Understanding Your Private Health/Medical Insurance Scheme

For the last few days, there have been quite a few Clients who have been asking me about the idea of getting a Private Health Insurance Plan and if it’s feasible to do so.

I appreciate their interest in getting a health insurance plan and as I have shared in my previous post on the basic fundamentals of Financial Planning – getting a health insurance plan is a must-must to take care of huge medical bills, on top of a Critical Illness Protection Plan.

Why Is A Health/Medical Insurance Scheme So Important?

To put in simple terms to understand, if there’s a hospital bill of $100,000 today right in front of you, would you

  • Want to take care of this bill 100% on your own accord or
  • Split this bill among your family members (in equal shares and hurt each other feelings…) or
  • Have a Health Insurance Plan that require you to pay out only $12,700 (assuming $3,000 deductible and 10% co-insurance) and have the rest of $87,300 taken care of by the Plan?

If I am you, I would rather have a Health Insurance Plan to take care and even if I do have to split the $12,700 among my family members, it’s easier to do so now!

But Hey Hold On… Does This Medical Bill Of $100,000 Really Exist?

To put it bluntly, if you are keen in surviving (especially in areas like Cancer treatment), this medical bill of $100,000 is very real!

I do have Clients who have given me real time feedback on the actual cost of Cancer Treatment in a Private Hospital, and that figure can easily reach $200,000 to $600,000 just to keep the Patient alive today!

So, What’s The Differences Between The CPF’s MediShield That I Have And That Of A Private Insurers’?

As explained under the CPF Main Site, Medishield is supposed to help Singaporeans to pay for medical treatments at Class B2/C in restructured hospitals. Meaning that if you are keen to seek treatment at Class B1 or higher level, you have to get that coverage from a Private Insurer.

In terms of benefits wise, you’ll definitely be getting more coverage and benefits from a Private Insurer as you will be paying a higher premiums as compared to Medishield’s.

Some of the Benefits in terms of differences and worth mentioning will be:

  • Higher Limit Per Policy Year (Medishield is covering only $50,000 per policy year)
  • Higher Limit Per Lifetime (Medishield is covering only $200,000 per life time)
  • Maximum Coverage Age (Medishield is only covering you till 85 – age next birthday)
  • The “As Charged” features as compared to Limits under the benefits for Medishield
  • Emergency Hospitalization Outside Singapore (for those who travel frequently)
  • Pre-Hospitalization Specialist’s Consultation, Diagnostic & Laboratory Services that lead to hospitalization within 90 days and Post-Hospitalization Treatment (max. 90 days after discharge)
  • Riders to help take care of the Deductible and Co-insurance.

Each Private Insurer also offer additional benefits for their Medical Plan, so it would be best to consult their Financial Planners for more details and to get a plan that’s suitable for you.

Some Frequently Asked Questions That You Need To Know

  1. What is Deductible? The deductible that you are seeing for each Ward Type would mean that if you are staying in that particular ward, should your final first bill (e.g. $800) fall below that stated amount (e.g. $1000 for a Ward C), you will not be able to get any claims from your plan. It will still be advisable to file that bill with your Private Insurer so should there be another bill that can be accumulated to be above the limit, you will be able to make a claim (please see Co-insurance).
  2. What is Co-insurance? This is normally a set percentage for you to take care of the remaining bill after you have settled the Deductible. E.g. A deductible of $1000 for Class C and Co-insurance of 10% would mean that if your first bill is $1500, you will need to pay $1000 first and then 10% of the $500 ($1500 – $1000). So in total you will be paying for $1050 for that first bill. If you do have another bill in the same year like $1000 in the same ward, you will be only paying 10% of that $1000 now.
  3. What does As-Charged mean? This would basically mean that there’s no claim limits to the benefits stated. As you need to understand is that there’s medical inflation and so charges will sure to go up. If there’s a limit in your plan e.g. $450 per day for a normal ward and if the charge is below that, you are safe but should that hospital decide to increase to $470, the difference of $20 will be coming out of your pocket.
  4. Does As-Charged Mean That The Bill is 100% Taken Care Of? The answer is No. This would only mean that there’s no separate bills to personally take care of. If you need to have the bill taken care of with the least worries, the only method is to include a Rider in your Medical Plan.
  5. Why Can’t I Pay My Main Plan’s Premium In Full With My Medisave Account? This is part of CPF’s regulation that you can only use up to a limit of $800 per person per calendar year. With effect from 01 December 2008, for insured person aged 80 and above, the Medisave Limit is increased to $1150.

In Conclusion

If you are worried about escalating healthcare costs and medical inflation and also about the burden when a certain illness is serious or prolonged, it’s always wise to have a Private Insurer’s Medical Plan on hand.

If you are worried that you are paying too much or that the money is down the drain if there’s no claim eventually which is really the monetary effects, you should consider if there’s a huge medical bill like $100,000 someday, would you be glad that you have gotten a private medical plan sooner?

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