More clarity on private health plan premiums

More clarity on private health plan premiums

WHEN Singapore introduces the MediShield Life insurance scheme for large medical bills this year, it will affect how much a person can withdraw from his Medisave savings to pay for the premium of his private health insurance.

Up to 60 per cent of Singaporeans have bought such private insurance. These schemes incorporate the basic MediShield plan.

These Integrated Shield Plans (IPs) pay for a better-class ward than the subsidised B2- and C-class wards covered by the basic MediShield plan.

Dr Chia Shi-Lu (Tanjong Pagar GRC) expressed concerns over the depletion of Medisave through the escalation of IP premiums.

He argued that as people get older and their Medisave runs low, they "will naturally downgrade to MediShield Life, leaving IP providers to cream off all the premiums already paid over the years".

Replying, Health Minister Gan Kim Yong noted that, at present, "Singaporeans are not aware of how much Medisave is being used for MediShield and how much is directed towards the additional private insurance component".

In future, insurers will have to "present their products more transparently and accurately" to help people make informed decisions, he added.

How Medisave can be used to pay for premiums in future will reflect this with greater clarity.

BEFORE MEDISHIELD LIFE STARTS

People up to age 65 can use a maximum of $800 every year from Medisave to pay for the premiums of MediShield or any private IP. The amount increases with age to $1,400 a year for those aged 81 and older.

These amounts are enough to pay in full the premium of the current basic MediShield for people of all ages.

It is also enough to cover in full the most expensive private IP premium for those under the age of 50, without them having to use cash from their pockets.

But older people with private IP premiums higher than the maximum $800 to $1,200 have to fork out cash to pay the difference.

AFTER MEDISHIELD LIFE STARTS

THERE is no change for people who have only the basic MediShield Life. Their entire premium can be paid using Medisave. But the 60 per cent of people with private IPs will get a new formula later this year on how much Medisave they can use.

The premium for the MediShield Life portion of their IP can be paid in full with Medisave.

But the additional premium for their private plan will face a new Medisave cap that will vary with age - with younger people allowed to use less and older people more.

The precise amounts will be announced later, but these are unlikely to cover the entire premium of the pricier IPs for treatments in A-class or private hospitals.

In future, even young people with expensive IPs will likely have to pay for part of their premiums in cash.

salma@sph.com.sg


This article was first published on March 13, 2015.
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