Private Medishield Plans

There are many medical plans that allows the premium to be paid using your CPF medisave account and consumers are always asking which is the best for value plan. It is difficult to compare the plans available as each has its pros n cons depending on an individual’s preference. Let me first start by going through the most basic which is the CPF Medishield plan.

There are several limitations in the CPF Medishield Plan. One such limitation is itemised limit which put a restriction of how much you can claim for each treatment or section of claim. The annual limit of $50,000 refers to the maximum one can claim within a year . Another limitation is the life time limit that will terminates the whole plan when you claim up to the amount of $200,000 in your lifetime.

Although the information of CPF Medishield is easily available in the CPF website, most people are not aware of what CPF Medishield covers or some who stay in a private/A ward only to realise that they can claim up to 35% of the total bills only!

These are no fault of CPF Medishield as this plan is meant as a national medical scheme to serve the masses and to insured those who are not financially sound to get their own insurance.  The authorities recognise those problems and in 1st July 2005, they open up the medishield plans to private insurance companies to insure consumer who prefers better medical attention. These plans are commonly known as ‘Medisave-approved Integrated Insurance Plans’ Or ‘Private Medical Plans(PMIs)’. There are several plans available in the market and a snap shot of the difference between them is shown  here.

There are two item that will be co-shared by the policy holders in all these plan. The first item is known as the “Deductible” & the second is the “Co-insurance“. The deductible is the amount that the policy that must be paid by the policy holder in a policy year before a claim is payable. This amount ranges from $1,000 to $3,000 depending on the ward type. For e.g. If I submit a bill of $10,000 for the first time of the year and my deductible is $3,000, the insurers will pay base on the $7,000 only. The purpose of this deductible is to keep the premium lower as the insurers will not pay a small claim like $500.

Co-insurance is a ‘on-going liability’ that the policy holder will have to bear. It is always 10% of the bill that is submitted.  The purpose of co-insurance is to let the policy holder a shared responsibilty of the bill. Without this co-insurance, he may have no hesitation of getting the same treatment at $20,000 instead of $10,000. However, he save his portion of the co-insurance by getting a less costly treatment and helps the insurers to minimise the payout as well.

The good news is most insurers allows you to cover for the co-insurance and deductible by using a rider. The bad news is that this premium is payable by cash. It is important to insure the 10% co-insurance as the amount is a variable depending on your bill size. The deductible is a fix amount and we know the maximum liability that can occur to us is $3,000 so as long as we have $3,000 in medisave, cash or employee benefit than we are generally quite safe. However, all the plans in the market requires you to cover for both the co-insurance and deductible except for 2 companies.

NTUC Income allows you to cover only the 10% deductible but cap it at $3,000. This means regardless whats the bill, the maximum one have to pay will be $3,000 if he have the rider.

Aviva allows us to cover for either the deductible of $3,000 or the 10% co-insurance and also the option to cover BOTH the deductible and 10% co-insurance. Some of my clients asked whats the rationale and the hassle of seperating them since most people will take both. The reason is that the premium for these plan are escalating over the years. You will be surprise to find that to a certain age, your premium will be the same as the deductible and is some instances it cost more than your deductible of $3,000. In those cases, it make no sense to keep the deductible rider. Another reason is the premium. For someone in the 30s, to cover for both deductible and 10% Co-insurance, it will cost about $250-350 per year. But to cover just the 10% co-insurance, it will cost just over $70 a year.

A deposit of $500 or 20% of the estimated treatment cost is require to be paid upon admission. Another differences between these plans are only NTUC Income & Aviva offers Letter of Guarantee(LOG) that waives the deposit if you are admitted to a government/re-structured hospital. While many agents stress on how comprehensive or how cheap their shield plans are, I emphasis on this LOG. The reason is that the best medical plan will not pay and has no bills to pay if we can’t even get admitted into a hospital and seek consultation. With LOG, there is no question about the ability to pay the deposit.

Nevertheless, I’ve seen agents that tries to find ‘bones in an eggshell’ and say the LOG does not provide for Private hospital. Let’s be practical! If you cannot even afford the deposit in a government ward, do you dare to check yourself into a Private ward?