Sunday 12 July 2015

Medisave for IP premiums: New limits on withdrawals when MediShield Life replaces MediShield in end-2015

Singaporeans over 40 can now use more of their Medisave funds to pay for their additional private insurance premiums
By Neo Chai Chin, TODAY, 9 Jul 2015

Singaporeans above the age of 40 will be able to use more of their Medisave funds to pay for part of their Integrated Shield insurance premiums when MediShield Life kicks in at the end of the year.

Integrated Shield Plans (IPs) offer benefits over and above the coverage offered by MediShield Life, the basic universal scheme that will protect against large hospital bills.

After announcing earlier this year that it would cap how much Medisave could be used to pay for the private-insurance portion of the IPs, the Ministry of Health (MOH) today (July 9) said the caps — called Additional Withdrawal Limits — will be S$300 per year for those below 40, S$600 for those turning 41 to 70, and S$900 for those turning 71 and above.

About 2.4 million Singaporeans — or more than six in 10 — own IPs. Just over half of them have plans that cover private hospital stays, while the rest are covered for B1 and A Class wards in public hospitals.

The MOH estimates that with the Additional Withdrawal Limits, 200,000 Integrated Shield policyholders (8.3 per cent) can use more Medisave to pay for the private-insurance component of their premiums, assuming they remain on the same plan and do not move into different age bands.

Integrated Shield Plans comprise the MediShield/MediShield Life component which is sufficient to cover B2 and C Class ward stays, as well as the private-insurance portion which is sized for stays in B1 and A Class wards and private hospitals. 

There will be no Medisave withdrawal limit for MediShield Life premiums.

The Additional Withdrawal Limits are higher for older groups because their premiums are higher, Health Minister Gan Kim Yong told reporters today.

“With these changes, Singaporeans will be able to use the same or more Medisave for their private component of the IPs, and all of them will be able to use Medisave for the full amount of their Medishield Life premiums after all the subsidies,” he said.

During public engagement on MediShield Life, Integrated Shield policyholders wanted to use more from Medisave for their premiums; this was especially so for older people, according to the MOH.

Currently, Medisave withdrawal limits apply to the entire Integrated Shield premium payable, and range from S$800 to S$1,400 per year.

According to the ministry, the Additional Withdrawal Limits mean that those below 40 can use the same amount of Medisave to pay for the private-insurance component of their plans, while those turning 41 to 70 can use up to S$250 more from Medisave a year to pay for this component. Those older than 70 can use about S$400 to S$700 more of their Medisave for this purpose.

In deriving the limits, the MOH tried to strike a balance between helping those who want to purchase private insurance plans, and ensuring people have enough Medisave for other healthcare needs, said Mr Gan.

On whether allowing more Medisave for the private-insurance components of IPs would encourage more people to buy them, Mr Gan advised Singaporeans to carefully consider two factors: If they needed to stay in higher class wards or private hospitals, and if they were prepared to pay higher premiums, especially in old age. 

“These are, first of all, personal decisions,” he said.

The Government will review the Additional Withdrawal Limits to account for future changes in Integrated Shield premiums, while ensuring adequate Medisave balances for long-term healthcare needs.

“We will need to calibrate, we’ll need to assess when the time comes, whether or not we need to adjust the (limits),” said Mr Gan.

Last month, the five Integrated Shield insurers – AIA, Aviva, Great Eastern, NTUC Income and Prudential – pledged to freeze the private-insurance portion of premiums in the first year of MediShield Life. But they said premiums would go up in the long term due to rising healthcare costs, especially in private healthcare.

Those with integrated plans cheer new rule
By Rei Kurohi, The Straits Times, 10 Jul 2015

With the new Additional Withdrawal Limit (AWL), seniors like Mr Chua Hock Guan, 78, can potentially save hundreds of dollars on out- of-pocket expenses towards their integrated plan (IP) premiums.

IP policyholders in his age group can use up to $900 from Medisave to pay the premiums on their private insurance plans.

"It definitely makes a difference to retirees. If I can save $500, I can use the money to buy food for a month," said Mr Chua, who lives alone.

Younger Singaporeans have also received the announcement well.

Business owner Agnes Goh, 52, welcomes the AWL in view of the higher premium for MediShield Life over the current MediShield premium. "I was a bit concerned about the higher price for MediShield Life at first, but it's a good thing that the withdrawal amount for private insurance is capped separately," said Mrs Goh, who has a policy with NTUC Income.

"As long as we're paying less in cash, this is good for everyone, even if it's a small reduction."

For Mr Foo Siang Kin, 55, the AWL means more freedom to choose private insurance policies that best suit his family's needs.

"When my wife had to be hospitalised, she was warded in a Class C ward. Not only did the policy cover the costs, but we also had extra cash left over after the claims," said the taxi driver, who has policies under NTUC Income for himself, his wife and their two children.

Mr Foo added that while the new AWL will ease the burden on the thousands of dollars he forks out for his family's premiums, he does not see it as a handout. As a non-salaried worker, he does not receive employer contributions to his Central Provident Fund account.

"After all, as a cabby, I have to top up the Medisave account myself. So I'm still paying out cash from my pocket every year," he lamented.

For those people below 40, the benefits from the AWL may not be as significant, but they were still seen as improvements.

Pastry chef Lester Heng, 34, holds policies from AIA and Prudential on top of his MediShield coverage. "I feel it doesn't really make a lot of difference to me since the amount I pay isn't that much, but any increase in the Medisave portion is still better," he said.

Buying an IP? Factor in usage, premium cost: Gan Kim Yong
By Salma Khalik, Senior Health Correspondent, The Straits Times, 10 Jul 2015

Singaporeans need to "consider very carefully the purchase of integrated plans (IPs)" that cover them for private healthcare treatment, said Health Minister Gan Kim Yong.

While this is a personal decision, he said: "We encourage them to consider two important factors."

One is whether they intend to use A or B1 wards, or private hospitals, should they need treatment.

Currently, 60 per cent to 70 per cent of people with such plans actually use a lower class of service than they are covered for.

"If their intention is to use government subsidised services, B2 or C class wards, then maybe it is not necessary to purchase IPs," he said.

The other consideration is whether they are prepared to pay the higher IP premiums, especially as they grow older, as premiums are significantly higher with age.

He suggested people discuss this with their insurance agents. They should ask for an indication of what their premiums will be like in 10 or 20 years' time.

However, he added, there might be people who want private services when young and subsidised care when they get old."There are people who decide that while they're working, they would prefer to have private services and therefore they'd purchase an IP."

"They are quite happy to revert to MediShield Life when they grow old and enjoy the lower premiums and the subsidised services."

There is nothing wrong with such a decision, he said.

"It depends on their attitude and own personal preference. But the basic point is that MediShield Life is adequate for government hospital subsidised services."

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