Recently there has been a lot of attention on medical and hospitalisation coverage, especially with the news of the health minister’s $8 heart bypass operation. Some people feel that he must have spent a lot on his insurance or have special back up plans to enjoy such comprehensive coverage.
On the contrary, the health minister’s coverage is in fact highly affordable to the average working singaporean and did not even involve any cash premiums!
How can average singaporeans enjoy comprehensive hospitalisation coverage without paying through the roof? What are the 3 key things you need to watch out for in your hospitalisation plans?
1. Does the plan have any sub limits or does it provide “as charged” coverage?
Most working Singaporeans with Medisave accounts will be covered with Medishield, a basic catastrophic medical insurance coverage that covers for hospitalisation bills in Class B2/C. The basic Medishield comes with specific sub-limits for various hospitalisation items e.g daily ward and treatment charges and surgical operations. What the sub limits mean to you, is that you can only claim up to the limits for each item, so the total amount you can claim may end up significantly lower than what you incurred.
Nowadays you can opt to upgrade your basic Medishield plan to “As-Charged” plans by purchasing a supplement Medisave Approved Integrated Shield Plans which are offered by private insurers. With an “as-charged” plan, it means you can submit your entire hospitalisation bill for claim, without being restricted to sub limits, except for the deductible and co-insurance portion which will be addressed later.
With the as-charged feature, a significant portion of the bill can be covered can be absorbed by the Shield plan. Such private shield plans also provide comprehensive coverage for private hospitals and for stays in Ward A/B1.
The best part is that you can purchase these Integrated Shield plans without forking out cash as the premiums are payable from Medisave, up to a limit of $800/yr per policy holder. You can also use your Medisave to pay for your parents’ Shield plans.
The health minister shared in his blog post that “In my recent bypass surgery, my hospital bill was largely paid by MediShield and a private Shield supplement. Medisave took care of my co-payment of the bill.” Talking about co-payment that brings me to the next section
2. Do you need to pay for any coinsurance or deductibles?
Shield plans typically come with co-payment components, consisting of annual deductibles and co-insurance, which must be self borne.
So what exactly are deductibles and co-insurance payment?
Annual deductible is the first $X of your hospitalisation bill that has to be self paid before the rest can be reimbursed. It is similar to the excess that is incurred for car insurance. The annual deductible amount varies depending on the ward that you stay in, ranging from $1000 in Class C to $3000 in Class A. The deductible payment is on an annual basis, meaning if you were hospitalised twice in a year and already incurred the full deductible amount in the first bill, you do not need to pay any more deductibles for the 2nd hospitalisation bill.
Co-insurance refers to 10% of the remaining bill after paying for the deductible which must also be paid out of your own pocket. The 10% co-insurance can become significant if the hospitalisation bill is very large; while the annual deductible is a fixed amount of initial payment.
For example, if you have an as-charged shield plan, assuming your hospitalisation bill is $10,000 and you stayed in a Class A ward, you would have to incur $3000 (annual deductible) + $700 (10% of balance $7000, after deductible). Your total out of pocket cost would be $3700 while the rest can be claimed under your as-charged shield plan. You can opt to pay for the co-payment charges by Medisave, subject to a limit, depending on the type of medical conditions and your Medisave account balance.
If you wish to minimise the out of pocket co-payment, there are cash riders available to cover for the co-insurance and/or deductible payments, so effectively you don’t have to fork out a single cent for your hospitalisation bills.
3. Is the plan portable?
Some working adults feel that their employer offers them adequate medical coverage and hence they can save the premiums on their own plan. While group insurance can be affordable and provides some coverage, most of the plans are not portable. This means that the plan only covers you while you are employed by the company, but the coverage will end once you leave the company.
Don’t wait till you develop a medical condition
In the event that you developed a medical condition while covered under the company’s insurance and subsequently leave the company, you may not be able to secure your own medical coverage by that time. This is because your medical history will be treated as a pre-existing condition which may be excluded or declined by the insurer.
So it’s always safer to lock in your own insurability and secure your personal medical insurance coverage while you are young and healthy. Having your own medical insurance plans will ensure proper coverage regardless of occupation or job changes. Most Shield plans are also guaranteed renewable, so you do not have to worry about the insurer refusing to cover you due to subsequent bad health or claims.
Some things to note
Take note that most Shield plans are on a reimbursement basis, meaning you pay first and then claim back from the insurance company.
Hospitalisation expense plans typically do not pay out more than what you incurred, regardless of the number of policies you have. Hence it would be wise to review your current hospitalisation plans to check if you are paying for multiple plans with overlapping benefits.
The purpose of a hospitalisation plan is to pay for the medical bills during hospitalisation and to minimise our capital outlay. This forms an essential and fundamental piece in your protection plan. Besides hospitalisation coverage, another important component to consider in your medical insurance coverage is critical illness protection. Critical illness plans will pay out a lump sum upon diagnosis of critical illness to cover for the loss of income and other treatment expenses not covered under the hospitalisation plans.