Health insurance also referred to as hospitalisation insurance, is a fundamental component of any financial plan. Even before buying life insurance, I will always ensure that the client has this in place first.
The reason is simple: Hospital bills can add up to tens of thousands. If one is not financially prepared for such a situation, it can derail plans and cause great financial distress. Also, as we age, the likelihood of a claim and the amount of claim can be large if hospitalisation were to happen.
I always emphasize to my clients this – get the best health insurance coverage that Medisave and cash can buy. Get coverage that is suitable for your needs. Be realistic too – if you prefer to have freedom of choice in terms of hospitals, then a plan that covers private hospitals up to standard class A ward is something you should consider.
New Policies To Reign In Overconsumption And Overcharging
In the past, the best health insurance that we can have is a 100% as charged main plan (standard room in private hospitals) plus the ‘full rider’ that covers deductible and coinsurance. This means that should you be admitted to an approved hospital, your hospitalisation or surgical bill will be fully borne i.e. 100% by the insurer.
Because of this 100% as charged and full rider coverage, it has led to the overconsumption of medical and healthcare services. For example, going for unnecessary scans or treatments. Fees and charges billed by medical professionals also came under scrutiny.
The Government stepped in in 2018 to stop this ‘buffet syndrome’ and advised insurers to stop offering 100% coverage in their health insurance plans. This led to the changes that took effect from 1st April 2021.
We saw the shift of almost all integrated shield plans to a copayment structure requiring clients to make some copayment for their hospitalization bills.
New policies implemented by insurers:
3 Important Changes That You Need To Know:
Change #1 – Removal of Full Riders, Introduction of Copayment Structure
Although it is only mandatory for those who purchased health insurance after March 2018 to transit to the co-payment structure, all insurers have now applied this to existing policyholders holding as charged plans.
From 1st April 2021 or from the renewal date of your hospitalisation insurance, your coverage will be renewed to one with co-payment. Only company P will allow policyholders who purchased their full riders before 8 March 2018 to remain on them but subject to claims-based pricing.
The co-payment for most insurers is 5% of the total hospitalisation bill. It could be 10% in some cases. Check with your health insurer for the exact terms and conditions.
There is a limit or cap (for most insurers, it is $3,000) on the copayment if the insured gets treated by a panel doctor and/or has obtained pre-authorisation in a private hospital.
If the insured goes with a non-panel specialist and/or did not get pre-authorisation, he will be subject to copayment without a cap.
Note: For those seeking treatments from Government Restructured hospitals, they do not need to worry about the copayment limit. All treatments in Government Restructured hospitals are covered by Integrated Shield plans and considered panel. Hence, copayment will be capped.
Change #2 – Panel vs Non-panel Specialists
To better reign in the cost of claims and to ensure that policyholders have access to trusted healthcare services, insurers have introduced their own panel of specialists and hospitals for treatments.
The policyholder receives better coverage if he or she chooses from the panel. For instance, he or she will enjoy longer pre and post hospitalisation treatment coverage as well as a cap on the copayment per year.
On the other hand, admission to a non-panel hospital or seeking consultation from a non-panel specialist may require the policyholder to make an additional payment on top of the copayment.
Change #3 – Premium Revision
We buy health insurance with the knowledge that premiums will increase with age and insurers reserve the right to increase premiums depending on claims experience and medical inflation.
Despite the current environment, company N has reduced premiums while still providing competitive benefits and maintaining a long-established track record.
As far as I know, all insurers have increased premiums due to medical inflation and higher claim experience. And there will be policyholders who will be subject to claims-based pricing. This means that if you claim on your hospitalisation insurance, you may end up paying a higher premium at the next renewal.
So, What Should You Do?
The change from 100% as charged and full rider coverage to one that features a copayment structure is certainly not welcomed by everyone. Policyholders will also have to brace themselves for higher revised premiums in the future and also the implementation of claims-based pricing by certain insurers.
Note: This means that Singaporeans and PRs insured under the Integrated Shield plan will have to think farther ahead and start setting aside money for their old-age health insurance premiums.
The top question on many people’s minds would be whether to switch to another ‘better’ or the ‘best health insurance plan in the market. What is better or best is subjective as each one of us has different needs and requirements.
Before switching, you need to be aware of this: If you already have pre-existing medical conditions, the new insurer is likely to impose exclusions on them.
My recommendation: Continue with your existing Integrated Shield Plan. Take time to understand the changes and the new clauses pertaining to your coverage.
1) Be prepared to pay a part of your hospitalisation expenses.
2) Run through your insurer’s panel of private hospitals and specialists. For better coverage and to reduce out-of-pocket expenses, it is best to seek treatment from panel doctors and hospitals. Remember to request for pre-authorisation from your insurer whenever necessary.
3) If affordability is a concern, you can choose to downgrade your hospitalisation plan. Lower-tier plans cover restructured hospitals and for classward A or B1 and below.
Before you take any decision, please speak with your financial planner first. If you wish to consult with me, you can reach out to me at email@example.com or call me at 6252 8500.