Last Updated on 2, April 2014
It appears to me that many people have some misunderstanding on how Medishield works. One thing that is misunderstood is the mistaken believe that Medishield is an as-charged policy for subsidized government hospital after the patient has fulfilled his deductible and co-insurance obligations. Far from truth, Medishield is NOT an as-charged policy but rather is a dollar-cap policy. Perhaps the misunderstanding arises because of this example from the MOH page: HERE
In that example, it was illustrated that if a person’s hospital bill was $8000 in a “C” class ward, the amount reimburse by Medishield is $6000 because the deductible and co-insurance were $1000 each. Mathematics: $8000 – 1000 deductible – 1000 co-insurance = $6000. Sorry to say that a layman does not realized that in that example there are some words that are not in English but contain certain insurance technical jargons. This insurance jargons make a world of difference. I want you to read these two statements from the MOH example carefully:
“A patient staying in Class C incurs a bill of $8,000. If all the expenses are within the MediShield claimable limits (A), the total claimable amount is $8,000.”
There are two jargons here: “a bill of …” and “total claimable amount”. I just want to inform you that the word ‘claimable amount’ is not the same meaning as in the English dictionary. It is not the amount that you can claim despite it being ‘claimable.’
The hospital bill is subjected to claimable limits. The claimable amount is the intermediary variable that we get after reducing the hospital bill by the claim limits. The MOH example assumes that the hospital bill is within the claimable limits. Unfortunately this is likely not true. What are these claimable limits? Read this benefit illustration HERE
There are so many limits! Daily ward limits, surgical table limits, ICU ward limit, implants limits and proration factors are some of the claim limits. I am not surprise that a hospital bill size of $8000 could only have a claimable amount of just $3000. After applying deductible and co-insurance, I am not sure whether the amount reimbursed can pay for the transport cost to and fro from hospital! Of course transport cost is not reimbursable by Medishield but I just trying to show how pathetic the amount one can claim from Medishield.
Thus I am not surprise at all that a hospital bill of $2300 in C class ward results in reimbursement of just $450 simply because Medishield is a dollar-cap policy. This small Medishield payout was the reason why a complain letter was sent to the Straits Times forum entitled Stumped by low MediShield payout
The above analysis is one of those things which consumers must be aware of. But I must admit that it is impossible for layman to know this. In fact, it is not likely they will ever know this unless they get caught in such a situation like this person who wrote a complain letter to Straits Times. There are just too many matters in life to worry about and I do not advocate learning all these things. You do not need to go to medical school in order to take care of your health. Similarly, there is no need to be guru in financial matters just to take care of your financial health. Here are some practical tips which a person can do to avoid making mistakes (sometime, not doing anything is itself a mistake);
- Do a periodic financial review with a professional financial adviser. The review should cover all aspect of financial planning and not just insurance. Why periodic? Isn’t one-time enough? Because laws and regulations change. Economy change as well. Financial products itself change. Consider the Medishield. In the past there is no pro-ration factors for means-testing. This was added not too long ago when means-testing was introduced for ‘C’ class ward. Will there be further changes? The only thing that is constant in life is change. That is for sure.
- Be careful when reading and listening to unqualified financial advisers – even those who appear to have very good past “resume”. These could be your friends, well meaning relatives, self-made gurus. Moreover, stay away from fake insurance advisers whose aim is to sell products instead of giving you advice. They will tell you that certain insurance company claims are very slow but in reality it is the #1 in the entire industry. Because the industry keeps on changing, it is very important that the adviser is always upgrading himself to keep up with new changes. You can ask your adviser how many hours in CDP hours he clock for the past 12 months and what other upgrade he is doing for himself that are not officially capture by the CDP hours. I am sure you will be shock to learn that majority of advisers just clock the minimum 30 hours per year in CDP hours of which 29 hours were spent on how to sell more life insurance.
Last year, I spent more than 500 hours in self education so that I can ensure I remain expert in the field. Officially most of the hours are not capture in the CDP hours because I do not narrowly limit myself to those subjects that are just life insurance and unit trusts. There are so many things in financial planning that are unrelated to ILPs and Unit Trusts.
My doors are always open for people to seek my advice on any matters inclusive of CPF rules and Medishield but consultation fee applies. I have cease providing free advice as I was taken advantage many times by people who after seeking my advice, purchase the recommended products/service from someone else.
This article also appeared on CPF Board's IMSavvy:http://www.cpf.gov.sg/imsavvy/blog_post.asp?postid={1061053444-213-1937677264}
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