Last Updated on by Tree of Wealth
There are many different insurance policy types. Still, health insurance remains one of the most important coverages a person can buy. However, many rely on their Medisave only or put off buying it as they don’t have time to understand health insurance terminology. Apart from the jargon, comparing products and finding the one that suits your needs most is also tiring. But it need not be so difficult. This article demystifies the common health insurance terms and conditions often seen. So continue reading to find out more!
What is health insurance?
Health insurance is a plan that helps you pay for your medical expenses. This includes most of your medical costs when you have an illness or accident, such as doctor visits and hospital stays. It also helps pay for prescription drugs and other medical costs.
There are two main types of health insurance in Singapore: private and government-sponsored. Your employer usually provides private health insurance through an employer-sponsored plan; you can buy it on your own through an individual market plan. Government-sponsored health insurance in Singapore comes in the form of Medisave and Medishield. This compulsory insurance deducts from your CPF, and you are automatically enrolled if you are a Singaporean.
It’s also important to realise that without health insurance, you have to cover all your medical costs, which can be heavy. If you have dependents or are saving up for a significant life event like buying a house, such expenses can interrupt your plans. You might have to pay deductibles or co-pay any medical expenses as part of your health insurance, but that will keep your premiums affordable.
What are deductibles, and what is coinsurance?
When purchasing health insurance, you might see a percentage for copayment. This percentage indicates the amount you have to pay after the deductible. A deductible is an initial amount you must pay to cover your medical expenses before your health insurance makes a payout. After that, the rest of the medical cost will be covered by the insurer. Co-paying means you split the cost between your insurer and yourself.
Here is an example:
Mr X has a hospital bill of $30,000. His health insurance plan has a $3,000 deductible and a 10% coinsurance feature. This is how it works out for him:
Less co-payment (10% x $27,000)
-$3000 (payable by Mr X)
-$2,700 (payable by Mr X)
*May not be 100% depending on the plan
The reason why deductibles are included in many Integrated Shield Plans is that these plans are supposed to cover major hospital and treatment bills. Hence, deductibles reduce the number of small claims made. The amount payable differs with each insurer and depends on the plan. You can also use your MediSave, if you are a Singaporean or PR, to pay for the deductible and coinsurance, up to specified limits, if your health insurance does not cover them.
What is Medisave?
Medisave is a national medical savings scheme. It helps Singapore residents set aside some of their income to meet their healthcare needs. This coverage includes hospital stays, day surgery and specific outpatient expenses, and healthcare needs in old age. It also covers dependents’ hospitalisation.
A portion of the monthly income is deducted and goes into your CPF account if you are a Singaporean or Singaporean Permanent Resident. Then, that amount is split into three different accounts. They are your Ordinary Account, Special Account and Medisave account.
The amount that goes into your Medisave is based on your age. You can check the rates from the CPF board’s website. However, if you feel that more is needed, you can top up your Medisave account until you reach the amount of your basic healthcare sum. The Basic Healthcare Sum (BHS) estimates how much money you need for healthcare expenses in old age. From 1 January 2022, the BHS will be raised from $63,000 to S$66,000 for those below 65 years old. For those who turn 65 in 2022, their BHS will be fixed at S$66,000 and will not change after that. The maximum amount you can put into your MediSave account will stay fixed until you are 65.
With Medisave, some healthcare expenses are covered. But what happens if Mr X requires post-hospitalisation treatment?
What is post-hospitalisation?
Assuming Mr X has fully recovered. However, he still has to buy medicine and may require follow-ups with a doctor. He may also need to undergo routine tests to ensure he’s recovering well. These are post-hospitalisation expenses. If you purchase private health insurance or an Integrated Shield Plan with private insurers, you can increase the coverage for post-hospitalisation fees.
Therefore, purchasing an Integrated Shield Plan is a good idea if you are a Singapore resident. An integrated shield plan(ISP) has two components. It comprises Medishield Life and additional private insurance coverage. Medishield Life is mandatory insurance that covers you irrespective of your health conditions. It provides enough coverage if you stay in a B2 or C class ward in a public hospital. However, it does not cover pre and post-hospitalisation charges. There are also Medishield Life premium subsidies for eligible Singapore residents.
An ISP, such as the one offered by Singlife with Aviva Shield, covers pre and post-hospital treatment and all treatment received in the accident and emergency department. It even covers planned and emergency overseas inpatient treatment.
Additionally, you might utilise your ISP’s private insurance component if you require an A class or B1 ward in a public or private hospital. If you are worried about paying for premiums, the good news is you can use your Medisave to pay your premiums up to a specific limit depending on your age. You will pay the rest of it in cash.
Can foreigners buy Integrated Shield Plans(ISP) in Singapore?
If you are working in Singapore and plan to stay here for a long time or have a foreign spouse, you might wonder whether foreigners can purchase an ISP. The answer is yes. Some insurers offer ISPs for foreigners. You can fill in the form at the end of the article if you want to know more about ISPs for foreigners.
However, foreigners working in Singapore can also consider purchasing international health insurance policies.
Other standard health insurance terms and abbreviations that you might encounter
The out-of-pocket maximum is the maximum amount you pay for all covered services you used for the year. The out-of-pocket expenses include deductibles and copayments for covered services, plus all services that are not covered. Your insurance will cover the additional amounts when you reach your out-of-pocket maximum after deducting the above.
Health Maintenance Organisation (HMO)
HMO stands for health maintenance organisation. HMOs have a network of healthcare providers who have agreed to accept payment at a certain level for any services they provide. This agreement allows the HMO to keep costs affordable for its members. If you purchase this type of health insurance plan usually limits coverage to care from doctors in a contract with the HMO. Your doctors will be the ones to coordinate with other healthcare providers if there’s a need to seek a specialist.
Point of Service (POS)
A point-of-service (POS) plan is a health insurance plan with different benefits for using in-network or out-of-network providers.
The POS allows you to access a specialist under your general practitioner’s referral. But note that any care sought outside the network would mean increased medical expenses. You have a more comprehensive option outside this umbrella and are not limited to the doctors under the HMO network.
Free Look Period
A free look period is when a new policy owner can terminate the policy without penalties. Most insurance companies grant a 14-day free look period, while an Integrated Shield Plan allows a 21-day free look period.
If the policy does not meet your requirements, write to the insurance company notifying them to cancel it within this period.
Policy exclusions are the conditions or circumstances where the insurer will not pay benefits to the policy owner. For example, insurers usually exclude your pre-existing medical conditions, such as diabetes or heart disease, before getting private health insurance.
MediShield Life and CareShield Life have no exclusions and cover all pre-existing health conditions. However, private health insurance policies will usually contain some exclusions.
In your application for private health insurance, you must provide details of any illness, surgery, disability or medical condition you have or had. Then, the insurer will decide whether to cover that medical condition. As a result, you might have to pay a higher premium if you have a pre-existing condition. The insurer may also provide limited coverage should you have a health condition or occupational exposure. Hence, buying health insurance when you’re young and healthy is crucial.
There are other exclusions apart from pre-existing conditions, so read your policy document carefully to determine precisely the type of coverage you will get.
Health insurance is a way to get medical care without worrying about the cost. It helps you pay for doctor visits, prescriptions, and hospitalisation. It can be a great way to help you get the care you need, but it’s also essential to understand what your life and health insurance terms and definitions cover before purchasing it. If you need help understanding what buying health insurance entails, it’s easier to consult a professional. Fill in the form below to talk to our experienced advisors to get the necessary information.
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