One of the common question my client asked is should they terminate their private integrated shield plan once CPF Medishield Life starts in later part of 2015. They had read in some articles that they should not terminate while some suggest they should. I cannot comment what is the best action for an individual but let us go through what’s in for us before we make an informed decision.
First, nothing much in procedure had changed from CPF Medishield to CPF Medishield Life. At the moment, if you are paying for a private integrated shield plan, a portion of the premium that is deducted from your CPF Medisave account goes to the private insurer and a portion goes to CPF Medishield. For example, Mr. A purchased an NTUC Enhanced Incomeshield “Preferred” plan and the annual premium payable for his age of 30 is $244. The premium for CPF Medishield is $66. Therefore, the amount of $244 will be deducted from Mr. A’s CPF Account. CPF will take $66 and NTUC Income will take the balance of $178. These are transparent to the policy holder and it’s all settled behind the scene. There are some wrong information that you have to pay for both plans i.e. $244+$66. Likewise, when a claim arises, the claims are paid by both CPF Medishield and Private Integrated Shield plans. This system will work the same when CPF Medishield Life kicks in so don’t worry about paying extra premium.
Next, I must stress that CPF Medishield Life is a vast improvement from the current Medishield.
In additional to the enhancement, one of the best improvement must be CPF Medishield Life provide coverage for pre-existing conditions.
Despite the increase in annual limits from $70,000 to $100,000 which is a more reasonable amount considering the medical cost in Singapore today, we need to look at the item limit. This is the maximum amount you can claim for respective items. For example, based on the ward charges posted on SGH website, it cost S$428/day for a Standard Ward Class A1 which is commonly known as a Single-bedded room. For the same ward type in Raffles Hospital, it cost $588/day. The “ward limit” for CPF Medishield Life is $700/day so you can claim the full amount regardless the stay is in SGH or Raffles Hospital.
Now, let us look at the limit for surgical procedure. We use a case of Appendix surgery and we shall use the 50th percentile for discussion purpose. (Source: https://www.moh.gov.sg/content/moh_web/home/costs_and_financing/HospitalBillSize/appendix_surgeryappendicectomy.html)
A 3 days treatment in Ward A at SGH will cost about $6,907. If we less of the 3 days of stay which cost $428/day, that means the surgical procedure will cost around $5,623. Let us assume 50% goes to doctor’s fees, lab fees and other miscellaneous cost, the actual cost of surgery will be around $2,811.
The same treatment will take an average of 2 days in Raffles Hospital and if we use the same assumption as above, the estimated surgery cost will be $7978.
The surgical procedure limit is maximum of $2,000. What this means to you is he excess of $2,000 is not claimable. In the case given above, $811 and $5,978 needs to be pay from your own pocket if you had stay in SGH & Raffles Hospital respectively.
In order to enjoy subsidise from the government which can be as much as 80%, most will choose to stay in a lower ward. However, does this help? To a certain extend, it may….
It may also be of an interest to know that mean testing for medical subsidies had taken effect on 1st Jan 2009. This is to Below is a chart of how it works.
|Ave. Monthly Income
|Class C Subsidy (Citizens)||Class B2 Subsidy (Citizens)||Class C Subsidy (Permanent Residents)||Class B2 Subsidy (Permanent Residents)|
|3,200 and below||80%||65%||70%||55%|
|$3,201 – $3,350||79%||64%||69%||54%|
|$3,351 – $3,500||78%||63%||68%||53%|
|$3,501 – $3,650||77%||62%||67%||52%|
|$3,651 – $3,800||76%||61%||66%||51%|
|$3,801 – $3,950||75%||60%||65%||50%|
|$3,951 – $4,100||74%||59%||64%||49%|
|$4,101 – $4,250||73%||58%||63%||48%|
|$4,251 – $4,400||72%||57%||62%||47%|
|$4,401 – $4,550||71%||56%||61%||46%|
|$4,551 – $4,700||70%||55%||60%||45%|
|$4,701 – $4,850||69%||54%||59%||44%|
|$4,851 – $5,000||68%||53%||58%||43%|
|$5,001 – $5,100||67%||52%||57%||42%|
|$5,101 – $5,200||66%||51%||56%||41%|
|$5,201 and above||65%||50%||55%||40%|
Let us look back at the same Appendix surgery in Tan Tock Seng Hospital and assume the earning of Mr. A is $3,500/mth and Mr. B is $5,000/mth. It will cost $1,288 for both but they will receive different subsidy.
|Patient||Subsidy||How much patient needs to pay?|
|Mr. A||78% x $1,288
|Mr. B||68% x $1,288
|$1,288 – $875.84
Mr. B will have to pay more as he is a higher income earner than Mr. A. This might make Mr.B stay in a higher ward since he is going to pay more anyway. With these in mind and knowing CPF Medishield or Medishield Life is intent for Class B2/C wards of public hospital, you have to decide if Medishield Life will be sufficient for you and your family members or private integrated shield is a better option.
Always speak to your financial advisor if in doubt.