If you didn’t know yet, the basic healthcare sum (BHS) will increased from S$57,200 in 2019 to S$60,000 in 2020. This means that I have to prepare S$2,800 in cash to top up my Medisave Account (MA) in January 2020.
Based on information from the CPF website, monies in the Medisave Account (MA) and Special Account (SA) earns up up to 5% interest rate per annum. Monies in the Ordinary Account (OA) earns up to 3.5% interest per annum.
With the increase in limit for the basic healthcare sum (BHS), we can take the opportunity to top up our Medisave Account (MA) using cash.
There are several benefits of hitting the limit (S$60,000) of your Medisave Account:
- Tax rebates if you use cash to top up your Medisave Account (MA).
- When you have max out your Medisave Account (MA), your monthly CPF contribution from your salary and employer gets overflown over to your Special Account (SA). The Special Account (SA) earns you a higher interest of 5% per annum. If your Special account (SA) have met the Full Retirement Sum (FRS), the monies will overflow to your Ordinary Account (OA) which earns you a 3.5% interest rate per annum.
So for those that will be receiving your 13th month bonus or Annual Wage Supplement (AWS), do prepare to set aside S$2,800 if you are planning to top up your Medisave Account (MA).