Pass on the burden of hefty medical bills

The Sun­day Times

31/10/2010

Author: Lorna Tan

Imag­ine receiv­ing a hos­pi­tal­i­sa­tion bill of $200,000. If you man­aged to sur­vive the shock, your next con­cern will be how to set­tle it.

The good news is that with the right med­ical insur­ance plan, most if not all of the bill is payable by your insurer.

Take Health Min­is­ter Khaw Boon Wan for instance, who paid just $8 for his recent bypass surgery.

When con­tacted, the Min­istry of Health (MOH) said that out of Mr Khaw’s total hos­pi­tal­i­sa­tion bill of about $25,000, $20,000 was paid for by insur­ance and $5,000 by Medisave.

Mr Khaw had sub­scribed to basic MediShield since it was launched in 1990 and topped it up with a pri­vate Medisave-approved Shield insur­ance plan which cov­ers Class A and pri­vate hos­pi­tals. Based on his age of 56, his annual pre­mium payable is in the $330-$662 band.

A sig­nif­i­cant por­tion of his bill was absorbed by the Shield plan because it offers an as-charged feature.

A tra­di­tional hos­pi­tal­i­sa­tion plan comes with spe­cific sub-limits such as spec­i­fied dol­lar ben­e­fits for room and board, doctor’s fees and procedures.

In a Shield plan, the as-charged fea­ture removes these ben­e­fit lim­its, which means that hos­pi­tal­i­sa­tion expenses are payable by insur­ance accord­ing to what is billed, except for the deductible and co-insurance por­tions. We will address the two terms later.

As-charged fea­ture

The as-charged fea­ture has become a stan­dard in all Medisave-approved inte­grated Shield plans but there are many peo­ple who have not upgraded to plans that offer this feature.

Do take note that a Shield plan comes with deductible and co-insurance components.

The for­mer refers to the first layer of charges that the pol­i­cy­holder has to bear. These may range from $1,500 to $3,000.

The co-insurance pay­ment is the por­tion shared by the pol­i­cy­holder, usu­ally 10 per cent of the bill after tak­ing into account the deductible.

If you wish to be cov­ered for the deductible and/or the co-insurance por­tions of the hos­pi­tal­i­sa­tion bill, Shield insur­ers offer optional rid­ers for them, payable via cash.

Mr Khaw did not have any rid­ers.

British insurer Aviva Singapore’s chief exec­u­tive Simon New­man recalled that cus­tomers in Sin­ga­pore and across the globe con­sis­tently said that their future health was their num­ber one concern.

‘Pri­vate Shield plans pro­vide an ideal solu­tion to pro­tect against the costs of seri­ous ill­ness and help ensure that the right treat­ment is received,’ he said.

He high­lighted that there are cur­rently five Shield insur­ers which offer as-charged Medisave-approved inte­grated Shield plans. These are not bounded by sub-limits and this ensures that the cus­tomer is not caught out by year-to-year med­ical inflation.

Shield plans offer high cov­er­age of at least $500,000 annual lim­its and have no life­time limits.

Unlike MediShield, which offers cover till age 85, these plans offer life­time cov­er­age which gives you peace of mind.

This is cru­cial because our med­ical needs increase with age, said Ms Tang Yin Fong, wealth man­age­ment firm Providend’s risk man­age­ment senior specialist.

Besides, they are ‘guar­an­teed renew­able’, which means you do not have to worry about the insurer refus­ing to renew your pol­icy due to sub­se­quent bad health or claims.

Fur­ther­more, Shield plans are gen­er­ally more afford­able than other non-private Shield plans in the mar­ket, and are payable with Medis­ave monies capped at $800 per pol­icy per year.

For pol­i­cy­hold­ers aged 81 and above, the Medis­ave with­drawal limit for insur­ance pre­mi­ums is $1,150 per pol­icy, per year.

Still, it is pru­dent to buy a hos­pi­tal­i­sa­tion plan that is afford­able and matches your health-care expectations.

If you are insured under a plan with Class A cov­er­age, you can gen­er­ally choose an A ward in a restruc­tured hos­pi­tal or any lower class ward.

But if you opt to be warded at a pri­vate hos­pi­tal, the insurer will pay only a pro-rated por­tion of your bill.

A plan that cov­ers pri­vate hos­pi­tals and a higher class ward costs more than one for a lower class ward. And the annual pre­mi­ums increase as you get older.

MediShield cover

MOH hopes that all Sin­ga­pore­ans will sub­scribe to MediShield, which aims to help mem­bers meet med­ical expenses from major ill­nesses, which could not be suf­fi­ciently cov­ered by their Medis­ave balance.

Cur­rently, MediShield already cov­ers 88 per cent of Sin­ga­pore­ans and of these, 58 per cent have topped up with a pri­vate Shield plan for hos­pi­tal­i­sa­tion in Class A/B1 wards and pri­vate hospitals.

‘Depend­ing on their pref­er­ences, they should choose a suit­able Medisave-approved Shield policy.

‘ If they have no plan to go into Class A/B1 or pri­vate hos­pi­tals, then basic MediShield should suf­fice. The pre­mi­ums are highly afford­able,’ said an MOH spokesman.

The annual pre­mium for basic MediShield for a 35-year old male is $54.

If he upgrades to an inte­grated Shield plan, the pre­mium may jump to about $100 to $250 depend­ing on the plan type, said Ms Tang.

One rea­son that peo­ple give for hold­ing off the pur­chase of pri­vate Shield plans is the belief that they are ade­quately cov­ered by their employers.

That is a very short-sighted view unless the insur­ance is portable, said finan­cial experts.

Few employ­ers pro­vide portable med­ical insur­ance and there will come a day when you would leave your employer.

Also, as you grow older, you may develop med­ical con­di­tions and it is very dif­fi­cult to find an insurer who will cover you once you have them.

If you are con­sid­er­ing a Shield plan, you should not be older than 75.

Other con­sid­er­a­tions include the time taken to set­tle a claim and find­ing out if the Shield insurer pro­vides a Let­ter of Guar­an­tee for your hos­pi­tal­i­sa­tion so that you can get in and out of the hos­pi­tal with­out mak­ing any pay­ment, said Mr Newman.

Hav­ing an insurer with a big pol­i­cy­holder base enables the cus­tomer to enjoy sta­ble pre­mi­ums, rec­om­mended Income’s senior vice-president and gen­eral man­ager Lee How Teck.

He added that it is a plus point if the insurer has a range of plans so that the cus­tomer can down­grade when pre­mi­ums get costly in old age.

And if you plan to switch from one insurer to another, you must be aware that you need to declare your health sta­tus again.

Avoid get­ting a new health plan with a new insurer if you already have pre-existing con­di­tions because the new insurer may not cover the pre-existing portion.

It is far bet­ter to get an upgrade from your cur­rent insurer, said Mr Lee.

While Shield plans are an effec­tive hos­pi­tal­i­sa­tion insur­ance prod­uct, do note that they do not pro­vide over­seas cov­er­age for non-emergency hos­pi­tal­i­sa­tion, cau­tioned Ms Tang.

‘It cov­ers mainly inpa­tient hos­pi­tal treat­ment dur­ing hos­pi­tal­i­sa­tion and does not pro­vide cover for out­pa­tient treat­ment, like spe­cial­ist ser­vices or gen­eral prac­ti­tioner ser­vices, except for cer­tain out­pa­tient cat­a­strophic treat­ment such as kid­ney dial­y­sis and can­cer treat­ment,’ she added.

Nonethe­less, out­pa­tient treat­ment which leads to or results from hos­pi­tal­i­sa­tion may be cov­ered by a Shield plan sub­ject to a spec­i­fied period before or after hospitalisation.

For those who have the bud­get and wish to hedge out-of-pocket expenses related to ill­nesses, Mr Patrick Lim, asso­ciate direc­tor at finan­cial advice firm Promise­Land Inde­pen­dent, sug­gested crit­i­cal ill­ness and/or dis­abil­ity income plans.

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Short-sighted excuseOne rea­son that peo­ple give for hold­ing off the pur­chase of pri­vate Shield plans is the belief that they are ade­quately cov­ered by their employ­ers. That’s a very short-sighted view unless the insur­ance is portable, said finan­cial experts.

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CASE 1Mr Henry Tay (not his real name), in his 40s, was admit­ted for spinal surgery owing to lum­bar pro­lapsed disc in the mid­dle of this year.He spent three months in a Class A ward at Mount Eliz­a­beth Hospital.

In 2008, he had bought a Medisave-approved inte­grated Aviva MyShield plan as well as a rider – MyShield Plus – which cov­ers the co-insurance component.

The annual pre­mium for his Shield plan is $480, payable by Medis­ave. He pays another $145 in cash for the rider.

His total hos­pi­tal­i­sa­tion bill of $203,000 comprised:

Room and board: $91,000

Sur­geon fee: $27,000

Doc­tor atten­dance fee: $51,000

Other inpa­tient costs: $34,000

Total amount payable by insur­ance: $200,000

• Amount payable under MyShield: $180,000

Amount payable under rider: $20,000

Amount not payable by insur­ance: $3,000 (deductible)

As Mr Tan’s rider does not cover the pol­icy deductible of $3,000, he had to pay that amount out of his own pocket.

The bal­ance of the bill worked out to $200,000, of which the co-insurance com­po­nent was $20,000 or 10 per cent of the total bill after tak­ing into account the deductible. The amount of $20,000 was cov­ered by the rider.

The out­stand­ing amount of $180,000 was payable by his MyShield plan.

Had Mr Tay opted for a rider that cov­ers both co-insurance and deductible, he need not have coughed up a sin­gle cent.

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CASE 2In Jan­u­ary, Mr Daniel Loh (not his real name), 56, was admit­ted to a restruc­tured hos­pi­tal for can­cer treat­ment dur­ing which he under­went three sur­gi­cal procedures.He stayed in hos­pi­tal for 59 days: three days were in the ICU B1 ward, five days in a B1 nor­mal ward and 51 days in a sub­sidised ward.

Mr Loh orig­i­nally owned an IncomeShield stan­dard plan. In 2007, he upgraded to an Enhanced IncomeShield Basic Plan, which is a B-ward plan with the as-charged fea­ture. He added a Plus rider that cov­ers the deductible and co-insurance components.

His annual pre­mium for his Shield plan is $340 and he pays another $224 in cash for the rider.

His total hos­pi­tal­i­sa­tion bill of $47,807 comprised:

Room and board and inpa­tient costs (ICU ward): $2,257

Room and board and inpa­tient costs (non-subsidised B1 ward): $4,279

Room and board and inpa­tient costs (sub­sidised B2 ward): $24,652

Sur­gi­cal costs: $15,420

Implants and med­ical con­sum­ables: $1,199

Total amount payable by insur­ance: $47,807

Amount payable under IncomeShield: $41,676.30

Amount payable under rider: $1,500 (deductible) + $4,630.70 (co-insurance) = $6,130.70

The pol­icy paid for the bill in full because Mr Loh stayed in the appro­pri­ate ward that was cov­ered by the health plan and his rider cov­ers both deductible and co-insurance.

Lorna Tan

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