FAQ: Buying a Shield Plan

1. I am provided with medical benefit by my employer. Do I need to buy a Shield plan?

I suggest that you buy the Medishield plan from CPF, instead of a private Shield plan. The premium is quite low for most working people.

You will need the Shield plan when you retire from work or join a new employer that does not provide any medical benefit.

If you are in fairly good health at that time, you can apply to convert from the Medishield to a private Shield plan. Most insurance companies will be willing to accept you.

If not, you can stay on the Medishield plan.

If you do not buy a Shield plan when you are healthy, and you apply for this plan in the future when you are in poor health, the insurance company may not accept you.

2. What type of plan should I buy?

The Medishield plan provided by the Central Provident Fund is adequate to cover the charges, if you stay in a subsidised ward (i.e. B2) in a restructured hospital.

If you wish to be covered for a higher class ward, e.g. B1 or A ward or be treated in a private hospital, you have to buy a private Shield plan offered by an insurance company.

All the Shield plans require you to pay the Deductible and the Co-insurance, i.e. up to 15% of the excess above the Deductible. The premium can be paid from your Medisave account, up to the limit of $660 a year (subject to revision). You have to pay the excess on your own, i.e. cannot be paid from the Medisave account.

Some insurance company offer a rider to cover the Deductible and the co-insurance. The premium for the rider has to be paid by you on your own.

Some plans cover the entire hospital bill. They are called “as charged” plans.

3. Should I buy the rider to cover the Deductible and Co-insurance?

As a general rule, you should buy insurance to cover a potential big loss with a small chance of occurrence.

For most people in good health, it is not necessary to take insurance to cover this small loss. It is better to bear this risk on your own. If you have to be hospitalised, you can pay these items from your Medisave account.

If you insure these items, you have to pay a premium that covers the expected claim, expenses and a profit margin. This can increase your cost by more than 30%.

4. Should I buy a “as charged” plan?

The “as charged” plan covers the amount as charged, and is not submit to a sub-limit for individual items (e.g. surgery, room and board, investigation) in the hospital bill. It is useful if you wish to be treated in a private hospital where the charges can be quite high.
You have to be aware of two negative features of this plan:
a) The premium rate for an “as charged” plan could be 10% to 30% higher than a similar plan that has limits for individual items.
b) The future increase in premium can be much higher, as the insurance company is not likely to manage the claims under “as charge” plans.
You will still have to pay the Deductible and Co-insurance, unless you buy a separate rider to cover it.
5. Should I buy a plan with a high lifetime limit?
Some plans offer a cover of $5 million. This is a marketing gimmick. It is a way for the insurance company to get you to pay a higher premium to them.

To my knowledge, out of 2 million people who are insured for the past 10 years, nobody has ever accumulated a lifetime bill of more than $300,000. Most of the large bills are probably less than $100,000.

Do not be frightened into buying a Shield plan because you have have to incur $5 million in medical bills. This is not possible.

6. How do I convert from Medishield to a private Shield plan?

You can approach the insurance company or its agent. They will be willing to accept you as a customer, if you are in fairly good health.

7. My parent is not covered under a Shield plan. How do I get them covered? Can they be covered, if they are not in good health?

You can approach an insurance company to get your parent to be insured.

If your parent has a certain medical condition but is otherwise in good health, you may be able to insure your parent to be insured with the exclusion of the specific medical condition. Your parent can still be covered for other illness.

If this is not possible, you do not need to worry. Many older folks are not covered under a Shield plan. If they go to hospital, they can stay in a B2 ward, which is not costly. B2 is suitable for old folks. The bill can be paid under Medisave.

8. Can I pay a level premium for my Shield plan?

The premium rate for a Shield plan varies according to the current age and the type of plan. The premium rate increases when you grow older. The increase can be quite steep at the older ages.

The premium rates are subject to revision by the insurance company based on their claim experience.

No insurance company is able to offer you a level premium, as they are not able to estimate the future increases in medical cost.

You can do your own method of levelling the premium. Here is how it can be done.

You should ask the insurance company to tell you the total premium that you have to pay for a lifetime, for example, up to age 85. You have to make sure that there is sufficient saving in your Medisave account to cover the total cost.

If your Medisave account is insufficient, you should downgrade to a lower plan, which is less costly. The cheapest plan is the Medishield offered by the Central Provident Fund.

9. How much of the hospital bill is paid by the Shield plan?

The insurance company calculate the amount payable by the Shield plan as fo llows:

a) The individual items are scrutinised to remove any excess over the specific limit (e.g. for surgery or hospital services) or items that are not covered

b) From the balance of the bill, the Deductible and co-insurance is taken away to arrive at the amount covered by the plan.

The claimable amount is about 40% to 60% of most hospital bills. It is higher for the larger bills.

You can pay the balance of the hospital bill (comprising of the Deductible, Co-insurance and the uninsured items) from your Medisave account or on your own.

10. How can I avoid double insurance?

If you buy a Shield plan in addition to the medical coverage provided by your employer, you are paying a premium for partial or no coverage, as most of the medical cost can be met from the employer's plan.

Here are some options to avoid the double insurance:

a) Ask your employer to buy a Shield plan. This allows you to continue the plan on your own when you leave your employer.

b) Ask your employer to cease the medical coverage and contribute the premium to your Medisave account. You can pay for the Shield plan using your Medisave.

Both options avoid the wastage of double coverage and reduce the cost to the employer and employee.

11. Should I use my Medisave or pay by cash?

Many people look for all ways to take money out of Medisave, e.g. to pay for medical insurance or expenses.

Actually, Medisave is your own money. If you keep your money in Medisave, you earn an interest rate of 4% plus 1% on the first $20,000. This is an attractive rate of return.

If you have money, pay by cash. Keep your Medisave intact, until it reaches the cap. This allows you to earn an attractive interest rate on your savings, which is better than the interest paid by your bank. You will need your Medisave when you grow old.

Do not spend too much money to buy expensive Shield plan. Choose an economical plan.

12. Can the insurance company refuse to renew my medical insurance, if I make a few claims?

For an ordinary medical insurance policy, the insurance company can refuse to renew your policy at the end of the current period of insurance, if you have made a few claims and is suffering from a chronic illness.

All Shield plans have a special feature. They are guaranteed to be renewable up to age 85 or a lifetime, regardless of your health condition. On renewal, you have to pay the prevailing premium based on your current age. You do not have to pay a higher premium if you are in poor health.