What's to Know About The Rising Cost of Basic Hospital Coverage?

You may be aware that the national hospital insurance, CPF Medishield has become Medishield-Life. You may have also heard that the private insurers are preparing to raise premiums. Is this justifiable? How will we be affected? In this first issue of the year we look at the upcoming changes to the "Shield" plan of the largest player in this market - AIA. This is important as the rest of the insurers would follow soon after.

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Around two-thirds of 2.5 million Singaporeans are insured by an Integrated Shield Plan (IP), with 60 per cent of them having a plan which provides coverage for private hospitals. IPs offered by appointed private insurers allows for better healthcare treatment and services above those provided by MediShield Life. MediShield Life is designed to provide only a basic level of coverage meant for ‘B2’ and ‘C’ class wards in Government/Restructured Hospitals. In addition, consumers may purchase a cash rider to the IP, in order to have full hospitalization coverage. 

According to Life Insurance Association (LIA) hospitalization claims have increased 15% annually over the past few years, with the majority from treatments and services in the private healthcare sector. This resulted in the current premiums becoming unviable for private insurers, leading to losses for 3 out of 5 insurers. Thus, IP premiums are set to go up across the board.

AIA has announced that it will raise the premiums for its IP covering private hospitals – AIA HealthShield Gold Max A by between 2 per cent and 23 per cent. This increase will take effect on policy anniversaries following 25 January 2017.

To balance out the increase in premiums, AIA has enhanced the plan. If treatment is sought with any of AIA’s Quality Healthcare Partners or Government/Restructured Hospitals:

1. the annual claim limit is increased to $2 million

2. the coverage for pre and post-hospitalization expenses is extended to 13 months 

These limits are the highest and the longest in the industry. 

3. Although the premiums will only increase upon the policy anniversary, the enhanced benefits will be effective from 25 January 2017, covering clients earlier.

AIA is also the first to set up a panel of preferred private doctors as recommended by the Health Insurance Task Force. This has the following benefits to clients:

1. It allows AIA to control and prevent unnecessary increase in premiums. 

2. AIA can ensure quality of treatment and care given to its clients. 

3. The list of preferred doctors gives clients more than enough choice of renowned specialists.

4. Being the first to make changes, AIA is able to set the bar for the rest of the insurers.

AIA has a significant market share which allows it to negotiate prices with the panel of doctors, containing cost yet maximizing quality and choice. This will create a win-win situation for clients and the insurance company going forward. 

The Integrated Shield Plan is an integral component of most people’s Risk Management portfolio. Should you have further queries regarding this topic, AIA Vitality, or any other matter concerning financial planning, please feel free to contact me. I’d be glad to answer your questions, no strings attached.