We are all aware that healthcare costs are rising. Even the insurance costs for hospital Integrated Shield Plans have been increasing to the point where more people are giving up on them. The most expensive Integrated Shield Plan can cost up to a lifetime premium of $323,900!
It is no wonder that the proportion of people on the highest tier of Integrated Shield Plans dropped from 40 percent in 2021 to 38 percent in 2023. This raises some concerns: Are healthcare costs in Singapore becoming unaffordable? Or, if we take a step back and ask, are Integrated Shield Plans even necessary, or are they just a nice-to-have?
Integrated Shield Plans provide more coverage than MediShield Life, with the most expensive tier allowing coverage for treatments at private hospitals. Other tiers and MediShield Life only cover treatments at public hospitals.
There are at least two schools of thought on this issue. The first is that one doesn’t need private hospital access, considering that public hospitals in Singapore maintain a very high standard of medical care.
Many financial advisors advocate for the highest tier of Integrated Shield Plans. While some may do so to earn higher commissions, I believe others genuinely consider it beneficial for their clients. They typically argue that a good hospitalization plan is crucial in times of need, ensuring access to the best medical care possible, even at private hospitals, without the burden of worrying about medical bills.
I lean towards getting the highest tier Integrated Shield Plans if the budget allows, based on personal experiences.
A few years ago, I had a knee ligament and meniscus tear. Initially, I visited Singapore General Hospital and got an appointment for an MRI scan 1.5 months later, followed by an orthopedic specialist appointment a few days after that. I was told I could have surgery 1 or 2 months later. Seeking a second opinion from a private specialist, I got my surgery done within two weeks. The private specialist mentioned that the MRI scan could have been done within a day or two, rather than waiting 1.5 months. The delay could have impacted my meniscus recovery. This experience taught me that private healthcare indeed offers speedier treatment, avoiding the long queues in public hospitals. While the public hospital treatment would have cost around $10k, my private treatment exceeded $30k. Thankfully, my highest tier Integrated Shield Plan covered most of the costs.
The second incident involves my son. As a toddler, he struggled to cough out phlegm, leading to bronchitis when it accumulated in his lungs. Multiple GPs failed to cure him, and he remained sick for a month. A referral to a pediatrician finally brought relief. Sometimes, he needed to be warded to use a humidifier and other medications to loosen the phlegm. The most serious case required a 10-day hospital stay, costing over $16k. As a parent, I don’t want to see my child suffer. Providing him with the best care possible and ensuring his swift recovery is always my top priority.
These experiences highlight the necessity of private hospital solutions in certain situations. Our fellow trainer at Dr Wealth, Chris Ng, argues that investing the premium for higher returns to self-insure is better. However, not everyone invests as well as Chris Ng. Additionally, unexpected medical bills in five or six digits are unpleasant, and most prefer to pay a known premium amount upfront.
Moreover, MediSave can be used to pay for Integrated Shield Plan premiums. People are more willing to enroll in these plans if there is no significant cash outlay. Since MediSave funds can’t be withdrawn and are passed on to descendants after death, some may feel using it for premiums is practical. Although this perspective may not be ideal, it’s understandable why some might see MediSave money as “good as gone,” making it easier to justify using it for insurance premiums.
That said, there is a limit to how much MediSave can be used to pay premiums per year. The Additional Withdrawal Limits from MediSave are dependent on the age group, as shown below:
- $300 for those with age next birthday at 40 years and below;
- $600 for age next birthday at 41 to 70 years; and
- $900 for age next birthday at 71 years and above.
Using the AIA Integrated Shield Plan as an example, the table of premiums is shown below. We can see that there is no cash outlay for ages 1 to 25 for AIA HealthShield Gold Max A. The cash outlay remains below $1,000 a year from ages 26 to 55. However, from age 56 onwards, the cash outlay starts to climb significantly. As premiums have risen over the years, it isn’t surprising that more people are giving up the highest tier plan.
Do you know what’s worse than high insurance premiums? Paying for the highest tier plan and then using public hospitals instead of private ones!
According to CPF’s statistics, only 48% of Integrated Shield Plan policyholders who qualify for private hospitals actually stay in private hospitals. The remaining 52% opt for public hospitals. So, why pay for private hospital coverage? This is really a waste of money! These policyholders would be better off opting for lower-tier plans and saving on premiums.
The shocking discovery of the underutilization of private hospitals is an indication that many have not think about their hospitalization plans. Don’t be one of them. If you want to review your coverage and get some good advice, you may look for Havend and indicate your interest through this link.
We do receive referral fees as an introducer, but we must also highlight that we only work with partners we trust and believe you can benefit from their products and services. We are not allowed to provide financial advice so do look for them.
There isn’t a one-size-fits-all solution when it comes to Integrated Shield Plans. It highly depends on your personal context. Some prefer to have the option of private hospitals and are willing to pay the additional premium. Others do not mind public hospital wards. Some have higher disposable incomes to afford higher premiums, while others may not wish to have a large cash outlay. Additionally, those with pre-existing conditions might find downgrading unwise. It’s essential to understand your situation clearly and make an informed decision.