People who need serious or frequent hospital treatment will find that the money in their Medisave accounts will go much further under MediShield Life than it does today, Health Minister Gan Kim Yong said.
Singaporeans will pay higher premiums under the proposed lifelong insurance scheme. However, their share of big subsidised hospital bills will be much lower.
The MediShield Life Review Committee recommended that co-payment of bills be reduced from 10 per cent to 20 per cent today to 3 per cent to 10 per cent.
Mr Gan said: "The idea is that MediShield Life provides a larger coverage, so the amount you need to pay as co-payment comes down.
"All in all, because of the pooling effect of insurance, a patient's cost in total will be less."
He added that the Medisave Minimum Sum is "enough for premiums and co-payment of bills in subsidised classes", from the time of retirement until death for most people.
The Medisave Minimum Sum for people who turn 55 from next month will be $43,500 - up from $40,500 now. Although this minimum amount has been raised annually, the Central Provident Fund Board said that about six out of 10 active members consistently meet the sum when they turn 55.
In an exclusive interview with The Straits Times, Mr Gan said the increased MediShield Life premiums will be affordable for most people thanks to the various government help schemes.
These include the Pioneer Generation Package under which people aged 65 and older this year will have between 40 per cent and 60 per cent of their premiums subsidised permanently.
Singaporeans born in or before 1959 will get $100 or $200 in Medisave top-ups for five years.
Those who are working will get an additional 1 per cent Medisave contribution from their employers from next year. On top of that, two in three people will get a permanent subsidy to help them finance the new insurance plan.
There will also be four years of transitional subsidies - starting at 80 per cent of the increase in premiums in year one and tapering to 20 per cent in the fourth year - to cushion the impact of premium increases.
The entire premium can be paid for with Medisave money, so no cash top-ups will be needed.
Mr Gan added that the current cap of $800 to $1,400 on the amount of Medisave that can be used to pay for insurance premiums might have to be tweaked for some age bands.