It was announced that there will be a new Additional Withdrawal Limits for Integrated Shield Plan. While there will be no cap as to how much Medisave one can use for Medishield Life, there will be revised limits as to how much Medisave can be used to pay for the ‘enhanced’ portion.
Take for instance, a 71 years old person who is insured with Prudential’s PruShield A Premier. The current premium is $2,753 a year. The current Medisave wtithdrawal limit is $1000 and hence, he would need to pay $1,753 cash currently. Note that this does not take into consideration of the cost of rider.
The New Situation
The premium amount paid to Prudential can be determined by subtracting the Medishield premium from the $2753 which is 2753 – 560 = $2,193. It is this amount that is going to be subjected to the new Additional Withdrawal Limit of $900. Since the Life Association of Singapore (LIA) has announced that all 5 insurers will not increase the IP portion of their premium for 12 months, it can be assumed that $2,193 will remain the same for 12 months. Thus, he has to pay 2193-900 = $1,293 cash.
(The Medishield Life premium for the same 71 years old man will be $885 before subsidy. This amount is not subject to any Medisave cap. )
So it can be seen that the cash outlay will be reduced from $1,753 to $1,293.
From what I see, the introduction of the Additional Withdrawal Limit is a control mechanism by the government to rein on the high premiums charged by the private insurers. Many will end up downgrading or give up their IP altogether when they have to pay cash instead of having the premium fully funded by their Medisave. This situation already happens in the Eldershield market. Many upgraded their Eldershield by selecting the sum assured based on the premium of less than $600 a year because that is the Medisave limit for the enhanced Eldershield. The right way of purchasing insurance is to determine the sum assured based on needs not premium.
The Health Minister, Mr. Gan Kim Yong said that “If their intention is to use government subsidised services, B2 or C class wards, then maybe it is not necessary to purchase IPs.”
If I have a chance, I want to ask him about the on-going complains that there is no bed in B2 ward resulting in patients sleeping corridor! I also want to ask him why the claim experience for private hospitals have been increasing at a whopping 17% per annum! For government hospital, the "A/B1" wards' claim experience is increasing at 12% per annum.
In the meantime, the Ministry of Health requires all financial advisers to be trained and undergo a test on Medishield Life/Integrated Plans by end of August 2015. This is a compulsory test.
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