01 Nov 2021
SOURCE: CPF Board

As someone who is preparing to step into or has just entered the workforce, you may be coming to grips with the various aspects of adulting.

One of the more important items in the “how-to-adult” checklist would be to sort out your hospitalisation insurance. From the moment you started working, you would have received several requests from insurance agents asking to meet. At the same time, you would have seen your peers getting their insurance plans and urging you to do so as well.

Here’s what you need to know to decide what kind of hospitalisation insurance coverage you might need.

All Singapore Citizens and Permanent Residents are automatically covered by MediShield Life, and have a MediSave Account

If you are inclined towards choosing subsidised treatment in a restructured hospital, MediShield Life is sufficient for you.

But if you wish to have additional coverage, you can consider purchasing an appropriate Integrated Shield Plan (IP):

Is there only one type of IP plan? Nope! There are a variety of different plans, which provide different coverage, you can consider. Here is a list of the different plans offered.

Before you decide if you need an IP, there are some things you must consider. 

1. What are the implications of choosing a higher class ward/ private hospital?

Your hospitalisation bill will increase substantially if you choose to stay in a higher class ward (eg A/B1-type ward) / private hospital. This considerably increases the amount you will have to pay. Take for example:

• A common medical condition in Singapore is the appendicitis 
• As shown in the table, the median medical bill ranges from $1,700 to $20,900, out of which you will have to pay the deductibles, co-insurance and whatever is in excess of any applicable IP limits
• You will have to pay a sizable amount, especially if you choose to stay in unsubsidised wards, ranging from $2,900 to $5,200 (~2 to 3 times more than subsidised wards)

^{Calculations are rounded to the nearest hundreds.}

_{1 Bill amount is taken from MOH’s website – Fee Benchmarks and Bill Amount Information (data from 1 July 2018 to 30 June 2019), at the 50th percentile across the bills gathered from Singapore Citizens.
2 This is the amount Insured has to pay after deducting hospital subsidies and MSHL/IP payouts, where applicable. It assumes patient admitted is below the age of 81 years old, and holds an IP whose ward coverage is pegged to their actual ward stay. Please approach your Insurer for your individual IP benefits as they may differ and/or change from time to time.}

It is important that you purchase IP plans according to your ward preferences so as to avoid paying higher premiums for coverage you might not need.

2. Can you afford the increasing IP premiums as you get older?

The premiums that you pay now might not be too much of an issue when you are young and still working, but what about in the future?

The additional private insurance coverage component could be up to 4 times the MediShield Life premiums when you are in your 70s or 80s and are no longer working.

Comparison of Premiums between MediShield Life (MSHL) and Integrated Shield Plans (IPs)

^{1 AWLs refer to the maximum amount of MediSave that can be used to pay for the additional private insurance coverage. The excess premiums above AWLs are payable in cash. Please refer to the table below for the AWLs applicable for the different age groups.
2 Premiums for the additional private insurance coverage (indicative as of 1 April 2021) are in addition to the MSHL premiums that you have to pay.
3 This refers to the cash top-up in excess of the AWLs for MediSave usage for the additional private insurance coverage premium.}

Perhaps you are thinking to maximise your coverage first and worry about whether to change the plan in the future. Here’s an example that illustrates why it is not worthwhile to pay for a private hospital IP, especially if you end up opting for subsidised care in public hospitals.

^{1  IP annual premium amounts are taken from MOH website, and the median across the various IP plans are used for the tabulations. IP premiums which include the MediShield Life component are before any applicable subsidies for MediShield Life premiums. Please login to your Healthcare dashboard ‘Coverage and premium details’ to view your MediShield Life premiums and applicable subsidies, if any.}

As you can see, a fresh graduate who is fully on MediShield Life from 23 to 50 years old pays $11,500 less in premiums compared to someone who purchased a private hospital IP at 23 and subsequently rightsized their plan at 50.

Another important factor to take note of is inflation. IP premiums are not fixed and can be increased annually due to medical inflation. Hence, the premiums that you need to pay in your 50s could be higher than the indicative premiums shown for that age when you bought your IP in your 20s.

3. Can you afford to pay cash for IP premiums which exceed the Additional Withdrawal Limits (AWLs)?

MediShield Life premiums are fully payable using MediSave, but the additional private insurance component of IP premiums is payable only with MediSave up to the AWLs. Any excess needs to be paid in cash.

As you get older, you may need to pay a substantial part of your IP premiums in cash depending on the IP you choose.

Lastly, also consider if paying for IP premiums is an efficient use of your MediSave. Your savings in your MediSave Account can earn an attractive interest rate of 4% per annum, which can help to meet your future healthcare needs. Not only that, any additional amount on top of the Basic Healthcare Sum will be transferred to your Special Account or Retirement Account, which can boost your monthly payouts when you retire!

So, should you get an IP? If your preference is to seek subsidised treatment in public hospitals, MediShield Life and your MediSave savings are sufficient for your needs. Otherwise, consider the considerations listed above before buying additional private hospitalisation insurance. We hope that this article has helped guide what you need to think about before buying hospitalisation insurance.

Helping you secure your future and retirement is, after all, what we strive to do.

Information accurate as at 01/11/2021.