Protect yourself against hefty medical bills
Take charge of your healthcare needs before it takes charge of you!
BY: Kee Siew Poh
By 2030, about one in five Singaporeans will be above the age of 65. Old age support ratio, which is the ratio of working age population to elderly population, has also been declining over the years. In 1970, the old age support ratio was 17, which means there were 17 residents aged 15 to 64 years for each resident aged 65 years and up. In 2011, this ratio has declined to only 7.9.
With increasing life expectancy and rising healthcare cost, how are seniors protecting themselves against hefty medical bills? To help Singaporeans pay for their medical expenses, the Government has put in place a financing framework, which consists of Medisave, MediShield and Medifund, widely known as the 3Ms.
For needy Singapore citizens who are not able to pay for medical expenses, Medifund is an endowment fund set up by the Government. It is a safety net for those who are unable to afford the subsidised charges at restructured hospitals even with Medisave and Medishield. For the vast majority, reliance will be mainly on Medisave, Medishield and private medical insurance schemes.
What is MediShield?
MediShield is a basic catastrophic medical insurance for Singaporeans and Singapore PRs. It helps insured members co-pay large hospital bills from prolonged hospitalisation and approved outpatient treatments which may not be sufficiently covered by their Medisave balance.
Is MediShield adequate for all forms of hospitalisation?
Hospital bills at the Class B2/C levels are generally affordable as there are heavy Government subsidies of up to 80 percent. However, with Means-testing, higher-income patients who choose to stay in Class B2/C wards are subsidised less than lower-income patients.
What if a patient chooses to stay in Class A ward; will MediShield be adequate?
|Hospital Bill||35 percent of hospital bill||MediShield|
|Room & board (18 days)||S$7,500||($7,500 x 35% =) S$2,625||S$2,625|
|Surgical procedure (Table 5C*)||S$5,000||S$840|
|Surgical implants||S$4,000||($4,000 x 35% =) S$1,400||S$1,400|
|MediShield payout||S$2,785 (17%)|
(* For the surgical limit, different limits apply to different tables. Surgery could be table 1, 2 or 3, etc and there will be different limits that apply based on the respective table. For table 5C, the sub-limit is at S$840.)
The example above is for hip replacement surgery for a patient warded in Class A. As the patient stayed in a Class A ward, the claimable amount is based on 35 percent of his bill as MediShield is for hospitalisation at subsidised Class B2/C wards. Thus, bills incurred in Class B1 and above, or those incurred at private hospitals, are pro-rated and not fully covered. If you do not choose your medical coverage properly, you will end up having to pay a large part of the hospitalisation bill; in this case, MediShield only covered 17 percent of the member’s total hospitalisation bill. If the bill had been larger at S$100K, the amount to be borne out of one’s own pocket would have been heftier at S$83K.
As MediShield is basic insurance, it covers members most effectively for hospitalisation at the B2/C class wards in approved medical institutions, instead of A class wards. MediShield premiums are very affordable, ranging from S$33 (for those below 30 years old) to S$462 (for those aged 74 to 75 years old) a year and the premiums can be paid from one’s Medisave account.
For those who intend to stay in higher ward, e.g. Class A ward, and would like to have a wider medical coverage, what are the factors to consider?
1. As-charged coverage vs coverage with sub-limits
|Impatient & day surgery benefits||
Plan A (S$)
Enhanced Income Shield
|Daily ward & treatment charges||690||1,000||As charged|
|Daily ward & treatment charges in ICU||1,100||1,500||As charged|
|Surgery||500 – 7,800||600 – 9,400||As charged|
|Surgical implants||7,000||11,000||As charged|
|Gamma knife||12,600||12,600||As charged|
This chart shows three types of MediShield-approved integrated shield plans offerred by the same private insurer, NTUC Income. The key difference lies in two words – “as charged”. For plans where coverage comes with sub-limits such as the NTUC IncomeShield Plan MA, the maximum amount claimable for surgery, for instance, is capped at S$7.8K. For the as-charged plans, such as NTUC Enhanced IncomeShield Plan Advantage, as-charged coverage would mean that one would be covered for the medical expenses up to the amount incurred or the annual limit of S$400K, subject to a few other factors which we will be discussing below.
At present, there are altogether five private insurers which offer “as-charged” coverage for some of their plans, which include NTUC Income, AIA, GE, Prudential and Aviva.
2. Deductible & co-insurance
A deductible amount of S$3K for a Class A ward stay would mean that up to the first S$3K of any hospitalisation bill incurred would not be covered. A co-insurance of 10 percent would mean that patients would have to pay 10 percent of the bill incurred after taking into account the deductible amount. For wider medical coverage, one may wish to ensure that both the deductible and co-insurance amounts are taken care of.
3. Pro-ration factor
|GE SupremeHealth Plan P Plus||–|
|GE SupremeHealth Plan A Plus||70% for private hospitals|
|Prudential PruShield Plan A Premier||–|
|Prudential PruShield Plan A Plus||65% for private hospitals|
|AIA Health Shield Gold A||–|
|AIA Health Shield Gold Prestige||–|
|NTUC Income Enhanced Income Shield Plan Preferred||–|
|NTUC Income Enhanced Income Shield Plan Advantage||65% for private hospitals|
|Aviva MyShield Plan 1||–|
|Aviva MyShield Plan 2||65% for private hospitals|
For plans where pro-ration factor applies, a patient would be subject to certain pro-ration factor should he decide to stay in a private hospital instead of a restructured hospital. Assuming a hospital bill of S$10K incurred in a private hospital, a pro-ration factor of 65 percent will reduce the claimable amount to just S$6.5K (65 percent of the bill). After which, the deductible and co-insurance will still apply.
In other words, if the patient intends to stay in a private hospital, this may not be the most ideal plan. He may want to opt for a plan which does not have any pro-ration factor, such as the NTUC Enhanced IncomeShield Plan Preferred or Aviva MyShield Plan 1.
From my experience working with clients in the last 10 years, I’ve personally come across many people, especially the seniors, who would want to stay at Government restructured hospitals but ended up in a private hospital. For instance, last October, there was a lady who had an eye complication due to diabetes. When she went to the Government restructured hospital, she was told there was a queue and the earliest she could get her eye surgery done was January this year, a three-month wait. She was worried about this and the possibility of further complications, so she ended up going to a private hospital and was operated on the next day. Some people also ended up going to private hospitals because the particular doctor recommended by their friends or family members is attached to the private hospital. If they are on a plan with pro-ration factor and they end up going to a private hospital, their claims will be pro-rated accordingly.
What Should I do? Trade off between cost and comfort
There is, however, a trade-off between comfort and cost. Having a higher plan or staying in higher class wards come with higher premiums and higher hospitalisation bills. So, do consider carefully before deciding which plans to purchase based on what best suits your needs.
If you would like to stay at a private hospital and would like to enjoy full medical coverage, it may be wise to consider a plan which is on an “as-charged” basis, with riders to cover both the deductible and co-insurance and without any pro-ration factor. Do note that premiums for both the basic plan and riders increase with every age band, so do consider the affordability factor, not just now but also in the future, when choosing the shield plan to suit your needs.
Kee Siew Poh is a Certified Financial Planner. She is the executive council and public awareness chairman of the Financial Planning Association of Singapore.
(**PHOTO CREDITS: Medical doctor, kurhan, stock.xchng; and calculator stethoscope, forwardcom, stock.xchng)