What You Really Need To Know About Deductible, Co-Insurance, Rider and Pro-Ration

There seems to be a recent rise in the request to understand more about the difference between MediShield and our Private Medical Plans.

The reason for that I do not really know but one thing for sure, there are still many who do not understand the “As-Charged” features and its no link to the Deductible and Co-Insurance.

What Does As Charged Mean? Does It Also Mean That My Hospital Bill Is 100% Covered?

If you have read my previous post, you would have understood what does As Charged mean and the answer to the second question is a no as the claimable bill is still subjected to Deductible and Co-insurance.

And if you are looking for something extra to take care of either the Deductible and/or Co-insurance, you would need to get a Rider on top of the Main Medical Plan. More about that later.

A deeper understanding if you need for the As-Charged features would be that there is no longer a limit placed on the amount that can be claimed each day for hospital stay, surgery and medical procedures. What this means is that hospitalisation expenses will be paid according to what is billed.

No split bills from each individual hospital items to worry about here but only the Deductible and Co-insurance on the final claimable amount.

In another simpler explanation would be that, as long as you are staying within your Ward Entitlement (e.g. entitled to Ward A1 and receiving the treatment entitled to that type of ward), every bit of your hospital treatment will be 100% covered. It’s only at the end of the hospitalization – the final total claimable amount is subjected to Deductible and Co-insurance.

Still unclear?

In number sense, and you are warded to Ward A and your medical plan entitle you to that, example:

  • Room and Board and its related Medical Services – $500 (fully covered)
  • Surgicial Procedure – $5000 (fully covered)

Final Bill – $500 + $5000 = $5,500 is the final claimable amount billed to you.

Your Medical Plan with Deductible of $3000 for Ward A and Co-insurance of 10% would mean:

  • Out of the $5,500, you have to take care of $3,000, leaving the remainder of $2,500, you will then take into account co-insurance 10% of the $2,500 giving you an amount of $250
  • So the total you have to take care from the $5,500 bill will be $3,250. The remaining $2,250 will be taken care of by the Medical Plan.
  • As you only need to pay the Deductible once in a policy year, if there’s any more hospitalization under the same Ward Type, you’ll just need to take care 10% of the final claimable amount for the rest of the policy year, subjected to the maximum claimable amount under your Medical Plan.

In brief, Deductible is the minimum amount that you would need to pay for your hospital/medical bill when you make a claim. It applies to the claimable amount rather than the incurred hospital bill. You only need to pay the deductible once in a policy year.

Co-insurance is the amount which is not covered by the policy and which you need to pay after the deductible (see below) is met. It is usually expressed as a percentage of the expenses.

Take Up A Rider To Take Care Of The Deductible And Co-insurance

A rider is usually available when you take up a Private Medical Plan. The premium for the Rider is usually paid for by cash mode only. Some of the benefits offered under each Private Insurers would be different therefore it would be good to do your own studies before you make a commitment as a Medical Plan is meant to be taken in the long term.

The Use Of The Rider

The rider is taken up to take care of the Deductible and Co-insurance. Before the rider, it would mean to most people that any small bills are not claimable in the first instances and big bills will still need a certain level of burden.

Therefore with a Rider, you can use it to make small bills claimable and take real good care of big bills (either 100% or subjected to a cap) or be given a daily cash benefit should you decide to downgrade to a lower Ward Type.

Do note that the premiums of the Rider is not guaranteed and subjected to claim experience. Based on my personal experiences with many clients these few years, a Rider that takes care 100% of the medical bill will have the highest chances of premium being increased (easily 20-30%) in a short few years period.

For most people with the longest healthy status would be quite affected by this as the increment is passed on to the whole cohort (regardless of any claim experience).

Pro-Ration

Another thing to note if you are taking up a Rider under a lower Medical Plan (e.g. Maximum Ward Entitlement is only Restructured Hospital – Ward A, this would mean that you are not entitled to any Private Medical Institutions or Hospital). What this mean is that there’ll be a Pro-ration (a certain % that you need to take care if being given a higher class treatment).

This Pro-ration factor will not take into account your Rider even if it take care 100% of the medical plan. As the rider clearly follows your maximum ward entitlement and its necessary medical treatment under it. Therefore if you go for a higher or better treatment, your medical bill is split and that amount is not claimable under your Rider.

How to resolve this? Get the Medical Plan with the ward entitlement in a Private Hospital. In this manner, you do not have to worry about being short-changed should you be asked to go for a Private Clinic Treatment even under a Restructured Hospital.

In Summary

Armed with bits of information from here, I do hope it will give you a better understanding of Private Medical Plan and the Rider. At least should there be any claims, you can be sure you have done your planning well and not being short-changed or burdened in the long term.

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