What features and limitations should you look out for in a health insurance plan?
Deductibles and co-insurance
(applicable for medical expenses insurance plans only)
It is common to find a “deductible” and “co-insurance” condition in medical expense insurance policies. These conditions help to keep premiums affordable but the policy may not fully cover expenses.
You should find out how these conditions apply to all covered expenses in your policy. It may be that for each policy year, an annual deductible and co-insurance condition will apply. A deductible is the initial amount you need to pay yourself for claim(s) made in a policy year, before any policy benefits are paid out. Usually, you only need to pay the deductible once in a policy year. Co-insurance is the amount you need to co-pay or share after you pay the deductible, and it is usually expressed as a percentage.
The amount of expenses after subjecting it to the claim limits, deductible and co-insurance, will be covered by the policy. You can use Medisave to pay for the remaining portions not paid by your insurance policy, up to the prevailing Medisave limits.
The illustrations below show how the claimable amounts are calculated under the Integrated Shield Plans.
Illustration 1: Reimbursement of hospital bill under an Integrated Shield Plan
Mr Tan had to undergo surgery for abnormal heart palpitations. The surgery involved the removal of the abnormal site in the heart causing the palpitations. He was warded for three days in a Class A ward of a restructured hospital for the surgery. The hospital bill amounted to S$11,000.
Mr Tan has an Integrated Shield Plan that entitles him to stay in Class A wards in restructured hospitals with coverage of benefits on an “as-charged” basis (i.e. there is no limit on claims for eligible expenses). He was able to tap on his Medisave to pay fully for the MediShield Life part of his Integrated Shield plan, and for the additional private insurance portions up to the additional withdrawal limits.
Mr Tan also bought a separate rider plan with cash to cover the deductible (of S$3,000) and co-insurance (of 10%) under his Integrated Shield Plan. As rider plans pay for the deductible and/or co-insurance, they cannot be paid for with Medisave.
|Room and Board||S$900||S$900|
|Miscellaneous Hospital Services (e.g. doctor’s professional fees)||S$3,200||S$3,200|
|Examination and Laboratory Tests||S$800||S$800|
|Total Hospital Bill||S$11,000||S$11,000|
|LESS: Deductible (S$3,000)||S$3,000|
|Net of Deductible||S$8,000|
|LESS: Co-insurance (10%)||S$800|
|Net of Deductible and Co-insurance (i.e. S$11,000 - S$3,000 - S$800)||S$7,200|
|Mr Tan’s Integrated Shield Plan (inclusive of MediShield Life payout) pays||S$7,200|
|Total of Deductible and Co-Insurance||S$3,000 + S$800 = S$3,800|
|Mr Tan’s rider pays||S$3,800|
|Mr Tan pays from Medisave/cash||S$0|
Note: The deductible and co-insurance portion of the bill can also be paid for through Medisave and / or cash.
More features and limitations
Pro-ration of reimbursement
If you stay in a higher ward class than your policy entitles you to, a pro-ration factor will be applied to the claimable amount, reducing the amount that can be claimed. In the example below, where the policyholder has a plan with Class B1 ward entitlement, the pro-ration factor applied to Class A ward charges is 80%.
Illustration 2: Pro-ration of Reimbursement of hospitalisation bill under an Integrated Shield Plan
As with Illustration 1, Mr Tan was warded for three days in a Class A ward of a restructured hospital for the surgery and the hospitalisation bill was S$11,000.
However, Mr Tan now has an Integrated Shield Plan that entitles him to stay in Class B1 wards in restructured hospitals with coverage of benefits on an “as-charged” basis (i.e. there are no claim sub-limits for eligible expenses).
Under Mr Tan’s Integrated Shield Plan (Class B1 ward), there is an applicable Pro-ration Factor of 80% for Class A ward charges. This means that the claimable amount for Class A ward stays will first be proportionately reduced by multiplying the Pro-Ration Factor with the actual amount of eligible expenses. The proportionately reduced expenses will then be subject to the claim limits, deductible and co-insurance.
Mr Tan has a rider to cover deductible (of S$3,000) and co-insurance (of 10%) of the claimable amount under his Integrated Shield Plan (Class B1 ward).
80% Pro-ration Factor
|Room and Board||S$900||S$900 x 80% = S$720|
|Surgery||S$6,100||S$6,100 x 80% = S$4,880|
|Miscellaneous Hospital Services (e.g. doctor’s professional fees)||S$3,200||S$3,200 x 80% = S$2,560|
|Examination and Laboratory Tests||S$800||S$800 x 80% = S$640|
|Total Hospital Bill||S$11,000||S$8,800|
|LESS: Deductible (S$3,000)||S$3,000|
|Net of Deductible||S$5,800|
|LESS: Co-insurance (10%)||S$580|
|Net of Deductible and Co-insurance (i.e. S$8,800 - S$3,000 - S$580)||S$5,220|
|Mr Tan’s Integrated Shield Plan (inclusive of MediShield Life payout) pays||S$5,220|
|Total of Deductible and Co-Insurance||S$3,000 + S$580 = S$3,580|
|Mr Tan’s rider pays||S$3,580|
|Mr Tan pays from Medisave/cash
the portion of the total hospital bill (i.e. 20%) not covered due to the 80% Pro-ration Factor
Note: The deductible and co-insurance portion of the bill can also be paid for through Medisave and / or cash.
There are limits to the amount you can claim under a policy. For example, medical expense policies may include limits for all claims as well as limits set for each illness, disability, year or for a lifetime. You can make claims on two or more policies to get higher benefits, but having several medical expense policies does not necessarily provide extra benefits as the total benefit you will get is limited to your actual expenses.
There are benefit limits for most health insurance policies. Benefit limits can take the form of a policy limit, lifetime limit, annual limit, event limit or benefit period.
There is no age limit for MediShield Life. MediShield Life covers you for life and there is no age limit for entry into the scheme.
However, your private insurance plans may have an age limit, and may not be available to you once we reach a certain age. Some health insurance policies provide cover for your whole life while others provide cover for a fixed period of time or up to a certain age. Choose a product with a length of cover that suits your needs. In general, you are also more likely to benefit more from health insurance if you sign up early while you are still healthy.
All health insurance policies contain some ‘exclusions’. Exclusions are conditions or circumstances where benefits will not be paid. Besides MediShield Life which covers pre-existing medical conditions, most private health insurance policies exclude coverage of pre-existing medical conditions you had before you sign up for the product.
When you apply for private health insurance, you must give details of any illnesses, disabilities or medical conditions you have or have had in your application. The insurer will then decide whether or not to provide cover for that medical condition. You should note that you may be charged higher premiums (loading) or your coverage may be restricted because of the medical conditions you have and /or because of certain occupational exposure you may face.
For this reason, if private health insurance is in line with your needs and affordability, it is advisable to buy it while still young and healthy.
Exclusions vary from policy to policy. Besides pre-existing conditions, there are other exclusions in a policy that you should look out for. For example, general out-patient medical services and alternative or complementary treatments, including Traditional Chinese Medicine (TCM) may be excluded. Read the policy document carefully to find out exactly what you are or are not covered for. Check with your insurance agent if you are not sure.
Insurers may also impose a loading (i.e. charge a higher premium) for a health condition, rather than exclude it altogether. This is subject to the underwriting decision of the insurer.
Waiting periods / Deferred periods
There may also be a ‘waiting period’ or ‘deferred period’ during which benefits will not be paid.
A waiting period is the period from the start of the policy during which benefits will not be paid if an event occurs during this period. This is to prevent policyholders from buying policies only when they are aware of their illnesses so that they can claim for the medical expenses soon after.
A ‘deferred period’ means benefits may only be paid after you have been disabled or sick for more than a certain number of days.
Before you take up a health insurance policy, check the scope of coverage and waiting or deferred period, if any.
Some health insurance policies provide you with cover anywhere in the world. But some policies have ‘geographic limits’ so treatment provided outside those limits will not be covered. For treatment provided overseas, some insurance policies will pay only up to the amount that would be charged in Singapore, if that treatment is available locally. If you are likely to be living or working overseas, you should discuss your needs with your insurance agent before you take up the policy.
A policy rider is an addition to an existing policy, which provides supplementary coverage. If the rider accelerates the basic policy’s benefit, the policy may expire after the rider is paid out.
Examples of rider benefits include:
- coverage of deductible and / or co-insurance, which helps you to pay 100% of the deductible and / or co-insurance subject to limits;
- daily hospital benefit, which pays a certain amount of cash for each day that you are warded;
- critical illness benefit, which pays a lump sum benefit upon diagnosis of any one of the 30 critical illnesses covered by the policy.
Some health insurance policies guarantee that your cover stays in force as long as you pay the premiums on time (e.g.: Integrated Shield Plans). But even if your cover is guaranteed, your insurer may be able to change the benefits, premium rates or other terms and conditions when the policies are due for renewal (usually every year on the anniversary of the start of cover). For some policies, the insurer has the right to cancel your cover with written notice before your policy is due for renewal. If renewal of cover is not guaranteed, an insurance company can decide not to renew the policy after a major medical claim.
Do note that some health insurance policies are short term, i.e. they may cover you for only a limited period. Examples of this include employer medical benefits, which generally end when you cease employment with the employer. Do check that your product you are covered by covers the duration that you need. If you buy a short term policy, check whether there is guaranteed renewability if this is important to you.
Make sure you are clear about the terms and conditions of the policy before you buy it.
Ending a policy
Your private health insurance policy may end when:
- You reach the maximum age stated in your policy;
- You have received the maximum benefits that can be paid under the policy;
- The insurer cancels your cover; or
- You fail to pay your premiums.
If your policy ends because you have failed to pay your premiums, you can apply to your insurer to provide cover again. Your insurer will review your age and health for the new cover. You may have to pay a higher premium or have extra or new conditions attached to the policy. Insurers can also refuse to cover you again.
What else should you look out for before buying health insurance?
When deciding what type of health insurance to buy, make sure you are clear about what you need and what you can afford to pay long term. The cost of healthcare differs greatly between private and public hospitals, and also for the different types of wards. There are different insurance policies to cater to different needs and premiums will be higher for policies which offer higher coverage. Take some time to work out what you need for you and your family, before deciding what to buy.
If you have budget constraints, and cannot afford to pay high premiums, be prepared to adjust the level of healthcare service and/or income protection that you want. Choose a product with premiums you can afford. If you do not keep up with your premium payments, your plan will lapse and you may not have the coverage you want when you need it.
Check whether you are already covered under another health insurance policy before you purchase any new ones. But remember that the coverage provided by your employer may not be portable.
You should note the following:
Multiple medical expense policies (applicable for medical expenses insurance plans only)
With medical expense insurance, the total reimbursement you will get from all your policies is limited to your actual expenses. So buying additional medical expense insurance policies does not necessarily provide extra benefits.
Switching between health insurance products
Health insurance policies do not usually cover pre-existing conditions (illness or disability you already have) when you sign up for them. Before you switch from one health insurance policy to another one, consider whether your health has changed from the time you bought your current policy and whether you have any existing health conditions. If there has been any change in your health condition, the new policy that you switch to may not provide you with the same coverage as your current policy, or the new policy may require you to pay additional premiums in order to provide you with certain benefits. Do watch out for this.
You should note that although MediShield Life covers pre-existing conditions, if you switch from one Integrated Shield Plan to another under a different insurer, you will only be covered for pre-existing conditions up to MediShield Life benefits. If you have existing medical conditions that are covered by your previous Integrated Shield Plan, you may lose coverage for your existing medical conditions under the additional private insurance component of your new plan.
Make sure the policy suits you
You should ensure that the policy recommended to you suits your needs. Read the policy documents carefully and seek clarification when in doubt. Ask for all calculations and explanations in writing.
All insurance companies minimally grant a 14-day free look period, while Integrated Shield Plans have a 21-day free look period. It starts from the date you receive your policy documents. During this period, you should review your policy carefully to see if it meets your needs.
If you decide that the policy does not suit your needs and do not want to keep it, write to the insurance company to give them notice of cancellation. Written notice must be given to the company within 14 days (or 21 days for Integrated Shield Plans) from the date you received your policy. The company will refund all your premiums less medical and other expenses they have already incurred.
What you should do before admission into hospital
Healthcare costs can differ greatly between a private and public hospital, and between the different types of ward. Before you go into hospital you should check:
- the ward charges and the costs of medical treatment recommended by your doctor;
- what ward class you are entitled to stay in under your health insurance plan and how much of the costs your health insurance policy will cover;
- what options are available to you; and
- that you have selected a ward or treatment based on what you can afford.
You should also check with your insurer if they can issue a letter of guarantee (LOG) to you. The LOG is to assure the hospital of payment by the insurer of the portion it will cover. Do ask the hospital for an estimate of the bill.
How do you make a claim?
To make a claim, you will typically need to fill in the insurer’s claim form and provide proof (such as hospital bills, medical reports, tests results and declarations of income) to support your claim. You may be asked to provide additional supporting documents if the insurer needs more information to assess your claim. You should make all claims as soon as possible. Most health insurance policies require you to tell the insurer about a claim within a time limit.
To make a claim under MediShield Life, IPs and Medisave, you only need to fill in a Medical Claims Authorisation form and the hospital will submit the claim on your behalf through the MediClaim online system after you are discharged.
The above information is prepared in collaboration with the Life Insurance Association of Singapore, Central Provident Fund Board and General Insurance Association of Singapore.
This article was first published on http://www.moneysense.gov.sg/ in October 2015