Originally published on dbs.com.sg, 01 Mar 2021

Singapore healthcare costs have been on the rise, along with the aging population and the increase in chronic illnesses and long-term care needs. To address that, the Singapore Government is expected to spend nearly S$13.4 billion on healthcare in 2020 - a 16.2% increase from 2019 - to cope with rising healthcare costs.

On an individual level, we also need to be aware of how rising healthcare costs can impact our finances and our families when we get sick. This is where health insurance can be helpful. Health insurance is an insurance plan that helps to pay for your medical bills – in part or in full - when you get sick or injured, or become disabled.

How can you tell the difference between the many types of health insurance available? This article can help you understand how health insurance works in Singapore.

Government subsidies for healthcare in Singapore
MediFund is an endowment fund set up by the Singapore Government. It is meant to help patients who are still unable to pay for their remaining medical bills, even after receiving government subsidies, and drawing down from their Medishield Life, Medisave and cash balances.

Interest income generated by the endowment fund is channelled to approved healthcare institutions to help low-income patients with their medical bills.

MediFund Silver and MediFund Junior – which is part of MediFund – focuses on providing more assistance to the elderly and to children.

Types of Health Insurance in Singapore, explained.

1. MediSave Singapore: It is not a medical insurance plan
Your MediSave Account is NOT a medical insurance plan. It is a CPF savings account that is designated for your medical needs and expenses. A part of your CPF contributions goes into the MediSave Account, in the same manner as your Ordinary Account and Special Account.

Your MediSave funds can be used to pay for hospitalisation, day surgery, selected outpatient expenses as well as the premiums for MediShield Life, Integrated Shield Plans, ElderShield and CareShield Life.

2. What is MediShield Life, and what does it cover?
MediShield Life is the basic universal health insurance plan that is provided to all Singapore Citizens and Permanent Residents for life. MediShield Life premiums can be paid fully with MediSave.

MediShield Life benefits: it fully covers subsidised treatment in B2 or C wards in public hospitals, and selected outpatient treatments like kidney dialysis and chemotherapy. Medical expenses incurred in A, B1 and B2+ wards in private and public hospitals can be partially claimed from MediShield Life, subject to claim limits and other limitations.

If you are wondering if MediShield Life is enough, and would like to enhance your coverage for your bills in private hospitals or A and B1 wards in public hospitals, you can use your MediSave funds to pay for your Integrated Shield Plan (IP) but only up to certain limits. The excess must be paid in cash.

3. What is Integrated Shield Plan (IP)?
IPs are health insurance plans provided by participating private insurance companies. These offer additional benefits beyond those provided by Medishield Life. IPs can provide coverage for hospital bills incurred in premium wards, and in private hospitals, depending on your requirements.

The premiums incurred are adjusted according to those requirements.

Premiums for IPs may be paid for using Medisave, subject to additional withdrawal limits (AWL).

Who might need it?
If you prefer to seek medical help from private hospitals or get treated in premium wards, here’s what you need to know about claiming from MediShield Life.

First, your bills will be adjusted to the equivalent B2 or C ward bills and then be subjected to MediShield Life claim limits. The remainder of your bill will be drawn from your MediSave account or paid for in cash.

If you would like to be able to claim more from your health insurance, leaving your cash untouched, then you will need to consider getting an Integrated Shield Plan such as MyShield that can cover premium wards and private hospitals, depending on your needs.

4. Hospital cash insurance
As its name suggests, hospital cash insurance provides you with a fixed amount of money for each day that you are hospitalised. The payout benefit can continue for multiple hospitalisations until the maximum number of days each year as stipulated in the policy is reached, or until the lifetime limit of the policy is reached and the policy ends. Such insurance policies are provided by private insurers and premiums must be paid in cash.

Who might need it?
If you are a freelancer, part timer, self-employed person, or if you do not have any paid sick leave or hospitalisation leave as part of your employment contract, you can consider getting a suitable insurance policy that includes hospital cash benefits. That will help to provide you and your family with some income while you are hospitalised and unable to work.

5. Critical Illness Insurance
Critical illness insurance pays you a sum of money when you are diagnosed with a critical illness that is covered by the policy. Different policies might cover different types of illnesses though they generally cover conditions like major cancers, strokes, heart attacks, and kidney failure.

These policies will also vary in how and when a payout is made. Some pay at the point of diagnosis, some pay after the first surgery is completed. Some pay the full amount at once, while some make a number of payouts over a period of time. Some policies only allow one claim before it lapses, while some allow multiple claims, subject to terms and conditions. Such insurance policies are provided by private insurers and premiums must be paid in cash.

Who might need it?
Are you actively saving for housing, education, or retirement needs? Critical illness plans such as eCriticalCare and Critical SelectCare can provide a sum of money to replace your loss of income while you recover from your illness, and pay for immediate medical expenses that may not be covered by your existing health insurance plans, while ensuring your savings remain untouched. (Read more: Is Critical Illness insurance necessary? )

6. Disability income insurance
Disability income insurance provides you with a monthly payout when you become disabled due to an accident or illness and are unable to work. It typically covers up to 80% of your monthly salary, and will last for 5 to 10 years, or until you reach the age of 60 or 65. Such insurance policies are provided by private insurers and premiums must be paid in cash.

Who might need it?
If you are supporting a family, you would need to look into replacing your income for the longer term if you were unable to work due to a disability. That is where a disability income insurance like MyCare might come in handy.

7. Eldershield / CareShield Life: Health insurance for the elderly in Singapore
ElderShield and the enhanced ElderShield plan (known as CareShield Life ), are long term disability insurance plans that are available to all Singaporeans and PRs. They provide financial support when you are disabled in your later years, and help to provide for your long term care when you are no longer able to take care of yourself. Singaporeans and PRs born on or after 1980 are covered by CareShield Life, while those born earlier are covered by ElderShield and can opt to be covered by CareShield Life by end 2021. 

Which health insurance is the best for me?
If you are a Singaporean or PR, you are already automatically covered by two universal health insurance policies: MediShield Life, and ElderShield or CareShield Life (if you are born on or after 1980). These two policies will cover you for your entire life and it also covers any pre-existing medical conditions you might have.

But if you would like additional health insurance coverage in Singapore, here are some questions you need to consider when comparing health insurance.

  • What coverage do you currently have?
  • What additional coverage do you or your family need?
  • What options are available?
  • What is your budget?

It is important to buy a health insurance policy that fits both your needs and your budget. It is also important to note that pre-existing conditions may not be covered by insurance policies provided by private insurers.

When it comes to making claims, claim from your company’s corporate medical insurance first before tapping on your personal health insurance.

Always read your policy document carefully, and speak with your Wealth Planning Manager if you are unsure of anything.

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Disclaimers and Important Notice

This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.