Insurance coverage; medical shield; financial planning; personal finance

MediShield Life versus Private Integrated Shield Plan

MediShield Life was rolled out in November 2015 to replace the MediShield. Unlike its predecessor, MediShield Life is a mandatory basic health care insurance designed to provide better coverage for Class B2 and C wards in public hospitals. There is also no need for Singaporeans to apply for MediShield Life. Given that MediShield Life provides enhanced coverage, it is important to review the merits of MediShield Life versus Private Integrated Shield Plan (IP).

Features of Medishield Life

Before we look at IP, there is a need to consider the key features of MediShield Life. Firstly, MediShield Life provides lifetime coverage and even those pre-existing conditions can be covered. The lifetime claim limit has been removed and the maximum claim limit has been increased to $100,000 per policy year. Thus, with the improved benefits, most Singaporeans will fork out less cash amount for hospital bills.

Medishield Life

As a result of these enhancements, the premiums for MediShield Life have also increased. However, the premiums for MediShield Life can be fully paid using CPF’s Medisave account. To offset the premium increases, the government is also providing subsidies. Clearly, the policy intention is to provide an affordable health care insurance that is able to meet the majority population’s needs. But then again, with MediShield Life, is there a need to purchase private IP?

Gaps in Medishield Life

In my point of view, private IPs still serve to address a gap in the basic health insurance framework. This is because with MediShield Life, you still need to pay both the deductible and co-insurance. The former is a fixed amount payable per policy year and serves to deter small claims. For those age 80 and below, the amount is $1500 (Class C ward) and $2000 (Class B2 and above).  The co-insurance is a percentage of the claimable amount, and is in addition to the deductible. The rate ranges from 10% to 3% as the bill size increases.

The advantages of private IPs is that there are options to purchase riders to cover the deductible and co-insurance portions. In addition, the IP that I purchased is “as-charged”. Thus, I will be reimbursed the eligible hospitalization cost incurred, instead of being subject to maximum claim limit per policy year. My private hospital shield also has no lifetime claim limit on the total hospital bills.

My strategy

I have upgraded my family’s medical insurance to Private Ward plan. The cash premiums, in addition to the Medisave deductions, amounted to more than $1000 per annum. I still find it worthwhile because buying a comprehensive health insurance is a form of assurance to me. I want my family to be well protected. After all, it is miserable to fall sick and become ill. You certainly don’t want to face money issues when you are hospitalized.

However, one of the biggest features of private shield plans is that you can choose your doctor. In today’s context, this is important. This is because through Internet, we can access information and find out which is the best doctor to seek treatment for your loved ones. With Medishield Life, you cannot choose your doctor.

If you think that private IP is beyond your budget, you may want to consider Standard IP, which is newly announced by the government. A Standard IP offers the option of enhanced hospitalization coverage beyond MediShield Life, specifically for Class B1 ward in public hospitals. This will allows you to choose your own doctor and be hospitalized in an air-conditioned ward.

With the introduction of MediShield Life and new IPs in the market, it may be worthwhile to review your existing coverage. In life, it is naive to assume that we can live healthily forever. Sometimes, there may also be unforeseen circumstances that may result in permanent loss of income. Whatever it is, make sure that your income-ability and wealth are well protected.

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Magically yours,

SG Wealth Builder

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