Integrated Shield Plans: Why MediShield Life Is Unfortunately Often Insufficient

Everything about them other than why the acronym is IP and not ISP

• Shield (Hospital) Plans are the most basic form of personal insurance and the most important to consider due to the potential size of hospital bills. 
• In Singapore, the base MediShield Life coverage is one of the most comprehensive government-based health insurance plans globally. However, it's sized for subsidised treatment in public hospitals in B2/C wards. If you go private or use A/B1 wards, it will cover only a small proportion of your bill and you would need to draw from MediSave and/or cash to pay the balance.
• Fortunately, MediSave-approved Integrated Shield Plans (IPs) are highly affordable and provide the additional hospital coverage needed, minimising your co-insurance liabilities while maximising your eligibility for private hospitals and better wards in public hospitals.

We sometimes see, portrayed in films and on television, families despairing over ridiculous hospital bills and the inability to afford them. In the news, we hear of people from countries like the United States who do not have basic access to healthcare and health insurance taken for granted in other parts of the world.

Thankfully, in Singapore, of the different forms of personal insurance coverage one gets, Personal Health Insurance is at the top of the list. Referred to in Singapore as an Integrated Shield Plan, a portion of this plan, MediShield Life, is paid for from one’s Central Provident Fund (CPF) account. Every Singaporean Citizen and PR has access to this.

What is an Integrated Shield Plan?

Integrated Shield Plans (IPs) are a form of hospitalisation coverage that covers large portions of covered clients’ hospital bills should a claim arise. They are comprised of two components:

1. MediShield Life: The ‘mandatory component’. Every Singaporean Citizen and PR opts into this component, and it is fully payable by their MediSave account with the Central Provident Fund (CPF) Board. This includes coverage for pre-existing conditions regardless of their insurability.
2. Additional Private Coverage: The ‘optional component’. There is an option to purchase an additional coverage component with private insurance companies. People do this for various reasons, such as extending their coverage scope to private hospitals or Class A/B1 wards in public hospitals and limiting their deductible and co-insurance exposure.

In the event of any medical emergency, among the first and heaviest costs incurred are that of inpatient expenses. However, the good news is that - depending on how comprehensive a Shield Plan is - we can reduce any unforeseen future hospital bills from potentially tens or hundreds of thousands of dollars down to a smaller, more affordable sum that does not break the bank.

MediShield Life and why it is not enough

MediShield Life, which is mandatory for all Singaporeans, is fully payable by one’s CPF MediSave account, meaning no cash outlay on your part. If you’re thinking, ‘that sounds great! So, why is there a need to talk about anything beyond that?’ For starters, MediShield Life covers us for large hospital bills in Class B2 or C wards in public hospitals. There are three main issues with this:

1. Deductibles: Before a hospital bill is considered for a MediSave payout, a fixed dollar amount has to be paid out-of-pocket by you as the client. The deductible amount is $1,500 for Class C wards and $2,000 for Class B2 wards. Only upon the payment will the remaining bill be considered for payout eligibility and amount.

2. Co-Payment: There is a percentage of the total bill you are liable to pay. This is shown below:

As shown in this Ministry of Health chart, there is no fixed cap for the dollar amount you may be liable for. This is dangerous - for relatively large hospital bills, 3% may still be a daunting sum for many people.

3. Pro-Ration Factors: This is less discussed but equally likely to damage personal finances. As established earlier, MediShield Life covers Class B2 or C wards in public hospitals. However, certain conditions such as contracting a rare disease only specialists can treat, or being in a remote/rural area when an accident occurs with the nearest hospital being a long distance away, may lead to the unintended need to use a private hospital.

In this case, the bill in the eyes of MediShield Life is scaled down by a pre-determined ratio. Hence, a payout is made to you under the ‘assumption’ that you were hospitalised in a B2 public ward - leaving you to pay the total remaining weight of the bill from the private hospital.

Going Private with Integrated Shield Plans (IPs)

Obviously, none of the previously described situations are ones we ever want to be in. The good news is that the solution exists. You can be covered under private insurance companies for only a few hundred dollars per year of additional cash outlay.

A Shield Plan acts as such; a shield. Specifically, from paying way more than you should have to. Shield Plans, almost like a club membership, come in “tiers”. The lowest “tiers” commonly just cover Class A public wards whilst marginally reducing the deductible & co-insurance. The absolute highest and most “exclusive” tier covers hospitalisation in any private hospital. Using doctors on their panel will limit your exposure to a co-insurance of 5% capped at $3,000.

This is a game-changer! Why? Because as of March 2018 under Singapore Regulations, Shield Plans can no longer cover 100% of the bill under any circumstances to avoid over-consumption. The absolute best offer within Singapore’s borders is 5% co-insurance with a numerical upper limit (cap). 

The upper limit becomes increasingly money-saving for larger bills. For example:

By upgrading his shield plan years ago, he has saved himself from paying a tear-jerking sum in the tens of thousands (had he only had MediShield Life with no upgrades) and was only liable to pay a much more reasonable $3,000 out of his pocket.

Disclaimer about IPs

While Shield Plans are pretty much a necessity, do be informed that your eligibility for purchase is entirely at the discretion of the private insurer you apply with. So if you have a pre-existing medical condition, from our experience, most insurers will be reluctant to take you in. Or if they do, it may be with:

1) Premium Loading (additional premiums for taking on additional risk) or

2) Exclusion of your conditions. As a hypothetical example (not based on specific facts, but just to make a point), if you have had bronchitis, they may state they will pay out except for in the event of hospitalisation due to respiratory illnesses. 

This stringent underwriting and caution in approving new clients are since - thanks to the economies of scale of having practically an entire country participating - the premiums for shield plans are relatively cheap, whilst the coverage amounts have lifetime limits (the absolute upper limit a shield plan will cover a single insured individual for) in the millions of dollars. 

Please see here for a comprehensive, highly detailed comparison of IPs from the MOH. You may well need help in deciding which is the best plan for your particular needs.

The MOH says, "You are strongly advised to seek the professional advice of insurance professionals before making any decision concerning any of the Medisave-Approved Integrated Shield Plans."

Conclusion

In Singapore, we are fortunate to have one of the most comprehensive government-based health insurance plans globally, in the form of MediShield Life. However, we can always do more. Not just that we can, but that we should. For only a few hundred dollars a year (a very affordable sum), we can move forward knowing we will never have to worry about bearing the weight of a monstrous hospital bill. Even if you are wealthy enough to afford it, it’s not something you ever want to pay for out of your own pocket. Be sure to speak with a trusted professional advisor to learn more and consider upgrading to a Shield Plan as soon as possible!

IPs. COMPLETED. ✅

 Sources:

1. https://www.moh.gov.sg/cost-financing/healthcare-schemes-subsidies/medisave 
2. https://www.moh.gov.sg/cost-financing/healthcare-schemes-subsidies/medishield-life 
3. https://www.careshieldlife.gov.sg/careshield-life/about-careshield-life.html 
4. https://www.lia.org.sg/media/1525/180426_lia_mortality_and_ci_101_guide.pdf