Medishield Life review: Most will be able to afford premiums without using cash

Subsidies, Medisave top-ups and extra employer contribution will help

Premiums for the new MediShield Life will need to be raised substantially to meet the increased claim payouts being proposed by a review committee.

Still, most families can afford to pay the higher premiums with their annual Medisave contributions - without having to draw on their Medisave savings or cash.

This is because they will receive various government subsidies, Medisave top-ups and an extra 1 percentage point Medisave contribution by employers from next year.

For two-thirds of households - whose total monthly family income divided by the number of family members comes to about $2,600 or less - there will be permanent subsidies to offset the cost of higher premiums.

So a family of two parents and three children with the sole breadwinner earning $12,500 a month, would qualify for this permanent subsidy.

Details of the subsidy will be announced later, but it will be tiered, with lower-income households getting more.

On top of that, the Government will give permanent annual Medisave top-ups to the pioneer generation, who are Singaporeans aged 65 years and older this year.

These top-ups will offset substantially the higher premiums they will face.

In fact, for people aged 80 and older, the subsidies and top-ups will be enough to cover their entire premium. Younger people aged 55 to 64 this year will get five years' of Medisave top-ups.

In addition, everyone, regardless of age or income, will receive four years of "transient subsidies" to tide them over the initial increase in premiums.

Part of the higher premiums paid by younger people will be kept to offset the higher premiums they will need to pay when they get older. This offset now starts when a person reaches age 70.

The committee has suggested bringing this forward to age 65, when most people would have stopped working.

The premium offset ranges from $30 to $449 a year, based on age of entry into the existing MediShield, or the future MediShield Life.

One big change that MediShield Life will bring is the inclusion of everyone, even those who are already sick.

But including them in the national insurance scheme will mean many of them are likely to make claims, some from the moment they are included. It would therefore not be fair to bring them in at the same premium level as people who have been on the insurance scheme for years.

Mr Bobby Chin, chairman of the MediShield Life Review Committee, said they pose "really high risks and costs" to the MediShield Life Scheme.

"If you have a pre-existing condition, it's only fair that you pay (more) for coming into MediShield Life," he said.

The committee suggests they pay an additional 30 per cent on top of the premiums for their age group, for a period of 10 years.

But this will not be enough to cover what they will cost the insurance scheme in claims.

So the committee is also asking all existing MediShield members to "pay a little bit more in sharing the costs of bringing in those with a pre-existing condition".

But again, getting existing members to pay in full the rest of the cost would be "too onerous", so it is capping the help from everyone else to no more than 3 per cent of their current premiums.

Together, what the new and existing members pay will not cover even half the estimated cost of bringing in people with pre-existing illness, said Mr Chin.

So it appealed to the Government, which has agreed to underwrite the rest of the cost.

Said Mr Chin: "The committee is really heartened that the Government has agreed to take on most of the costs of bringing in those with pre-existing conditions."

salma@sph.com.sg

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