I received the following letter from Ministry of Health. The letter is self-explanatory.
Date: 6 January 2016
Dear Mr Wilfred Ling
CLARIFICATION TO ARTICLE ‘PREMIUM SHOCK FOR MEDISHIELD LIFE’
I refer to your online article “Premium Shock for MediShield Life” (Oct 5, The IFA on Duty Blog), in which you explained the different types of MediShield Life premiums for your readers.
The Ministry of Health would like to share with you that there are some factual inaccuracies in the article. These are explained below and we hope you can make the corrections so that your readers have a more accurate picture of MediShield Life and how it works together with Integrated Shield Plans (IPs).
How Premium Subsidies are Calculated
First, we would like to clarify that the amount of premium subsidies is based on a person’s monthly household income per person and annual value (AV) of his/her home. Singapore Citizens and Permanent Residents also get differing subsidies (PRs get half of the premium subsidy given to Singapore Citizens). As most buyers of Integrated Shield Plans are generally better off, some of your clients may not qualify for premium subsidies, which is intended to help the lower- to middle-income Singaporeans. However, they will still get Transitional Subsidies or Pioneer Generation Subsidies, both of which are not dependent on household income or annual value of their property.
Another point you missed mentioning was that only Transitional Subsidies end after the first four years of MediShield Life, whereas Premium Subsidies and Pioneer Generation Subsidies continue to be given to those who are eligible.
Availability of Information on MediShield Life
You also mentioned in your article that “material information on MediShield Life is not properly disclosed upfront” and that “the true cost of MediShield Life is not known to most people”. We would like to highlight that information on premiums payable has been published on MOH’s MediShield Life website at https://www.moh.gov.sg/content/moh_web/medishield-life/premiums---subsidies/how-to-receive-premium-subsidies/subsidy---premium-tables.html#main_content_text. Welcome Booklets explaining MediShield Life were also sent to all Singapore households in August 2015. The premiums table can be found on pages 15-19 in the English section of the Welcome Booklet, pages 31-34 in the Chinese section, pages 47-50 in the Malay section and pages 65-68 in the Tamil section. If you did not receive a copy of the Welcome Booklet, you can download it from the MediShield Life website at https://www.moh.gov.sg/content/dam/moh_web/MediShieldLife/Others/Downloads/MediShield%20Life_Online%20Preview_Jul2015.pdf. If you prefer, we would be happy to send you another physical copy of the booklet. Such effort by the Ministry to inform the public on MediShield Life is contrary to the comment that “material information on MediShield Life is not properly disclosed upfront”. As for premiums beyond the first five years, you would appreciate that the rates can only be set after knowing the claims experience in the next few years. This is no different from how premiums are set by private insurance companies selling Integrated Shield plans or indeed any health insurance plans in the market.
We note that you also have raised some concerns in your article about the increase in MediShield Life premium amounts, and you pointed out that for some age groups, the differential between MediShield Life premiums and premiums for an IP was small. We would like to clarify that for MediShield Life, a proportion of the premium increase during younger ages is for "pre-funding". This works to better distribute premium payments bore smoothly over a person's lifetime. It benefits the policyholder who pays slightly more during his working years, and benefits by getting premium rebates when he is older. This policy design was based on feedback gathered during the MediShield Life public consultation and is useful as policyholders would have stopped work when they are older. As such, the additional amounts paid during the policyholders’ working ages are set aside in a pool in the MediShield Life Fund, which individuals and others in the same generation can tap on to receive premium rebates when they are older.
Distributing premiums more evenly over our lifetime helps us to pay ahead for premiums. Planning and saving for our future healthcare expenses will reduce concerns over whether we have enough savings during retirement.
We appreciate your efforts in explaining MediShield Life, but hope that you can look into the above to allow accurate information to be provided to your readers. Do let us know if you have any questions by emailing us at MOH_Media@moh.gov.sg. We would be glad to assist.
Lim Bee Khim (Ms)
Ministry of Health
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