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Everything You Need To Know About Integrated Shield Plan

Healthcare systems are reviewed regularly to ensure that it is operating on a sustainable system. If the system is unsustainable, medical bills will skyrocket, quality of care will deteriorate and ultimately patients will have to pay the price.

On 7 th March, the parliament has announced changes to IP riders to incorporate 5% co-payment. In this article, let us understand what integrated shield plan (IP) is and how the change may affect us.

What is an Integrated Shield Plan? Do I need it if I already have MediShield Life?

The IP consists of two components. The first is MediShield Life managed by the Central Provident Board (CPF) Board. This is compulsory for all Singapore citizens and permanent residences. It will cover us for life, including pre-existing medical conditions. The coverage includes hospitalisation and treatment based on the costs of Class B2/C wards in public hospitals.

The second is an additional insurance coverage provided by private insurers. This will provide for the additional costs incurred for Class A/B1 wards in public hospitals or private hospitals. On top of that, we can opt for plans with riders to reduce the portion we have to pay for our hospitalisation bill.

How do I know if I have IP?

According to the Ministry of Health, 68% of Singapore citizens and PRs have

integrated shield plans in place.

To find out if you are covered by an Integrated Shield Plan, simply log in to CPF’s website, go to “My Messages” and look under the “Insurance” section. If you are covered by one of the following plans, you do have an IP.

For those with existing integrated shield plan, how does it compare to MediShield Life?

Let’s take a look at a basic scenario.

For normal hospital ward charges, MediShield Life covers up to $700 per day. If you choose Class B2 ward, you will need to pay $2000 as deductible plus an additional 10% of the claim amount as co-insurance. Meaning to say, if the bill is $6000, you will be paying $2000 deductible and $400 (10% of $4000) as co-insurance. MediShield Life will be paying the remaining $3,600 equivalent to 60% of your hospitalisation bill.

Depending on the type of IP you subscribe, you may be covered for your entire medical bill even for private hospital, class A or B1 ward. If you do not have the full rider and you choose class A ward, the deductible is $3,500 based on NTUC Enhanced IncomeShield and 10% of co-insurance. If your bill chalks up to $10,000, the total amount you need to pay is $4,150 and IP will cover the balance. This might seem like a hefty price, but the deductible remains the same even if your hospitalisation bill goes beyond $10k. Meaning to say IP will take care of a larger portion of your bill giving you greater peace of mind.

Why the change in IP?

Since the introduction of IP in 2005, premiums have been increasing due to adverse claims received by IP insurers. Over the past 2 years, premiums for IP and full riders have increased up to 80% and 225% respectively.

According to the Life Insurance Association Singapore (LIA Singapore), the industry claims ratio jumped from 57% in 2011 to 82% in 2015. At the same time, the Straits Times has reported people with full riders have bills that are 60% higher than those without. Despite hikes in IP and rider premiums, all insurers clocked underwriting losses in 2016. If this continues, it will threaten to make health insurance unsustainable.

How does it affect me?

To mitigate the problem, the parliament has announced that those buying the new rider, will need to co-pay at least 5% of their hospital bill. The total amount that a policyholder has to pay can be capped $3,000 a year to ensure that patients will not have to dig too deeply into their pockets. However, the cap is applicable only if patients are treated by doctors on the insurer’s approved panel or prior approval have been sought from the insurer. Otherwise, they would have to pay the 5% without a cap on their portion.

Currently, if you do not have a full rider for your IP, you will still be able to do so until 1st April 2019 but you will need to switch over to the new scheme by 1st April 2021.

If you belong to the 1.1 million people who already have full riders, the government has not mandated any change for your IP. You will still be covered for your entire hospital bill. However, Senior Minister of State for Health, Mr. Chee Hong Tat expects the new riders to have lower premiums than full riders, and switching over will result in premium savings.

What can I do now?

Ultimately, you should be properly covered for hospital bills to the best you can.

With proper coverage, you can be assured that you have your insurance to fall back on in times of crisis. If you do not have IP and would like to have the option to choose where you seek treatment, do consider getting IP with rider even if you are required to make co-payment eventually. If you already have the full rider and wish to lower your premiums, you can opt to switch over to a rider with co-payment. Alternatively, discuss your situation with your financial advisor to find the best solution for you.

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