Integrated Shield Plan Riders Co-Payment Change: Is This Good for Consumers?

No this is not an April Fool’s joke.

As of yesterday (1 April 2021), all Integrated Shield Plans (IPs) with full riders that cover your whole hospital bill will be phased out.

This means that from here on out, all IP riders will become co-payment riders that require policyholders to pay at least five per cent of the hospital bill.

Also, this will affect policyholders who renew their existing IPs with full-riders from 1 April 2021 onwards.

But, the good news is that most insurers have capped the co-payment amount to $3,000 a year (subject to conditions and approval) even though this was not required from the Ministry of Health (MOH).

Hopefully, this will keep things affordable.

Not to mention MOH has stated that ‘Policyholders can also continue to tap on MediSave to pay the co-payment amount under their riders, subject to the MediSave withdrawal limits.’

But you might be wondering, is this new policy move good or bad for consumers like us?

Here’s what you need to know!

TL;DR: Integrated Shield Plan Riders Now Require Co-Payment of at Least 5%: Is This a Good Move for Consumers?

The Bad

• Policyholders Will Have to Pay Part of Their Medical Bills
  • Integrated Shield Plan Non-Panel Doctor Exclusion

The Good 

• Medical Costs Might Be Kept Down
• Lower Premiums

What Are Integrated Shield Plans?

Now before we begin, let me give you a quick refresher on IPs as covered under our beginner’s guide to health insurance.

An Integrated Shield Plan is an ‘upgrade‘ of your MediShield Life, where they are offered by private insurers and provides additional medical coverage.

Depending on the type of Integrated Shield Plan that is chosen, the protection can be enhanced to provide coverage for areas such as hospitalisation benefits, claim limits and coverage for private hospitals and public hospitals (A or B1 wards).

With the increase in coverage, one can expect the premiums for Integrated Shield Plan to be much higher as compared to MediShield Life.

 What Am I Covered Under an Integrated Shield Plan?

Here’s a quick overview of the differences between MediShield Life and an Integrated Shield Plan:

However, while MediShield Life covers pre-existing conditions, Integrated Shield Plan policies might only be accepted if the individual is healthy.

This is depending on the insurer, and applications might be either modified or rejected if an individual has pre-existing conditions.

As such, it is recommended to not switch plans if your current plan covers your pre-existing condition.

How Do I Pay for the Premiums of Integrated Shield Plans?

There are Additional Withdrawal Limits (AWLs) for using MediSave to pay for Integrated Shield Plans.

The AWLs is as follows:

• $300 if you are 40 years old or younger on your next birthday.
• $600 if you are 41 to 70 years old on your next birthday.
• $900 if you are 71 years or older on your next birthday

Each insured person can only have one Integrated Shield Plan paid with MediSave.

Now that you are up to speed, let’s move on to what this IP co-payment rider change means for consumers.

The Bad

Policyholders Will Have to Pay Part of Their Medical Bills

Under the old system for policyholders with an IP who purchased a full rider, the policyholder’s deductible and co-insurance and deductible will be fully covered.

This would mean that they would not have to pay out of pocket for their hospital bill in the unfortunate event they get hospitalised.

For context, the deductible is an amount from your medical bill you will have to pay first before the payout from your health insurance kicks in. You will generally only need to pay the deductible once per policy year.

Also, there’s a chance that you will have to pay for co-insurance after paying the deductible.

As for co-insurance, this is the amount you will have to pay for your medical bills that are split between you and the insurer.

At the time of writing, most deductibles cost between S$1,500 and S$3,500 per year and co-insurance is about 10 per cent of the cost of your medical bills after the deduction of the deductible.

In addition, you can also consider using your MediSave up to the withdrawal limits to pay for the co-insurance and deductibles that are not covered by your policy.

This new co-payment rider feature will mean that the policyholder will have to pony up a minimum of five per cent of the hospital bill.

But, the good news is that most insurers have capped the co-payment amount to $3,000 a year (subject to conditions and approval).

P.S. Do check with your policy provider your exact co-payment amount.

This means that the amount you pay is capped at about $3,000 a year which should keep things affordable for most.

Not to mention that you can pay for this co-payment with your MediSave subject to the MediSave withdrawal limits.

Pro-Tip: Check out this calculator from Central Provident Fund (CPF) to find out how much you can withdraw from your MediSave.

Integrated Shield Plan Non-Panel Doctor Exclusion

Also, an important thing to note is that this $3,000 cap only applies if you get treated at your insurers’ approved panel of doctors.

If you insist on getting treatment from a doctor that is not included in the panel, you might have to pay more.

Based on a study by the Singapore’s Academy of Medicine conducted in 2020, only about 21 per cent of private doctors are included in each insurers’ IP panel.

However, doctors and policyholders are lamenting that the selection criteria is strict and not exactly very transparent.

These panels were created with the intention to regulate doctors and reduce overcharging.

However, this has resulted in a war of words between the Singapore Medical Association (SMA) on the side of the private specialists and Life Insurance Association Singapore (LIA) on the side of the insurers which you can read more about here.

So how much will you end up paying?

You can rest assured that you will not have to pay more than the co-payment cap for your hospitalisation bill, if you opt for the co-pay rider for your IP and use a doctor approved by your insurer.

However, you will have to pay more if you opt for a non-panel doctor.

For the sake of the consumers, I hope the SMA and LIA come to an agreement to provide more options for consumers.

The Good

Medical Costs Might Be Kept Down

According to the latest Mercer Marsh Benefits (MMB) Health Trends report, Singapore’s medical cost inflation is projected to remain at about 9.5 per cent in 2020, representing a 0.5 per cent drop from 2019.

This is much higher than Singapore’s headline inflation rate which grew to 0.2 per cent year-on-year in February 2021 according to the Department of Statistics (Singstat).

These rising medical costs could be attributed to the IPs will full riders that covered the entire co-payment which may have contributed to over-consumption, over-servicing and over-charging.

According to MOH:

Between 2015 and 2020, the compound annual growth rate of claims incidence was about 15% for full riders of private hospital IPs and about 9% for full riders of restructured hospital IPs.

For riders with some form of co-payment of private and restructured hospital IPs, this figure was close to 0%.  Over the same period, the average bill size for claims from full riders was at least 20% higher than riders with some form of co-payment, for private and restructured hospital IPs.

The statistics seem to indicate that the co-payment system encourages more accountability and responsibility amongst policyholders and their doctors.

This may encourage all parties to carefully consider the necessity of the medical treatment and its cost and not go overboard.

In turn, this may help keep healthcare costs down and ensure that health insurance premiums remain affordable and sustainable in the long run.

Lower Premiums 

If you compare the new IPs with co-payment riders and those with full payment-riders, you would find that they are actually a lot more affordable.

This can be attributed to insurers being able to optimise their underwriting risk management over the long run and price premiums lower.

Already, NTUC Income has stated that they will reduce their premiums by up to 50 per cent (subject to policy and policyholder’s age).

Whereas Aviva Singapore has stated that its 100,000 existing customers on full-pay riders might ‘see a reduction in their premiums on the next renewal if they are within the same premium age bands.’

Also, AXA insurance has stated that their new AXA Shield with the new AXA Enhanced Care co-payment rider will actually be about 28 to 54 per cent cheaper than the old IPs with full-pay riders.

Not to mention that insurers like AIA, Great Eastern and Prudential have already begun issuing policies with claims-adjusted pricing. This is where policyholders that do not make a claim will enjoy a discount on their future premiums.

What About Policyholders With Existing Full Riders?

If you bought your IP with a full rider between 8 March 2018 and 31 March 2019, you will be required to transition to the new co-payment riders when you renew your IP from 1 April 2021.

Your insurer should have notified you about the changes by now. If not, you should probably check with your insurer about the changes.

Whereas for the IPs bought or renewed after 1 April 2019, your IP policy would have already included the minimum 5% co-payment rider instead of the full rider.

But in the end, everyone in Singapore will have to shift to IP policies with a co-payment rider after 1 April 2021.

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