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How is the 2002 Individual Medical Account liquidated and how is the 2003 Individual Medical Account validated?
(02.21.2008)

Q: Which insurance participants shall have their Individual Medical Accounts liquidated as required?

A: All insurance participants (except for those who canceled or liquidated their Individual Medical Account and terminated their related social insurance) that opened a Individual Medical Account in the 2002 Medical Insurance Year (from January 1, 2002 to March 31, 2003) shall have their account liquidated as required.

Q: What is included in the liquidation of a Individual Medical Account?

A: The liquidation of a Individual Medical Account includes 3 parts: a calculation of the amount to be added in or deducted from the Individual Medical Account according to the participant’s actual private payments; a calculation of the amount to be added to the Individual Medical Account according to the average annual employee salary in Shanghai of the past year; and the remaining amount in the Individual Medical Account at the year-end. Based on these 3 parts, the liquidation of a Individual Medical Account in the 2002 Medical Insurance Year can be worked out.

Q: How is the liquidation of the Individual Medical Account calculated?

A: The liquidation of the Individual Medical Account at the year-end equals (=) the actual added-in amount minus (-) the expected amount plus (+) the remaining amount in the Individual Medical Account in the 2002 Medical Insurance Year

Definitions

1. Actual expenses

Based on the actual private payment(s) and the average annual employee salary in Shanghai in 2001 and 2002, the actual added-in amount of the Individual Medical Account is calculated according to the ratio as required in the medical insurance procedures.

2. Expected amount

The amount in the Individual Medical Account that was calculated according to the base at the time of the participant buying the Medical Insurance at the beginning or in the middle of 2002.

3. Remaining amount

The amount in the Individual Medical Account (namely the unused amount in the Individual Medical Account) by 0:00 AM on March 31, 2003.

Q: What are the proper processes for liquidating an Individual Medical Account?

A: At 0:00 AM on March 31, 2003, interest shall be added to the liquidation of an Individual Medical Account generally according to the rate at 1.98%, which is the rate for a 1-year fixed bank deposit at present. The liquidation of an Individual Medical Account in the 2002 Medical Insurance Year, plus the interest, shall be added to the accumulative balance in the Individual Medical Account in the 2003 Medical Insurance Year (from April 1, 2003 to March 31, 2004) to be carried forward.

Q: How is the accumulative balance in the Individual Medical Account used?

A: The accumulative balance in the Individual Medical Account is used in 2 situations. In the first case, it is used after clinical or emergency medical expenses in the Individual Medical Account of that year have been used up.

In the second case, it is used to pay for the expenses accumulated at one’s private cost for hospitalization, clinical treatment for severe illness, hospital emergency treatment, or at-home medical treatment.

Q: What are the standards for calculating the Individual Medical Account in the 2003 Medical Insurance Year?

A: For a currently-employed person, the Individual Medical Account is calculated as the summed-up total of 12 months with the monthly average of his/her salary as at February 2003, and is added to his/her Individual Medical Account in advance. For a currently-employed person or a retiree, the part in his/her Individual Medical Account that is calculated on the basis of the average annual employee salary in the previous year in Shanghai, shall take the average annual employee salary in the previous year in Shanghai as the base for calculation. As every currently-employed person has different private payment amounts, different age segments and different remaining amounts in their Individual Medical Accounts, each individual will have different actual amounts in their Individual Medical Accounts.

Q: What is the standard age to calculate the Individual Medical Account?

A: The standard is the actual age on January 1, 2003.

Q: When will the Individual Medical Account be added in the 2003 Medical Insurance Year?

A: Based on the above calculation standards, the Individual Medical Account in the 2003 Medical Insurance Year will be added at 0:00 AM on April 1, 2003. If the employee discontinues making private payments or handles the procedures of retirement in the 2003 Medical Insurance Year, the Individual Medical Account will be processed along with its liquidation on April 1, 2004.

Shanghai Municipal Medical Insurance Bureau

March 28, 2003