Singapore Insurance Primer: Medical Insurance
Key Takeaways:
- 1. Medical insurance protects you against medical bills and loss of income when you are unwell.
- 2. There are three key types of medical insurance available in Singapore: hospitalization (health) insurance, critical illness coverage and disability income insurance.
- 3. You can choose to purchase additional insurance on top of MediShield to provide you with a more comprehensive scope of coverage.
Medical insurance can help protect you against medical expenses and loss of income when you are unwell.
In this article, we walk you through the typical medical insurance structure and what policies are generally offered in the market for residents in Singapore.
What does medical insurance cover?
From the perspective of medical insurance in Singapore, there are three time periods associated with an illness:
- 1. Pre-Hospitalisation
- 2. Hospitalisation
- 3. Post-Hospitalisation
On a related topic, there are also two potential types of medical treatment in the context of coverage by basic medical insurance:
- 1. Non-Necessary or Elective
- 2. Medically Necessary
In Singapore, basic “medical insurance,” as spoken about commonly in the community, refers to the coverage of medical bills that are associated with two conceptual categories: “Medically Necessary” and “Hospitalisation”. Although there are other more advanced and costlier medical insurance that could cover the rest of the concepts, let’s study the basics of medical insurance first.
Hospitalisation status
Assume you visit a general practitioner for some mild discomfort experienced in your lower back. You were charged for the consultation and prescription medication. A basic medical insurance plan is unlikely to cover this.
Let’s increase the seriousness of the issue. The back pain persists for over a month. As such, you have been referred to a specialist to perform an MRI without being hospitalised. It is also unlikely that the cost of the MRI is eligible to be claimed under a basic medical insurance.
However, a week after the MRI, the doctor deems that hospitalisation is medically necessary to treat your back pain through a surgical procedure. Depending on your insurance policy, you may be eligible to make claims for the total hospitable bill against a basic medical insurance.
Moreover, the MRI bill before your imminent hospitalisation, may also be claimable under your medical insurance. This is because you ended up in the hospital to seek treatment after getting the MRI. This cost is considered a “pre-hospitalisation” cost. If you require additional medical follow-ups and treatments after being discharged from the hospital for your back pain, some of these costs, called “post-hospitalisation” costs, could also be eligible for medical insurance claims.
Medically Necessary treatment status
Your medical specialist may believe your back pain does not require immediate hospitalisation or major surgery. They showcase therapeutic options that you may consider, including minor surgery. Therapeutic options refer to pain-reducing and life-enhancing procedures that may not remove the root cause of the illness.
If you “elect” to perform such minor surgery, it may be the case that a basic medical insurance will not cover this cost even though you will be hospitalised for the surgery. This is because an elective surgery may not be considered” medically necessary treatment”. You may have to contact your insurance provider and discuss in detail whether it is covered before you opt for such therapeutic surgery.
Outpatient vs. inpatient
Some medical conditions may not require you to be hospitalised and may not be considered medically necessary. Yet, they may be covered by basic medical insurance.
Such examples include chemotherapy for treating cancer or kidney dialysis. Though one does not need to be warded, he/she may have to visit a clinic or the hospital frequently. These classes of costs are termed outpatient costs which may be claimable under basic medical insurance.
What are deductibles co-insurance and co-payments?
The idea of deductibles, co-insurance and co-payments is best illustrated with an example. In this example, we assume an insurance policy with a fixed deductible of S$3,500 per policy year and a co-insurance of 10% for each claim.
| Item | Bill | Paid By: |
|---|---|---|
| Knee surgery total eligible cost | S$40,000 | |
| Fixed deductible | S$-3,500 | You |
| Balance after deductible | S$36,500 | |
| Co-insurance of 10% | S$-3,650 | You |
| Balance after co-insurance | S$32,850 | Insurer |
| Total Paid by You | S$7,150 | |
| Total Paid by Insurer | S$32,850 | |
Many insurance providers offer insurance riders to cover some of the deductible and co-insurance, with minimum 5% co-payment of the total eligible cost to be paid by you Generally the rider that will limit your co-payment amount to e.g., $3,000 per policy year if the Insured meets the prescribed criteria. Below are two examples of how this rider works.
For the following examples, assume the Insured is also covered under the rider and meets the prescribed criteria to have the co-payment capped at $3,000 per policy year.
In the first example, the co-payment amount is below $3,000 and you pay it in full.
| Item | Cost | Paid By: |
|---|---|---|
| Knee surgery total eligible cost | S$40,000 | |
| 5% co-payment requirement | S$-2,000 | You |
| Balance remaining | S$-38,000 | Insurer |
| Total Paid by You | S$2,000 | |
| Total Paid by Insurer | S$38,000 | |
In the second example below, the co-payment amount is S$4,000. According to the rider you purchased, this exceeds the S$3,000 limit. Hence, you pay for the first S$3,000 and the insurer pays the next S$1,000.
| Item | Cost | Paid By: |
|---|---|---|
| Knee surgery total eligible cost | S$80,000 | |
| 5% of total eligible cost | S$4,000 | |
| Rider limits co-payment to $3,000 | S$-3,000 | You |
| Balancing remaining | S$-77,000 | Insurer |
| Total Paid by You | S$3,000 | |
| Total Paid by Insurer | S$77,000 | |
What is a policy limit?
The idea of a policy limit is best illustrated with an example. Assume that an insurance policy mentions the deductible is S$3,500per policy year and the co-insurance is 10% for each claim and that the policy limit is S$150,000 per annum.
| Item | Cost | Paid By: |
|---|---|---|
| Hip surgery total eligible cost | S$200,000 | |
| Fixed deductible | S$-3,500 | You |
| Balance after deductible | S$196,500 | |
| Co-insurance of 10% | S$-19,650 | You |
| Balance after co-insurance | S$176,850 | |
| Policy limit of S$150,000 | S$-150,000 | Insurer |
| Remaining balance after the policy limit | S$-26,850 | You |
| Total Paid by You | S$50,000 | |
| Total Paid by Insurer | S$150,000 | |
What is a pre-existing condition
A pre-existing condition is a medical illness you had before purchasing medical insurance. You are covered by MediShield Life even if you have a pre-existing medical condition. However, Integrated Shield and medical insurance from your insurance provider may not cover pre-existing conditions depending on an individual’s insurance coverage.
Now that we have covered the basic terms and principles of medical insurance, let’s look at what are the different types of insurance options available in Singapore.
Medical insurance available in Singapore
Medical insurance available for Singaporeans and Permanent Residents
If you are a Singaporean or Permanent Resident (PR):
- 1. You’re automatically covered under MediShield Life, a basic universal health insurance plan administered by the government’s Central Provident Fund (CPF).
- 2. You can enhance MediShield with additional private insurance called “Integrated Shield”.
- 3. You can purchase private insurance that is not linked to MediShield.
Medical insurance available for foreigners in Singapore
If you are a foreigner (or a dependent of one) in Singapore, you may be eligible for an Integrated Shield plan if you fall under a certain class of visas and work permits. Non-government linked plans (so-called private and international) are always eligible for a foreigner.
MediShield Life and Integrated Shield
MediShield Life is the basic medical insurance plan available to all Singapore Citizens and Singapore Permanent Residents. You have to pay for premiums and cannot opt out of it. However, the premiums are further subsidized depending on your income.
MediShield Life payouts are pegged at B2/C-type wards in public hospitals and will cover a certain portion of your bill. If you choose to stay in a A/B1-type ward or in a private hospital, your MediShield Life payout will cover only a small proportion of the bill and you will need to top up the rest from your MediSave account or in cash. Private insurers can “enhance” MediShield coverage with their own plans to increase such limits, provide additional benefits and provide more exclusive warding that is shared between fewer patients. If you have an Integrated Shield plan, you are already covered by MediShield Life. The company you have taken the plan out with acts as your single point of contact. They will act on the CPF Board’s behalf for premium collection and claims disbursement for the MediShield Life component of your Integrated Shield plan.
Below is a very limited example of the comparison of a MediShield vs. an Integrated Shield plan.
| Item | MediShield | Integrated Shield* |
|---|---|---|
| Ward | B2 and below (many patients) | DoP: B1 (4 patients), A (1 patient) etc. |
| Surgical costs | Lower limits | Higher limits or as charged |
| Implants | Lower limits | Higher limits or as charged |
| Pre-hospitalization | Not covered | DoP |
| Post-hospitalization | Not covered | DoP |
| Transfer to community hospital | Lower limits | Higher limits or as charged |
| Outpatient treatment (such as chemotherapy) | Lower limits | Higher limits or as charged |
| Special procedures such as gene therapy | Lower limits or not covered | DoP |
| Overseas emergency treatments | Not covered | DoP |
| Hospital | “Restructured” hospital | DoP: private hospitals |
| Annual policy limit | S$150,000 | DoP: may be extensible up to S$2.5 million |
| Co-Insurance | 10%, uncapped | DoP: 5-10% but may be capped to a certain amount with the purchase of riders |
*DoP = Depends on Policy – there are many providers with different policy types with different levels of benefits.
Private / international insurance
Medishield and Integrated Shield plans focus on your largest medical bills that can impact your life significantly, mainly when an illness is so severe that you need to be hospitalised.
Moreover, it is also focused on hospitalisation in a hospital located in Singapore. Some Integrated Shield plans provide benefits for emergency and/or panned treatment overseas with some limitations.
Private medical insurance with international coverage in addition to MediShield and Integrated Shield may offer a wider range of benefits. Some examples are as follows:
- Outpatient and elective therapy benefits – for example, an MRI to diagnose the root cause of back pain.
- Dental benefits, including those of a cosmetic nature.
- Cosmetic surgery benefits.
- Maternity cover, some of which extends to neo-natal ICU costs at the point of delivery - remember being pregnant is not an illness, and at the point of delivery, a baby is a new person with no insurance coverage.
- International medical tourism – there may be some experimental or niche surgeries that can only be performed in certain hospitals globally.
- Pre-existing conditions and/or birth defects.
- Long term (many months to years) support and nursing costs.
Note that coverage for hospital plans is made on a reimbursement basis. Hence, the pay out from one’s insurance plans will not exceed the final bill incurred.
Regardless, one should buy a plan that meets their coverage needs and is also affordable.
Critical illness insurance available in Singapore
Critical Illness (CI) insurance refers to insurance that provides a lump sum pay-out if you're diagnosed with a critical illness covered by the policy (Read also: 4 Things You Need to Know when Evaluating on Critical Illness Coverage Needs). The principle behind this type of insurance is that the illness could render you with a very large recovery time and thereby lose your current level of income, completely or partially, for many months to years. Examples of such critical illnesses could be a stroke, heart attack or cancer.
It is recommended to have five years of your gross income covered for critical illness insurance in Singapore, according to the Life Insurance Association (LIA).
Disability income insurance available in Singapore
Disability income insurance is designed to provide individuals with a certain income level if they become too ill to work due to partial or total disability. Most coverage may pay you up to approximately 75% of your monthly average salary until you are 60 or 65. Payments are stopped or reduced once you are able to start work again. Unlike critical illness insurance, which issues a lump sum pay-out, disability income insurance is typically paid out on a monthly basis.
Singaporeans and PRs born in 1980 or later are automatically covered by CareShield Life, a long-term care insurance that provides monthly pay-outs starting from SS$600 in case of severe disability. To qualify for the pay-outs, individual must not be able to perform three out of six MOH-accredited Activities of Daily Living (ADLs). The six ADLs include washing, dressing, feeding, toileting, moving, and transferring.
However, it is possible that you may have a partial disability and could still perform most of the ADLs stated. In this case, you should consider having private disability income insurance as you will not qualify for CareShield Life pay-out.
For example, you may have broken your arm while falling down a flight of stairs. You can still wash, dress, and feed yourself, but you work in a profession that requires physical labour or physical dexterity. In this case, you will not be able to do any of the heavy lifting required in your profession and will have to take at least six months off for full recovery.
Private disability income insurance can cover the loss of income. You will then be able to use this payment to pay your rent, basic expenses, or physiotherapy sessions.
Why you should get medical insurance coverage as soon as you can
The younger you are, the more likely you are to have a clean bill of health. This means you are more likely to get the most comprehensive coverage out of your insurance policy, as most private insurance plans (not MediShield) in Singapore will not cover pre-existing medical conditions.
While you may still be able to purchase an insurance plan in Singapore with existing medical conditions, insurers will impose exclusion clauses which do not cover your existing medical conditions. This means you will be left with expensive out-of-pocket medical bills if you ever require treatment for those pre-existing conditions.
Have a safety net in place no matter what life throws your way
No one anticipates receiving a bad diagnosis; acting sooner rather than later will save you and your loved ones from added financial burdens. Speak with a Citi Insurance Specialist today to explore more.
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