Questions to ask about MediShield Life

Will premiums be affordable? Should you go private? What about co-payment?

What the insurers say

Proposals unveiled recently by a committee tasked to look at enhancing the national health insurance scheme MediShield contained much good news.

MediShield Life - enhancements to the MediShield scheme - would offer higher payouts and, therefore, lower out-of-pocket expenses for CPF members.

But there are concerns that the increase in premiums, the details of which which have yet to be released, may be substantial for some. Throw some insurance terms such as "deductible" and "co-insurance" into the picture and it's no wonder many are left with fuzzy ideas of what the reforms are all about.

A tongue-in-cheek way to remember MediShield Life is to think of it as a Look Into Future Expenses, specifically large hospital bills.

The Sunday Times checks out how the new plans could affect you.

Basic plan

First, MediShield Life will ensure that everyone, even those with pre-existing conditions previously not covered under MediShield, will be insured.

Senior citizens can also heave a sigh of relief as all of them - a group more likely to need the insurance - will be covered. Currently, MediShield's coverage is extended only to those up to 92 years of age.

Other MediShield Life recommendations include the removal of the lifetime claim limit of $300,000, increasing the policy year claim limit by 40 per cent from $70,000 to $100,000, and higher claim limits for expenses like outpatient cancer treatments.

Under the proposals, there would also be lower co-insurance rates from between 10 per cent and 20 per cent, to between 3 per cent and 10 per cent.

"Co-insurance" is the amount of money in a large hospitalisation bill that you have to bear above the deductible.

A "deductible", meanwhile, is the initial sum that you have to pay for claims made in a policy year, before you receive a MediShield payout.

The deductible ranges from $1,500 to $3,000 and is put in place by the authorities to sieve out small claims, since the aim of MediShield is to help pay for large hospitalisation bills.

MediShield Life will continue to cover only Class B2 and C public hospital bills.

People who wish to stay in private hospitals or Class A and B1 wards in public hospitals should note that MediShield Life will cover only the amount it would for a B2 patient. It will not be able to pay the bulk of your bill, so you would need additional coverage on top of MediShield Life, known as Integrated Shield Plans (IPs).

Integrated Shield Plans

On top of the basic MediShield scheme, there are currently five insurers - AIA, Aviva, Great Eastern, NTUC Income and Prudential - which provide Medisave-approved IPs. About two in three Singaporeans are on Integrated Shield Plans.

This means you can use your Medisave savings to pay for the IPs, which are combined with basic MediShield to form a single integrated plan.

IPs provide benefits above and beyond what the basic MediShield scheme provide.

For instance, some IPs already offer lifetime coverage, coverage for certain pre-existing conditions, overseas medical treatments and the like.

With the enhanced MediShield Life scheme, there may be some overlaps with the IPs.

The Sunday Times understands that the MediShield Life Review Committee is in talks with the five insurers, reviewing the issues related to IPs, and will share its recommendations soon.

Mr Sumit Narayanan, partner for advisory services at consultancy firm EY in Singapore, said: "With the recent MediShield Life proposals, some uncertainty in the near term is to be expected as the proposals are being finalised."

He added: "This is a good opportunity for IP providers to launch more innovative products to cater to the different needs of the population."

Mr Andrew Taggart, PwC's South-east Asian insurance consulting leader, said: "The risk for IP providers is that their customers get confused by the new proposals in transition, so clearly articulating the impacts and reminding customers of the value of the plans will be an important activity for providers in the short term."

IP providers will also have to make sure they raise their game, not just their premiums, to ensure the enhanced MediShield Life scheme does not erode their competitiveness.

"The IP providers will need to work through the product and pricing implications of the changes particularly around pre-existing conditions to decide if they will cover them and if so at what price," said PwC consulting partner and actuary Steven Lim.

Reactions from the IP providers to the changes being made to MediShield are generally supportive.

AIA Singapore chief marketing officer Ho Lee Yen said: "AIA Singapore is working very closely with the authorities and will continue to review our policies to help ensure that insurance will remain easily accessible and that our customers' needs are addressed."

Industry players also stressed that the IPs are not competing against the basic plan.

NTUC Income chief executive Ken Ng said: "MediShield Life and Integrated Shield Plans will continue to serve Singaporeans in complementary ways, catering to different needs."

Mr Daniel Lum, director of product and marketing at Aviva Singapore, said premium rates for IPs change periodically as they are highly dependent on factors such as past claims experience and medical inflation. "These premium adjustments ensure that the premiums collected are sufficient to cover the amount of claims paid out," he said.

Great Eastern chief product officer Lee Swee Kiang said: "While some may choose not to continue with their IP, we do not expect a large percentage to do so and we will be proactively explaining and educating our policyholders on the importance of retaining their IP."

Prudential Singapore chief marketing officer David Ng said: "We are confident that even with the changes that are eventually made to MediShield, our policyholders will continue to enjoy the additional insurance protection that they are covered for."

What next?

All eyes are now on that critical premium number. It's been reported that the final submission from the MediShield Life Review Committee will be handed to the Government by the end of this month.

A debate on the proposed landmark changes will then be held.

Once that information is available, those with basic MediShield as well as the integrated plans can then sit down and work out their sums.

Ask pertinent questions such as whether you need to stay in a private ward, whether you can afford the premiums not just now, but in future.

If your company also provides health insurance coverage for you, check how best that complements the MediShield Life plan and then see if you need to upgrade to an integrated plan.

Remember though, that not every company-sponsored insurance plan has portable health benefits, so if you leave that firm, you may lose those benefits.

You would then have to start a new plan at an older age and possibly in poorer health, which will in turn mean higher premiums for your new health plan.

Policyholders want health-care providers and insurers to control any ballooning of medical costs, by controlling costs at the treatment and premium levels. The likely higher premiums will come on top of premiums which were already raised last year by IP providers, owing to the enhanced MediShield package that gave higher annual payouts, among other things.

However, Dr Khoo Kah Siang, president of the Life Insurance Association, told The Sunday Times: "There will be minimal impact on the IP component of premiums.

"For IP benefits, the premium rates are subject to change as per normal, taking into account claims experience, future consumption trend and medical inflation rate.

"IP insurers will continue to monitor and manage these factors, to ensure that their plans remain competitive and affordable."

Still, do compare across insurers and figure out which plan best suits your needs. It is after all, a matter of life and death.