Understanding Integrated Shield changes

A HOT debate has raged in the past few weeks over the most recent changes to the Integrated Shield plans (IP). What are the issues here?

One of the biggest perennial concerns is the rise in medical expenses should one fall seriously ill. There is a need to mitigate this financial risk. Thankfully Singaporeans and Permanent Residents have MediShield Life, which covers large medical bills if we stay either in a B2/C ward of a government/restructured hospital.

But if we want the option of a better ward or a privately-run hospital and the ability to choose our own specialist doctors, we will need to upgrade to an IP. NTUC Income was the first to introduce a "Shield" plan in 1994. In 2005, Aviva introduced their own "Shield" plan with the "as-charged" feature and also full riders for the deductible (the initial amount that one has to pay before the Shield plan makes a payout) and co-insurance (the co-payment after the deductible is paid).

Essentially, the full riders ensure that the bill is fully paid by the insurer. Other insurers followed suit and IP premiums have risen in the subsequent years. In 2018, the Ministry of Health (MOH) announced that from April 1, 2019, full riders would not be sold to new IP buyers.

Existing policyholders with full riders could still keep their full riders if they choose to. But new IP buyers can only purchase "partial riders" that will require policyholders to co-pay at least 5 per cent of the bill but capped at S$3,000 a year, if policyholders see doctors from the insurers' panel. If they see non-panel doctors, there will be no cap to the co-payment.

Most recently, however, it was announced that from April 1, 2021, even policyholders with full riders must convert to partial riders on their next policy renewal.

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The private sector doctors were unhappy with the IP insurers' panels which were seen to exclude many private specialists. The insurers maintained that this was done to reduce costs and premiums. The doctors, however, have charged that IP insurers should take a "hard look" at their management and commission (distribution) costs to manage premiums increments.

Instead of focusing on the debate, where we really have no control over the outcome, it is far more important for consumers to understand the implications of the IP changes and what we should do about them.

Due to space constraint, I will only cite NTUC Income's (among the biggest IP insurers) Enhanced IncomeShield to illustrate some implications. When an existing Enhanced IncomeShield policyholder renews his policy, the full rider (Plus rider) will be automatically converted to the new Deluxe rider. Those with existing partial rider (Assist rider) will automatically be converted to the new Classic rider. There are a few major implications here.

Aligning with your expectations

The first table tells us that if we are sure that we will only use panel doctors (doctors from government/restructured hospitals or selected doctors in private practice), a Classic rider may be sufficient. But if we want the option to visit non-panel doctors, having a Deluxe rider is important.

Of course, if we are able and willing to set aside some cash to pay for the deductible and co-payment, we may not need to buy the rider. But the point really is that we should review the rider we have or the rider that we will automatically be converted to, to ensure that it is aligned with our healthcare expectation.

Affordability

Based on the second table, the premium differences between the Classic and Deluxe riders across the age bands can be around 50 per cent. So, while we may want the best rider, we need to assess our willingness and ability to pay the extra premium.

Breadth and depth of panel doctors

I took a quick look at just 10 different medical disciplines on the panels of different insurers and the range is wide. Between them, the difference in terms of number of doctors can be in the hundreds. But while breadth is important, depth is important too.

For example, there are many sub-specialists in the orthopaedic space (like spine specialists or knee specialists) and that may be an important consideration for you. While it is possible that insurers will continue to add more doctors onto their panels over time, checking if your existing doctor is currently on the panel may be important for you.

There are many other considerations relating to whether your new rider or even your current IP is suitable for your needs, but space constraints do not allow me to highlight more. And, I am only using one insurer to draw some implications.

A s consumers, we need to focus on the main issues instead of the noise. Please don't do nothing. Speak to your trusted adviser for a review.

• The writer is CEO, Providend Ltd, Singapore's first and probably sole fee-only comprehensive wealth advisory firm. He can be contacted at chris_tan@providend.com