Financial experts advise Singaporeans who can afford health insurance - but who have failed to take out any - to procrastinate no longer.

In a statement on Wednesday, the Life Insurance Association (LIA) said that for the majority of Singaporeans, it is important that they are covered by an appropriate private medical insurance plan.

This is because once means testing is put into practice, Singaporeans will no longer be certain of qualifying for the high-level subsidies that would be given to patients staying in Class B2 or C wards in a restructured hospital.

What is means testing?

LAST Monday, Health Minister Khaw Boon Wan outlined the Government's plans for means testing.

In a nutshell, means testing means a patient can pick the ward class to stay in at a restructured hospital and the level of the hospital subsidy will be determined using factors such as income.

That will mark a change from the current situation where a person who chooses to be admitted into a Class B2 or C hospital ward receives the full subsidy corresponding with the ward class, regardless of his income level.

For instance, a patient staying in a Class C ward gets 80 per cent of the cost subsidised. Patients staying in Class A wards do not get any subsidy while those staying in B1 wards are subsidised slightly.

The objective of means testing is to ensure that lower-income Singaporeans obtain a higher subsidy than those who are better off.

The Government has explained that it has put initiatives in place to improve health care, so facilities in wards B2 and C are expected to be enhanced over time.

In the absence of means testing, an overcrowded Class B2 or Class C ward would come at the expense of the lower-income patients since the higher-income patients could easily afford an alternative ward.

The exact details of how means testing will be implemented are still being ironed out and the ministry has not decided on the exact criteria yet.

Although the ministry has stated that higher-income patients would be subsidised less than lower-income patients, it also stressed that their bills would 'remain affordable'.

Why buy hospitalisation plans?

SINGAPOREANS should not await the full details of means testing before buying the right medical insurance plan to defray the cost of hospitalisation, said Mr Eddy Cheong, who heads financial advisory firm Providend's family office services. He noted that people tend to procrastinate when it comes to reviewing their medical insurance.

'Maybe the thinking is that hospitalisation won't happen to them or that they could easily go for the cheapest ward, that is, Class C, to reduce cost.

'With means testing, not everyone is eligible for the full subsidy of the ward and hence they have to pay more either in cash or from Medisave,' he said.

Said Mr Stanley Jeremiah, the managing director of Convergys Employee Care, Asia Pacific: 'There is more reason now for the man in the street to ensure that he has a lifetime medical insurance plan and that he puts aside enough money for insurance premiums post-retirement.'

Currently, private Shield plans can be funded from one's Medisave account, subject to an annual cap of $800.

However, as the premiums rise with one's age, it is important to ensure that one has sufficient monies to fund future premiums to prevent policies from lapsing.

Another reason to buy health plans early is insurability. Insurers shy away from covering conditions such as high blood pressure so it is best to purchase a health plan while one is still young and healthy.

In fact, some experts advise going for the highest health cover that one can afford.

This is because insurers allow you to switch to lower-priced plans without underwriting, or assessing your health condition, but the reverse is not permitted.

People typically delay buying personal health plans because they are already covered by their employer's insurance programme.

However, most of these programmes are not portable and the cover ceases when the person leaves the job. By that time, he may no longer be considered insurable if he has been diagnosed with certain medical conditions.

It is a fact that health-care cost will continue to rise as patients demand better medicines and procedures.

All over the world, medical inflation typically exceeds general inflation.

A lucky few might have ample savings to dig into for their health-care expenses, but the majority are better off transferring some of the risk and cost of health care to insurers in return for a premium that can be paid out of Medisave.

What to look for in hospitalisation insurance cover