Medishield Life comparison to Medisave-approved Integrated Policy – To switch or not to switch?

With the announcement of Medishield Life on 5 June 2014, will I drop my Medisave-approved Integrated Policy (IP) with Aviva?

I took up Aviva IP Myshield Plan 2 that covers my in-patient stay in any Government/Restructured Ward which allows me to stay in Class A1 ward in Government/Restructured Ward or other class wards below A1.

Let’s compare the benefits of Medishield Life and Aviva’s IP Plan 2 (in broad terms).

Benefits Medishield Life IP Plan 2 of Aviva
Inpatient benefits daily ward & treatment charges

– Normal stay

Max daily claim limit $700 As charged, meaning Aviva picks up these charges without daily claim limit.
– ICU Max daily claim limit $1,200 As charged
Surgical procedures Max claim limit $200 to $2,000 As charged
Claim limit for policy year $100,000 $400,000
Claim limit for Lifetime No limit No limit
Maximum coverage age Lifetime Lifetime (Premium on renewal from age 76 onwards till 100)
Annual deductible $2,000 Class B2 $3,500 for Class A1
Co-insurance Co-insurance rates range from 3% to 10% 10%

Under the Medishield Life, those with pre-existing conditions will have to pay 30% higher premiums to reflect higher risks, over a period of 10 years. Since I have been covered under IP, pre-existing medical conditions had been factored in my policy already.

Premium increase for remaining policyholders as a result of universal coverage should be no more than 3 per cent from current premiums according to Medishield Life Review Committee. Let’s see whether this is true in the end.

The following are reasons for keeping to my Aviva IP Myshield Plan 2 even with latest changes to Medishield:

1. Existing benefits offered by IP are superior than Medishield Life on all fronts except for annual deductible and co-insurance rates. See above table.

2. Claim limit for lifetime is already unlimited under IP.

3. Maximum coverage age is already lifetime under IP.

4. I can opt for ward A1 hospitalisation in Government/Restructured Ward under this IP on a “as charged” basis. (“As charged”, meaning Aviva picks up these charges without daily claim limit.)

5. Claim limit for a policy year is $400,000 in the case of IP against a lower limit of $100,000 for Medishield Life.

6. As one gets older, it is not advisable to switch insurance policy because we may more likely have pre-existing medical conditions that can cause insurance premium to go higher on the switch.

The government will provide subsidies for bottom two-thirds of households to help them cope with increase in premium as a result of Medishield Life. Details are still sketchy based on the reports of Medishield Life in major newspapers. For one, mean-testing of those households that qualify was not completely spelt out. Will the annual value of one’s residence be used again beside per capita family income to determine who qualifies for subsidies? I would think that this would be the case like the CHAS scheme, where annual value of residence is also used.

Copyright © 2014, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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2 Responses to Medishield Life comparison to Medisave-approved Integrated Policy – To switch or not to switch?

  1. Pingback: Daily SG: 9 Jun 2014 | The Singapore Daily

  2. Tan S Y says:

    Hi, I think many Sporeans got one important fact wrong in the proposed Medishield Life. From what I read, the 3% increase mentioned by the Committee is merely to help cover the cost of bringing in those with pre-existing medical conditions. Neither the Committee nor the Health Minister has indicated what the total final premium increase would be. But Mr Gan did provide a hint on this. A few days ago, he reportedly gave an example of a family whose premiums would increase from $102 to $148 per month (this is before any subsidy). He also said that the 1% increase in Medisave (eg. 1% of a base salary of $5000 = $50 per month) would be more than enough to cover this increase for most Sporeans. So we are likely looking at 40% premium increase as I doubt that Gan would give this example without having worked out the total increase with the Committee. Apparently he will announce the figure only later this month after the government has decided what subsidy it would give the people.

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