MediShield Life or Integrated Shield Plan? How about riders? What are your health insurance options
SINGAPORE – Singaporeans are not using their health insurance plans fully, with about half of those with Integrated Shield Plans (IPs) going for subsidised care in public hospitals.
As Health Minister Ong Ye Kung previously noted, these patients needed only MediShield Life and hence could have saved a lot on IP premiums.
An IP provides additional coverage for stays in private hospitals, or in Class A and B1 wards in public hospitals.
This is on top of MediShield Life – the universal health insurance for all Singaporeans, regardless of their health status – which covers stays in B2 and C wards at public hospitals.
Dr Cynthia Chen, assistant professor at the Saw Swee Hock School of Public Health, said IPs also allow higher claim limits, so more of the healthcare bill will be covered by the IP insurer.
There are seven such insurers: AIA, Prudential, Great Eastern, HSBC Life, Singlife, Income and Raffles Health Insurance.
In order to decide on whether you want to take up an IP or go for basic medical care under MediShield Life, you should consider your preference for hospital and treatment options, said Mr Chan Wai Kit, executive director of the Life Insurance Association of Singapore (LIA Singapore).
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For instance, do you want to stay in a public or private hospital? Do you want to choose your own doctor?
In addition, there are benefits to getting more comprehensive health coverage while we are young, said Dr Chen.
Most of us would be healthy with no pre-existing conditions, so the insurer would cover most of our hospital admissions.
However, as we age, we are more likely to develop ailments and the insurer will exclude these health conditions from the coverage or charge very high premiums.
So when you buy early, you are locking in your health status, Dr Chen said, adding that if anything happens to you, you are more likely to be covered.
“Ultimately, it boils down to affordability; how are your finances,” said Professor Sumit Agarwal, who specialises in finance, economics and real estate at NUS Business School.
Prof Agarwal noted that one might not want to spend on comprehensive insurance coverage if it affects day-to-day living. In such instances, maybe the bare minimum is enough.
Ms Helen Shen, group head of life and health at Singlife, said you also have to consider if you can afford the premiums over the long term, as IP coverage tends to get more expensive as we age.
IP premiums can be deducted from MediSave, up to a cap/additional withdrawal limit and provided you have enough in your account. The remaining premiums will have to be paid in cash.
The additional withdrawal limit is $600 for someone between 41 and 70 years old, and $900 for someone aged 71 and above.
Private insurers also offer riders to limit your out-of-pocket hospital expenses.
Dr Chen said these riders cover the deductible, which is payable once every year, before you can start receiving payouts from your insurance policy.
The riders also have a co-payment feature, where you generally co-pay between 5 per cent and 10 per cent of the bill, she added.
Most insurers have capped the co-pay amount at $3,000 per policy year, but the policyholder has to consult their panel of doctors.
This essentially means that an IP policyholder with a rider could pay as little as $3,000 from his own pocket for his stay in hospital.
A Great Eastern spokesperson added that IP riders provide more coverage for cancer, such as higher claim limits for treatments on the Cancer Drug List as well as coverage for those not on the list.
It may give us peace of mind to get the most comprehensive coverage, but Mr Manu Tandon, chief health officer at HSBC Life Singapore, said it is important to remember that the premium for riders cannot be paid with MediSave.
Dr Chen said you have to ask yourself if you can fork out cash for a rider, which generally costs $1,000 to $2,000 a year, bearing in mind that rider premiums also increase sharply with age.
Dr Akshar Saxena, assistant professor at Nanyang Technological University’s School of Social Sciences, said riders encourage people to consume more healthcare than necessary because the healthcare services are cheap.
“Somebody has to pay for this extra consumption and the cost is distributed among all the insured people, so the insurance premiums for everybody else goes up,” he said.
LIA’s Mr Chan said IP insurers are working closely with the Ministry of Health to address inappropriate claims and to minimise over-treatment, over-prescription and over-consumption by introducing initiatives such as pre-authorisation and panel providers.
Pre-authorisation requires policyholders to obtain approval for medical treatment prior to the actual procedure. Because policyholders know in advance how much their insurer will cover, they can make more informed care and treatment decisions.
IP insurers also have health panel doctors who have entered into a contract with them to consult patients at predetermined rates, usually at a discount to their usual fees.
Some IP insurers, such as AIA, Great Eastern, Singlife and Prudential, have tried different forms of claims-based pricing as another approach to manage claims.
A Prudential Singapore spokesperson said the insurer was the first to introduce claims-based pricing in 2017.
The practice encourages customers to stay healthy as those who do not make a claim during the review period can enjoy a premium discount.
If they make a claim, their premiums may go up, depending on the claim amount and the choice of healthcare provider.
Ms Irma Hadikusuma, chief marketing and proposition officer of AIA Singapore, said AIA adopts a deductible waiver pass feature to mitigate costs and promote responsible healthcare consumption.
The insurer will waive the $2,000 deductible on the first private hospital claim. Over the next three consecutive policy years, if there are no private hospital claims, the insurer will waive the $2,000 deductible again from the subsequent policy year.
Great Eastern’s claims-adjusted pricing approach covers customers for larger bills, while the smaller bills come out of their own pockets.
Singlife offers a 15 per cent discount on premiums if a policyholder has a maximum claim of $1,000 in the prior two years.
Prudential, which has taken the claims-based pricing approach for seven years, said the practice was instrumental in helping it to improve its underwriting performance.
Singlife’s Ms Shen said it is too early to conclude if no-claims discounts or claims-based pricing will help to slow down medical inflation.
Income Insurance, for one, is not adopting the practice. A spokesperson said it wants to safeguard policyholders against a surge in rider premiums post-claims. This could happen if a policyholder enjoys a claims discount in one policy year and in the next year, he has no discount and must pay more premiums because he made a claim.
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