Balance benefits, savings in changing IP

Options available for private plan holders looking to downsize, other than new B1 plan

Come May 1, Singaporeans will have another option for affordable healthcare in the form of a standard Integrated Shield Plan (IP) targeted at class B1 ward in public hospitals. It is expected to appeal to two groups: people seeking a higher hospital class than that provided by the basic MediShield Life (ML), and those looking to downsize from their existing private plans.

My parents fall into the second category.

Currently, 64 per cent of Singaporeans have IPs. Of these, 56 per cent have policies covering stays in private hospitals, 25 per cent for class A ward in public hospitals, and 19 per cent for class B1 ward in public hospitals.

For more than a decade, my brother has been forking out the premiums for my parents' hospitalisation insurance plans. As they have grown older, their premiums have also edged up.

With the launch of the standard IP, it is timely to review our parents' healthcare needs and costs.

The writer's parents Allan Tan and Ann Lee celebrating their birthdays, which fall in the same month. In reviewing their healthcare needs and costs, it was found that while a downgrade of their current IPs to the new standard B1 plan would result in savings from lower premiums, it would also lead to the loss of significant benefits, making such a move unsuitable. ST PHOTO: LORNA TAN

Should we downgrade our parents' plans to the standard IP? What savings would we enjoy and what benefits would my parents have to do without? What other options are there to achieve premium savings?

My dad, 81, has an Enhanced IncomeShield Basic plan, which means it covers class B1 and below of restructured hospitals, such as National University Hospital. He could opt to be hospitalised at a private hospital, but Income would then pay up to half of the hospitalisation bill.

His current premium, before government subsidies, is $1,250 for the ML component and $1,275 for the additional private insurance coverage - a total premium of $2,525. He also has a Plus rider covering the deductible and co-insurance hospital bill portions - costing $1,318 a year.

  • What is an appropriate level of cover?

  • Buy a plan that matches your healthcare expectations, provided you can afford the premiums. So, if you expect to stay in a class B1 ward, then buy a hospital plan with B1 coverage.

    Bear in mind that premiums rise as you age.

    Therefore, it is important to ensure that you have sufficient money to fund future premiums. This is to prevent policies from lapsing.

    My preference is to buy a higher-class plan now while I can afford it, with a view to downgrading to a lower plan when I am older and premiums are higher.

My mum, 76, has an Enhanced IncomeShield Advantage plan, covering class A and below of restructured hospitals. Her premium, without taking subsidies into account, is $3,007 and her Plus rider amounts to $1,482. Their combined annual premiums are hefty at $8,332. A portion is payable from Medisave and the rest in cash.

To recap, the standard IP is a no-frills private insurance plan offered by all six IP insurers: AIA, Aviva, AXA, Great Eastern, NTUC Income and Prudential.

They will offer the standard IP with identical benefits that provide coverage on top of ML but the premiums will vary. The six insurers have agreed to keep premiums of the new B1 plan unchanged for the first two years.

Those with class B1, A or private hospital IPs who wish to downgrade with their existing insurer can do so without additional underwriting or undergoing a medical test. An exception is Aviva policyholders because the insurer practises moratorium underwriting, where medical history declaration is not a requirement for applicants.

The new standard B1 plan will pay for large subsidised hospital bills and selected outpatient treatments such as chemotherapy and kidney dialysis, similar to MediShield Life. Other features include pre-determined claim limits (it is not an as-charged plan), as well as deductible and co-insurance components, in line with efforts to manage healthcare costs. Patients with this plan can choose their doctors and enjoy air-conditioned rooms.

The premiums for Income's standard B1 plan are $2,168 and $1,930 for my dad and mum respectively. Income offers a Plus rider to cover both deductible and co-insurance components of the standard plan and it will cost dad $1,213 and mum, $873.

One clear advantage of downgrading to the standard IP is the annual premium savings of $462 for dad and $1,686 for mum, assuming we include the cost of riders for the standard IP.

However, while there will be savings if we downgrade my parents' plans to the standard one, they will stand to lose some benefits not covered under the new standard IP.

Let's take a look at the three main benefits that my parents will lose.

One key difference between the new B1 plan and most IPs is that the former does not cover pre- and post-hospitalisation benefits. For IncomeShield, such benefits cover the costs incurred during outpatient visits to the hospital three months before and after the hospitalisation.

Another difference is that there is a cap on claims for the new plan. For example, daily ward charges are capped at $1,700 per day, there are limits on surgical costs, and so on.

My parents' current IPs are as-charged plans so we don't have to worry about huge bills as long as they stay in their respective ward classes. As-charged plans also help to hedge against the certainty of rising medical costs.

One consideration I deem important is the annual policy limit which is a lower $150,000 for the standard IP.

Presently, my dad and mum are enjoying higher annual limits of $250,000 and $500,000 under their respective plans.

As I consider the loss of these benefits to be significant, my decision is to rule out the option of downgrading my parents' plans to the standard IP.

Still, I have two other options which can help to save on the annual premiums.

•Downgrade their Plus riders to an Assist rider which covers the deductible and caps the co-insurance portion of their current plans ($2,000 for Basic plan and $2,500 for Advantage plan). The Assist rider will cost a lower $894 for dad (Enhanced Basic plan) and $1,025 for mum (Enhanced Advantage plan). In this case, the annual premium savings would be $424 for dad and $457 for mum.

•Downgrade mum's Enhanced Advantage plan to the IncomeShield Enhanced Basic (as-charged) plan where her annual premium will be $2,156 and her full rider will be $949, resulting in premium savings of $1,384. For greater savings, we can opt for an Assist rider at $686 for her Enhanced Basic plan, which will shave $1,647 off current premiums per year.

Combining both options, I will consider downgrading dad's Plus rider to an Assist rider as well as mum's Enhanced Advantage plan to an Enhanced Basic plan and an Assist rider, resulting in an overall annual 25 per cent saving of $2,071.

I believe that this will be a nice compromise between maintaining the important benefits and achieving substantial yearly savings.

A version of this article appeared in the print edition of The Sunday Times on April 03, 2016, with the headline 'Balance benefits, savings in changing IP'. Print Edition | Subscribe