Short answer: Singapore law does not require group medical insurance for every employee. Employers must insure each Work Permit and S Pass holder for at least S$60,000 a year of inpatient and day surgery cover, and carry work injury insurance for manual and lower-paid staff. Group medical cover open to all staff is not taxable for employees.
Group medical insurance in Singapore is a common staff benefit, but owners often mix up what the law requires, what a group policy covers, and how IRAS and the GST rules treat the premium. This guide separates the three: which cover is compulsory for which employees, what to check in a plan, how the premium is taxed, and why GST on most staff medical premiums cannot be claimed.
Key facts at a glance
- Work Permit and S Pass holders: the employer must buy and maintain medical insurance of at least S$60,000 a year for inpatient care and day surgery, and cannot pass the cost to the worker.
- Since 1 July 2023, that cover carries a co-payment of 75% by the insurer and 25% by the employer for claim amounts above S$15,000.
- Work injury compensation insurance is compulsory for all manual workers and for non-manual employees earning S$2,600 or less a month; failing to insure can mean a fine of up to S$10,000, up to 12 months’ jail, or both.
- Under the Employment Act, after 3 months’ service the employer must pay the consultation fee where the MC comes from a public medical institution or a company-appointed doctor and gives at least one day of paid sick leave.
- A group medical policy covering the employee, spouse and children, available to all staff, is not taxable for the employee.
- The company’s deduction for medical expenses, including medical insurance premiums, is capped at 1% of total employee remuneration, or 2% with a portable medical benefits arrangement.
- GST on medical and accident insurance premiums for staff is not claimable unless the cover is obligatory under the Work Injury Compensation Act or a collective agreement.
Raffles Corporate Services works with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice. This article is general information only and is not legal advice.
Is group medical insurance compulsory for Singapore employers?
Not for every employee. The compulsory pieces are narrower: medical insurance for Work Permit and S Pass holders, work injury compensation insurance for certain staff, and paying some consultation fees under the Employment Act.
Everything else is a benefit the company chooses to give. Singapore Citizens and Permanent Residents are covered automatically by MediShield Life, the national basic health insurance scheme, according to the CPF Board. Once you promise a group plan in a contract or staff handbook, it becomes a term of employment, so the wording matters.
| Employee group | Compulsory cover or cost | Source |
|---|---|---|
| Work Permit holders | Medical insurance of at least S$60,000 a year for inpatient care and day surgery, including conditions that are not work-related; details submitted before the permit is issued | MOM work pass conditions |
| S Pass holders | Same S$60,000 minimum, bought before the pass is issued or renewed | MOM work pass conditions |
| Employment Pass holders | MOM’s list of medical obligations does not include medical insurance; sick leave and work injury duties apply as for other staff, and work injury insurance if they do manual work | MOM |
| All manual workers, and non-manual staff earning S$2,600 or less a month | Work injury compensation insurance from a MOM-designated insurer | Work Injury Compensation Act 2019 |
| Employees covered by the Employment Act with at least 3 months’ service | Consultation fee where the MC is from a public medical institution or company-appointed doctor and gives at least one day of paid sick leave | Employment Act 1968 |
| Citizens and PRs generally | No employer insurance duty; covered by MediShield Life | CPF Board |
What must the medical insurance for Work Permit and S Pass holders cover?
At least S$60,000 a year per worker for inpatient care and day surgery, including hospital bills for illnesses that have nothing to do with work. The employer pays the premium.
The MOM page on S Pass medical insurance, and its Work Permit equivalent, set further conditions:
- If the plan has sub-limits, for example for inpatient care, day surgery or per condition, each sub-limit must meet the S$60,000 annual minimum.
- For policies, renewals or extensions starting on or after 1 July 2023, the insurer pays 75% and the employer 25% of claim amounts above S$15,000.
- For those starting on or after 1 July 2025, policies use MOM’s standardised exclusion clauses, premiums are set in two age bands (50 and below, and above 50), and insurers pay hospitals directly once a claim is admitted.
- The employer may agree a co-payment with the worker only if it is reasonable, does not exceed 10% of the worker’s fixed monthly salary, lasts no more than 6 months in every 2 years of employment, and is written into the contract or collective agreement with the worker’s full consent.
MOM accepts a group plan, an individual plan or a rider, if the employer finances it directly and the coverage meets its requirement. Workers in dormitories and certain sectors also need a Primary Care Plan; our guide to medical insurance and the Primary Care Plan for work pass holders covers that.
How is work injury insurance different from group medical insurance?
Work injury compensation (WIC) insurance pays for injuries and diseases arising from work. A group medical plan pays for illness and injury generally. One does not replace the other.
MOM’s work injury compensation insurance rules require cover for every employee doing manual work, whatever the salary, and every non-manual employee earning S$2,600 or less a month, excluding overtime, bonuses, annual wage supplement, productivity incentives and allowances. It applies to local and foreign staff, and since 1 January 2021 policies must come from a MOM-designated insurer. For higher-paid office staff it is optional, but the company still pays any valid claim. Our WICA guide for employers explains claims and compensation limits.
What does a group medical insurance plan usually cover?
Most SME plans combine group hospital and surgical cover with optional outpatient benefits. The insurer’s policy wording, not this list, decides what is paid.
When comparing quotes, check the ward class and annual limit, whether day surgery, GP, specialist, dental and screening benefits are included, whether spouses and children can join, how pre-existing conditions are treated, and what happens when an employee leaves. If work pass holders will be on the plan, confirm their limits reach S$60,000.
Portability is relevant to tax. A Transferable Medical Insurance Scheme (TMIS), which MOM describes as enhanced group hospitalisation and surgical insurance, extends inpatient cover for up to 12 months after an employee leaves. Adopting it for at least 50% of local employees qualifies the company for the higher 2% deduction cap discussed below.
Group medical insurance Singapore: is the premium taxable for employees?
No, if the policy is group medical insurance covering the employee, spouse and children and the benefit is available to all staff. Group life, personal accident and critical illness cover can be different.
IRAS’s page on insurance premiums paid by employers sets out the treatment:
| Premium paid by the company | Employee income tax |
|---|---|
| Group medical insurance (employee, spouse, children), available to all staff | Not taxable |
| Personal insurance policy where the employee is the policyholder | Taxable |
| Group life, personal accident or critical illness policy where the employee is contractually entitled to the payout | Taxable on the premium share, unless the employer uses the concession described below |
| Group life, personal accident or critical illness policy where the employer decides whether to pass on a payout | Not taxable |
| Travel insurance for business travel | Not taxable |
| Work injury compensation insurance | Not taxable |
For the contractually-entitled case, since Year of Assessment 2013 IRAS has allowed an employer to elect not to claim a tax deduction for those group premiums, so that the premiums are exempt for employees. The election is not available to investment holding companies, tax-exempt bodies, or service companies taxed on a cost-plus basis, and it must be applied consistently to everyone on the policy. Otherwise, attribute the premium to each employee on a reasonable basis, such as average premium per head, and report it in Form IR8A. Our guide to tax on employee benefits and Appendix 8A covers the reporting side.
Reimbursed medical and dental treatment is also not taxable if available to all employees, and different limits by grade are accepted. Reimbursed health supplements, contact lenses, spectacles and transport to a clinic are taxable.
Can the company deduct the premium, and is there a cap?
Yes, but medical expenses for employees, including premiums for medical and dental insurance, are deductible only up to 1% of total employee remuneration for the year. The cap rises to 2% with a qualifying portable medical benefits arrangement.
The IRAS business expenses guidance and MOM’s portable medical benefits page list three ways to reach the 2% cap:
- Portable Medical Benefits Scheme: extra monthly MediSave contributions of at least 1% of gross monthly salary, minimum S$16, for at least 20% of local employees and all new local hires in the year.
- Transferable Medical Insurance Scheme, for at least 50% of local employees.
- Paying MediShield Life or Integrated Shield Plan premiums for at least 20% of local employees and all new local hires.
Ad hoc MediSave contributions of up to S$2,730 per employee a year also earn a deduction above 1%, within the overall 2%. Total remuneration includes salaries, allowances, bonuses, directors’ executive remuneration and CPF contributions, but excludes directors’ fees, benefits in kind, medical expenses, Skills Development Levy and Foreign Worker Levy. Our article on the 1% and 2% medical expense deduction cap works through an example.
Can a GST-registered company claim GST on the premium?
Usually not. Regulations 26 and 27 of the GST (General) Regulations disallow input tax on medical and accident insurance premiums for staff unless the insurance or compensation is obligatory under the Work Injury Compensation Act or a collective agreement under the Industrial Relations Act.
In practice, GST on a WIC policy can be claimed if the other conditions are met; GST on a voluntary group hospital and surgical plan generally cannot. IRAS’s list of exceptions does not mention work pass medical insurance, so check the position before claiming GST on it.
How do you set up a group medical plan for your staff?
Decide the scope first, then buy the policy and line up payroll, tax and HR documents with it.
- List your employees by pass type, salary and duties, so you know who needs MOM-compliant medical insurance and who needs WIC insurance.
- Decide the benefits for all staff, keeping a basic benefit common to everyone, and consider whether TMIS or a Shield plan would unlock the 2% cap.
- Obtain quotes through an insurer or licensed broker.
- Write the benefit into contracts or the staff handbook, including what ends when employment ends and any co-payment terms.
- Name your appointed clinics in writing, because the Employment Act consultation fee duty turns on them; see our sick leave guide for employers.
- Code premiums and medical claims to a separate account so the year-end tax computation can apply the cap, and mark GST on staff medical premiums as not claimable.
For CPF, the CPF Board lists reimbursements of medical and dental treatment for employees and their spouse and children as not attracting contributions, while allowances are wages. A fixed monthly “medical allowance” paid in cash in place of insurance is therefore an allowance for CPF purposes. For work pass applications that need the insurance details, our sister site Singapore Employment Agency covers the process. The free tools page has related payroll calculators.
Frequently asked questions
Do I have to give group medical insurance to Singaporean staff?
No law requires it. Citizens and PRs are covered by MediShield Life. You must still meet the Employment Act consultation fee rule and work injury insurance duties.
Can I deduct the work pass holder’s medical insurance premium from their salary?
No. MOM says the insurance cost cannot be passed on to the worker. A limited co-payment on medical bills is allowed only on MOM’s conditions.
Does the 1% cap apply to group medical insurance premiums?
Yes. IRAS lists premiums on medical and dental insurance among the medical expenses subject to the 1% or 2% cap.
Can one group plan cover both local staff and S Pass holders?
Yes, if the employer finances it and the cover for S Pass holders meets MOM’s S$60,000 annual minimum, including each sub-limit.
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Last reviewed: 9 November 2026. The Editorial Team, Raffles Corporate Services.