MediShield Life a welcome addition

CONSUMER surveys have time and again highlighted Singaporeans' deep anxiety over rising healthcare costs. In this context, MediShield Life has emerged as a welcome addition to Singapore's healthcare financing framework. Based on the recommendations of a review committee, the scheme will result in higher payouts and, consequently, lower out-of-pocket expenses for CPF members. This is thanks to bigger claim limits for a number of benefits such as ward costs, surgical procedures and outpatient cancer therapy. The removal of the age limit of 90 also enables the plan to offer life-long coverage, a boon at a time when people are living longer. Significantly, it steps into the breach to cover those with pre-existing illnesses, who today may suffer huge premium loadings or may be rejected by insurers outright.

Premiums are yet to be announced but already, there are assurances that they will be affordable. It is most likely that premiums can be funded by Medisave contributions. CPF members will have to take stock of their healthcare coverage. They are likely to question if they still need a private Integrated Shield plan. Premiums of private Shield plans were raised significantly last year. But those thinking of cancelling their plans should think twice. MediShield Life is structured as a catastrophic plan, unlike private Shield plans where benefits are paid on an "as charged" basis. Based on illustrations, MediShield Life could potentially cover as much as half of a large hospital bill. But the examples feature heavily subsidised B2 wards. Members should calibrate their expectations of benefits such as the choice of a private hospital or a Class A ward, alongside their insurance cover. A mismatch can be extremely costly.

Meanwhile, it is worth contemplating a portable medical scheme, as advocated by NTUC. At the moment, much duplication exists. Companies provide group cover for their staff, who in turn continue to pay for MediShield and private Shield plans that they are unlikely to claim on while they are employed. There exist a number of schemes where employers can make an additional contribution to employees' Medisave accounts, or pay the premiums of a Shield plan on employees' behalf. As the take-up of the schemes is reportedly poor, a tax incentive as suggested by NTUC may help. Certainly, small and medium enterprises in particular may benefit, as their company size and budget may limit their choice of a group plan.