.


Increasing access to treatment for crucial birth defects would further improve Singapore’s already very low infant mortality rate, indeed the lowest in the world. It would also improve the quality of life for children in need.

Neonatal and congenital defects occur through chance, happening to only two out of the 110 babies born daily. As calculated by the CPF Board, the extension of coverage to children with neonatal and congenital defects would mean an increase in premium for those aged 1-20 years of not more than $12 a year or less than $1 a month.

But there may be poor families who cannot afford even this slightly increased premium and who may thus opt out from the scheme. AWARE suggests that the increase in premium for the extended coverage be further decreased through sharing by the general population, instead of limiting it only to those 20 years old and below. The increase in premium will thus be negligible for everyone, but will bring Singapore a step closer to being a truly inclusive society, supported by a universal health care system.

Risk pooling across the whole population is a necessary evolution to include all citizens, with no exclusion of those born with neonatal and congenital illness or those who live over the age of 90. Risk pooling across the whole population would also make Medishield more affordable to ageing citizens, as their premiums will not become unaffordable as they age, even if they are covered by Medishield in principle.

As Singapore continues to build trust and harmony among citizens, as stated by PM Lee on National Day, it is only fitting that all citizens should share the responsibility of taking care of young and old. Worries over an increase in premium therefore do not constitute grounds for rejecting this extension of coverage. 

Without MediShield coverage, families who would otherwise be celebrating the birth of a baby find themselves saddled by an immense financial burden, which can reach six-digit figures on average. Many families cannot afford the hefty sums needed to save or ameliorate the life-chances of their children. Even private insurance schemes may not be available to them as many insurance companies reject coverage of those with pre-existing health defects.

Therefore, the extension of MediShield to help such families is necessary as Singapore evolves into an inclusive society that leaves no one behind.

Read our full submissions here and here.

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