The ABCs of MediShield Life

The ABCs of MediShield Life

SINGAPORE - Now that the dust is settling on the announcement of the new MediShield Life premiums, it would be a smart thing to do a stock-check on just where you stand on medical insurance.

The premium increases unveiled a week ago give certainty about how much you will need to pay for coverage but that is just one part of the story.

These across-the-board premium hikes for the basic scheme proposed by the MediShield Life Review Committee are to pay for the enhanced benefits that will provide lifetime coverage for all.

Government subsidies of about $4 billion will kick in over the next five years to take the sting out of some of the increases but we will all have to pay more.

In percentage terms, the biggest rise hits those in the 21 to 30 and 31 to 40 age ranges - people who are likely to be economically active.

The annual premiums before subsidies for these age groups will soar by 195 per cent.

Those between 21 and 30 will have to fork out $195 in annual premiums next year before subsidies, up from $66. If subsidies are factored in, the annual premium will drop to $82 per year for the lower-income group and to $92 for high-income earners.

The annual premium for those 31 to 40 will be $310 before subsidies, up from $105. Subsidies will bring the premiums down to between $131 and $146.

Conversely, those aged 81 to 83 will face the smallest premium rise of just 11 per cent, from $1,123 to $1,250. Subsidies will reduce the premiums to between $750 and $1,148.

The premiums will be used to help provide coverage against large hospitalisation bills for those previously deemed uninsurable people with pre-existing illnesses or those above 92, for example.

The extra cash will also go some way towards helping to fund other benefits under MediShield Life, such as the removal of lifetime claim limits and increasing the policy year claim limits.

While the enhanced MediShield Life benefits are a welcome relief for many, a key question is raised: Should you keep your Integrated Shield Plan (IP) or buy one, if you do not have one, to complement the basic plan?

The Sunday Times checks out the ABCs of MediShield Life.

Affordability, as-charged riders

Affordability is the key to the question if you are considering upgrading your MediShield Life basic plan to an IP.

Instead of just looking at your annual premium in isolation, consider the lifetime premium cost, says Mr Ong Lean Wan, chief executive of Life Planning Associates.

"The concept of lifetime premium cost for IP gives you a better gauge of the total funding amount for a long-term health insurance plan that charges you age-related premiums."

The lifetime premium cost calculates the cumulative premiums from a starting age to an end one.

Based on the cheapest IP for private hospitals and assuming the current annual premium remains constant throughout, Mr Ong found that the lifetime premium cost from age one to 85 is $102,407.

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