News Digest summarises and analyses important news so you don’t have to.
Premiums for MediShield Life are set to be raised over the next few years, with some even going up by a staggering 35%. While it’s all but confirmed, the Medishield Life Council has made recommendations to increase the premiums, and a public consultation will last until 20th October 2020.
The government has pledged subsidies to defray the premium hike in the first few years.
There are two main reasons cited for the premium hike:
- Enhanced benefits
- Increased claims in recent years
There are a few enhanced benefits that are recommended:
- Increase of annual claim limit from $100,000 to $150,000
- Higher claim limits for various benefits like radiotherapy and daily ward charges
- Lower deductible (first amount you have to pay) for day surgery
However, there is now less coverage for private hospitalisation:
- Lower pro-ration factor (ie. less coverage) for private hospitalisation
If I were a betting man, I’d wager that the increase is mainly due to increased claims coupled with medical inflation. MOH cites an increase of 40% in payouts over the last few years, and this looks set to continue as medical inflation outpaces consumer inflation, coupled with a greying population.
What can you do?
If you have upgrade your basic MediShield Life with an insurer
Premiums of integrated MediShield plans have historically risen in tandem with the rise in MediShield premiums, and the cost of healthcare insurance has indeed been increasing over the past few years. This trend does not seem to be abating.
It’s time to be realistic about our healthcare coverage. While private hospitalisation coverage used to be really cheap in the past, those are now becoming more of a thing of luxury. I recently downgraded my mum and my own integrated plans in response to the rising cost of insurance. They remain the most vital part of our insurance portfolio for sure, but “the best” isn’t really financially practical any more. Up to A ward coverage in government hospitals is good enough for me.
Also, you can relook at whether your insurer has more cost-effective riders to go with your plan. For those who bought when 100% coverage riders were available, do take note of the premium difference between that and an “almost 100%” coverage. The difference in cost can be huge.
If you are only on MediShield Life
MediShield life is a relatively basic plan with various limits to keep premiums affordable, and even after these enhancements (and corresponding premium hike) remains rather inadequate when it comes to high medical bills.
You should still upgrading with an insurer, although one would do well and pick sensibly instead of going for the best. Remember: premiums can change, and in all likelihood only in a certain direction.
Please consult a financial adviser as this does not constitute personal financial advice.
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