The ST Guide To... buying health insurance

MediShield Life began in November last year (2015), bringing compulsory health insurance to Singapore and marking the coming of age for health insurance here.

Just 25 years ago, hardly anyone here had personal health insurance. They either depended on their employers for healthcare support, or paid the whole sum out of their own savings.

And hospital bills can be very big, even with Government subsidy, sometimes posing a severe financial strain on the patient's family.

With the launch of MediShield Life, no Singaporean or permanent resident will ever have to face big hospital bills on their own again.

Singaporeans were introduced to medical insurance in 1990 when the Government launched MediShield.

While there were commercial health insurance available to the individual then, few took them up, largely because few understood the importance of health insurance.

Things changed with MediShield, largely because people were allowed to use their Medisave to pay the premiums, which essentially meant no out of pocket payments were needed.

As a result, close to 1.5 million people signed on for the rather basic health insurance. Coverage then was limited to $15,000 a year, $50,000 in lifetime claims and only up till the age of 65 years.
Between then and now, the health insurance scene has undergone many changes, as people here came to appreciate the benefits of such coverage.

One major change was the goverment allowing private companies to offer health insurance whose premiums could also be paid for with Medisave. As a result, there is now a plethora of health insurance coverage with different payouts and premiums - making it extremely confusing and difficult for the average person to decide what to get.

But opening it to the private sector to offer coverage for private sector bills also saw these bottom-line driven companies cherry pick only the healthiest people, leaving those at higher risk of needing hospital care to the goverment-run scheme. 

So another major change came a decade ago making it compulsory for everyone using Medisave to pay for premiums, to also be enrolled in the basic MediShield coverage. This is done through the private insurers, with no effort needed by the individual.

Meanwhile, the basic scheme also changed, offering higher annual and lifetime payouts, as well as coverage for older people, and recently, for life.

As healthcare costs continue to rise faster than general inflation, and as the population ages, many of those who really needed the coverage found themselves left out in the cold, either because they had hit their limits, or because they could no longer afford the hefty premiums charged.

Although Medisave could be used to pay the premiums, the government had put a cap on the maximum that could be used each year. 

Also, there were many people who have pre-existing conditions that have been excluded from insurance coverage.

This led to the creation of MediShield Life, a concept that had been raised many times over the years, but that is finally reaching fruition, where everyone, regardless of age, infirmity or ability to pay would enjoy coverage. 

But the difficulty in choosing the best insurance for them remains for the two in three people who are on the private plans integrated with MediShield. 

For more information on MediShield Life, go to the Ministry of Health's website

Here are some tips on picking the health insurance that suits you best.

Decide on the class of ward you are likely to use - not the one you would most like to use.

Given the choice, most people would pick what they consider the best, and usually the most expensive. 

Your insurance might cover you for that, but don't forget that it doesn't pay the full bill. You need to pay an initial amount called a “deductible” as well as co-pay the rest of the bill.

The deductible is $1,500 if you choose a subsidised C class, and $3,500 for A class or private hospital.

Aside from that, you will have to pay 10 per cent of the rest of the bill for Integrated Plans. For MediShield Life, the co-payment drops to 3 per cent if the claimable amount is more than $10,000.

Do your maths to find out if you can comfortably afford the premiums in future.

Use the current premium rates as a guide, but realise that IP premiums have been going up every few years. 

This means that what you will need to pay 10 to 20 years in the future will likely be much higher than the rates published today.

Life expectancy for women here is now 85 years and for men, 81 years.

Are you diabetic? 

If you are and you worry about eventually suffering from kidney failure and needing dialysis, it might be worth your while to buy a higher plan.

This is because the basic plans pays for dialysis at subsidised rates.

If you are well off, or live in landed property that may make you ineligible for subsidy, you would need dialysis at private rates. Generally, this is available only with the higher A class and private hospital plans.

Because dialysis is something that needs to be done regularly for the rest of your life, unless you get a kidney transplant, the cost without insurance could be prohibitive.

Have you been excluded for certain coverage by your IP?

If you have, you will need to ask if you are more likely to need hospital treatment for the medical problem you have no coverage for, or for other illness for which you have full insurance cover.

If it is for medical conditions you have been excluded for, then ask yourself if it is worth paying higher premiums just for coverage of medical problems you are less likely to suffer from.

Should you buy a rider?

This would fully cover you for all hospital treatments without the need for you to pay the deductible and co-payment.

First, riders are expensive, so can you afford to pay this, on top of your insurance premiums, for the rest of your life?

Another consideration is that historically, people who are fully covered tend to spend more on their treatments, sometimes even including things they really do not need - simply because it is free.

Similarly, some doctors would charge higher rates when their patients do not need to foot their own bills.

So while riders can give you peace of mind knowing that your entire health bill would be taken care of, it does fuel consumption. As a result, both the premiums and the cost of riders would rise much faster than than general healthcare inflation.

To compare premiums and payouts of different integrated plans, check out this Ministry of Health webpage.