SINGAPORE - Premium increases for the better benefits of MediShield Life will be less than $360 a year, and most or all of them will be absorbed by various subsidies and top-ups for the majority in the first year.
The MediShield Life Review Committee yesterday released its full report, which included details of premiums, benefits, subsidies and the suggestion that the Government work with insurers to set up a standard higher plan pegged at the private, B1-class ward.
Given the significant increase in benefits - such as the removal of the lifetime limit and higher daily and annual claims - and the inclusion of the old and the sick, people had feared premiums would rise so much that they would not be affordable to many.
But the biggest rise in premiums before subsidies will be $355 a year for people aged 75-77 years - from $775 to $1,130.
In fact, for the low-income and lower middle income groups in this age band, the revised premiums will actually be lower with the government subsidy.
Their MediShield Life premiums will be $678 and $735 a year respectively if they do not qualify as pioneers - such as permanent residents and those who became citizens only after 1987 - and $517 if they do qualify as pioneers. The pioneer generation refers to those who were citizens before 1987 and are 65 years and older this year.
High-income people in this age band who are non-pioneers will get transitional subsidies for four years. They will pay $846 in the first year, and the full $1,130 in the fifth year, after the subsidies run out.
A transitional subsidy of 80 per cent will be given to anyone whose premiums have gone up after the permanent subsidies have kicked in. The transitional subsidy will be reduced to 60 per cent, 40 per cent and 20 per cent in subsequent years. The low premiums are possible with the Government underwriting more than 40 per cent of MediShield Life premiums for the first five years.
Past that, the 15 per cent to 50 per cent premium subsidy for two in three people will continue as a permanent feature. This subsidy now costs $230 million a year, but is expected to increase beyond the initial five-year period.
In a statement yesterday, the Ministry of Health (MOH) said: "With the substantial government subsidies and support, premiums will be more affordable for most Singaporean households."
It added that all pioneers will pay less in premiums than they do today, with those aged 80 years and older not having to come up with any money as their premiums will be fully covered between the subsidies and the Medisave top-ups they will receive. This is regardless of how rich or poor they are.
The committee has decided to follow the current MediShield practice of each age band paying for itself - so inevitably, premiums will rise with age.
To cushion the impact, it has recommended significantly higher "advance" premiums to be paid by working adults, which will reduce what they need to pay when they get older.
So someone aged 30-39 will have his premium almost tripling - from $105 to $310 a year.
However, this would still be affordable, especially with the 1 per cent increase in employer Medisave contributions from next year. This same person will start getting an annual premium rebate from the age of 66 - instead of the current 71. The rebate increases with age and the amount depends on the age the person joined MediShield.
The maximum rebate, given when a person is 86 years and older, goes up from $449 a year today, to $537 with MediShield Life.
This article was first published on June 28, 2014.
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