Insurers moving away from covering hospital bills in full

NTUC Income notifies Integrated Shield policyholders of change; other insurers reviewing policies

All NTUC Income Integrated Shield Plan (IP) policyholders will soon have to pay for part of their hospital bills, and those with other insurers may have to do so too.

NTUC Income has started informing policyholders from Feb 3 that IPs with riders that cover hospital bills in full will have a co-payment feature for renewals from April 1, in a move to encourage policyholders to consume healthcare services prudently and keep health insurance costs sustainable.

These policyholders will have to co-pay at least 5 per cent of their hospital bills, NTUC Income told The Straits Times yesterday.

However, their premiums will be reduced by up to about 50 per cent, depending on the policy and the policyholder's age, it added.

There are exceptions for those with serious medical conditions, who start co-payment a year later.

The latest move comes three years after the Ministry of Health (MOH) directed insurers in March 2018 to stop offering such plans. It had given insurers until April 1, 2019, to come up with new riders that require customers to pay at least 5 per cent of their hospital bills, and required those who bought such plans during the transition period from March 8, 2018, to March 2019 to switch to the new scheme from April 1 this year.

However, NTUC Income has decided the deadline will now also apply to almost all its roughly 160,000 policyholders currently still on full-rider plans, including those who bought such policies before the MOH announcement in 2018.

Four other insurers offering IPs with such riders say they are moving policyholders to co-payment riders, or considering doing so.

This move comes as the over-consumption and over-charging of healthcare services have pushed up the cost of health insurance premiums, said NTUC Income, adding that the average premiums of its Plus Rider have increased between 14 per cent and 41 per cent from 2018 to 2020.

"Co-payment is an important and effective healthcare financing feature which encourages prudent consumption of healthcare services, so as to keep health insurance costs sustainable and affordable for all in the long run," it added.

In 2018, then Senior Minister of State for Health Chee Hong Tat told Parliament that the zero co-payment feature of full riders had resulted in a "buffet syndrome".

The average medical bill size for full-rider policyholders in 2016 was about 60 per cent higher than for those without riders, he noted. He said this was the case, even though rider policyholders are younger and generally in better health.

Since April 1, 2019, anyone who buys a new rider will have to pay at least 5 per cent of the hospital bill, capped at $3,000 a year, subject to conditions such as prior approval from the insurer for the procedure. Otherwise, the cap does not apply.

For existing policyholders with such plans, MOH said in 2018 that such policies are commercial contracts between insurers and their policyholders, and insurers should consider the interest and well-being of all policyholders when changes are made.

The Straits Times has contacted MOH for comment.

There are currently six other insurers offering IPs.

Mr Chen Thong Wah, AXA Insurance's director of life product development, said around one in three AXA Shield customers has a full rider attached to his policy. The insurer said it will transition these customers to its co-pay rider AXA Enhanced Care from April 1. "This will take effect upon the customer's policy renewal," he added.

Likewise, Aviva Singapore said about 100,000 customers are still on full riders for their IPs and that its co-payment feature for existing full-coverage riders will come into effect from April 1. Customers on existing full-coverage riders will see a reduction in their premiums on the next renewal if they are within the same premium age bands.

A Great Eastern spokesman said the company is reviewing its Shield portfolio and changes will take effect by April. "We will be able to provide more details by the end of February," he said.

Prudential Singapore's head of product management Stanley Ng said: "Slightly over 10 per cent of our customers on full riders for their IPs will be transitioning to co-payment riders upon their policy renewals from April 1."

AIA Singapore declined to comment.

Raffles Health Insurance does not offer full riders, as its IP was introduced in August 2018.

NTUC Income policyholders interviewed said they were caught by surprise.

Freelance life skills educator Goh Ann Tat, 49, said: "When the Government announced in 2018 that the co-payment requirement will not affect policies purchased before the announcement, policyholders like myself thought the full riders we have will not be converted to co-payment schemes."

However, Mr Goh, who purchased his policy in 2000, supported the move, saying: "We have to be realistic about the reality of rising claims and over-consumption of medical services."

Legal executive David Ng, 38, who bought his NTUC Income policy in 2008, said: "I hope the rate of increase in premiums will be slower with the new changes."

He is also worried that the co-payment percentage will increase from 5 per cent. "We have little to no say if this happens," he added.

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A version of this article appeared in the print edition of The Straits Times on February 11, 2021, with the headline Insurers moving away from covering hospital bills in full. Subscribe