Structure of Hospitalisation Protection Plan
Hospitalisation coverage can be complex.
There are simply 3 main components of insurance to cover for a typical hospital bill:
(a) MediShield Life (using Medisave) for basic coverage for all Singaporeans/PR,
(b) Integrated Shield Plan (ISP) by the private insurer
(secured using Medisave / cash) (for added benefits such as “as-charged” & to upgrade hospital ward to 3 different tiers: Tier1 Private A; Tier2 Gvt A; Tier3 Gvt B1 wards.
(secured using cash) to cover for both deductibles (can go up to $3,500 for A wards) & co-insurances (10%), less a 5% co-payment (of total bill due to a recent government ruling to curb medical overconsumption).
Effects of Not Getting Complete Hospital Coverage
Case Study: Client X has component (a) & (b), without (c) rider, and is discovered with late-stage cancer early 2020, and requires frequent hospital visits (A&E), hospitalisation, scans & blood tests, chemo treatment, specialist consultations. Cost incurred includes (per policy year) of $2,500 as they chose the Gvt B ward, and 10% co-insurance of all bills. Interim medical bills put the overall cost at $30K, with $2,500 & $2,750++^ required as cash outlay & a significant portion using Medisave.
Note the premium for the rider under Tier 2, is $41.80/mth (age 51-55). This rider is recommended for this case because it would help to offset the thousands of dollars for this case, & the overall claims experience will be better as all bills are eFiled, instead of filing under medical reimbursement (ie pay cash, claim later, lead time 1-2mths). Also, note that different bill sizes require different amounts of cash outlay based on the formula.
to find out more if you need someone to discuss the typical bill size & payment structure.
*$2,750++^ is because some of the CT scans related to the chemotherapy sessions are claimed under post-hospitalisation treatment with a window of 100days only. Such related bills incurred post this 100days window will not be reimbursed.
‘Wrong Sized’ Hospital Coverage
Case Study: Client Y got the ‘wrong sized’ hospital coverage, ie component (b) – Integrated Shield Plan (ISP) (Tier 1), without (c) – rider. When seeking medical treatment, client opted for B1/2 ward due to government subsidy & overall costing. If you do not intend to secure the component (c) rider, why opt for Integrated Shield Plan (ISP) (Tier 1), because you would most probably (in reality) be utilising it at tier 2 (Gvt A) or tier 3 (Gvt B).
Let’s see how much does this ‘wrong sized’ hospital coverage mistake cost a 51 YO male client.
Option A: If you are on (b) ISP (Tier 1) – Private A ward w/o (c) rider, the premium is $1,165 ($600 medisave, $565 cash), ie if you decide to stay in Gvt B ward (for subsidy), it will cover the bills, less $3,500 deductible & 10% co-insurance.
Option B: If you are on (b) ISP (Tier 3) – Gvt B1 ward with (c) rider, ie covering the full bill incurred less a 5% co-payment, the premium is $503 ($215 medisave, $288 cash).
Summary: Understand what your plan covers, & under what situations how much of the bills are covered, and the premiums associated with the customisation of your hospitalisation plan. In this case study, if you are >51, probably using Gvt B1 ward for treatment, putting yourself on Option B would have the cost saving (premium difference) of $663, that is almost a -57% savings, with a peace of mind that the overall bill payment will not exceed 5% co-payment.
Note: as your age increases across the age band, the cost savings quantum will be higher!
Note: there is real value in discussing with your consultant on the recent governmental ruling, as well as your considerations for the customisation of every plans, & to evaluate if they still hold true.
Else you should discuss your options & to further customised the protection plan to suit you best moving forward.
What are the options for your parents?
Case Study: Recently I’ve met up with many young working executives who are currently financing hospitalisation protection plan for their parents (retired, no active income). What are the options available? Most parents have been on Tier1 with riders all this while prior to retirement, is these plans (Tier1) still relevant? Typically client would choose Tier 1 during the prime working of their life (such that medical turnaround time is fastest to ensure that one continue working & bringing income home). However, as we age & transit into semi-retirement/ retirement, the real need for fastest medical turn-around will be greatly reduced. Furthermore, given the increasing premiums (age-band) of Tier1 plans past 50’s onwards, we will definitely need to review it.
For client, age 51, to reduce (b) & (c) coverage from Tier 1 to Tier 2 (cost saving of $2,253^). For the newer riders (c) which has 5% co-payment, the cost savings would be $1,141. This cost savings will increase drastically with the increase of age band, eg for client age 71, the cost savings will be $5,345 & $2,561 respectively, and one might consider to reduce the coverage to Tier 3 even to ensure long term premium sustainability.
Conclusion: regular review to revisit the rationale behind past decision will set the stage right for resource allocation moving into the future.
^Figures extracted from AIA, accurate as of Apr 2020.
What if I’m covered by Corporate Employee Benefits?
Case Study: Recently few of my corporate clients asked if they are over-paying for their personal hospitalisation protection plans, since their company is providing some form of hospitalisation coverage. This question is applicable to most Singaporean working adults, as your company would have provide some form of hospitalisation & medical protection as part of the Employee Benefits. To answer this question, it is important to understand how a typical hospital bill looks like, & how does insurance company process the payout.
There are 2 groups of hospitalisation policy holders in Singapore, one with the new rider (requires a 5% co-payment) & the other with the old rider (full coverage) (for component c), and there are many scenarios in which the Corporate Employee Benefits will come in to help offset part of the bill. If you wish to find out more about how your company benefits can work hand-hand with your existing coverage, you can arrange for consultation with (as I specialise in both Corporate Employee Benefits & Personal Hospitalisation Protection Planning).
I know costing is at the back of all client’s minds when making a decision on which company & which plan to secure. For ease of comparison across the various insurer, you can find out more from .
To end off, I highly recommend for everyone to understand the individual company’s claim processes, & what are some of the situations that will trigger the activation of this hospitalisation protection plan. I’ve dedicated the next few articles to share on the pit-falls if the last step was not discussed & thought out, so please STAY TUNE 🙂
The article was written by,
“Committed to Protecting 10,000 Families, to Touching Lives with my Heart (Hard) Work”
Chris Zheng LiyuanSenior Premier Consultant (AIA)Million Dollar Round Table (MDRT)Associate Financial Planner (AFP)