You will be able to explain which insurance premiums MediSave pays and how much of a shield plan it covers.
Every year, around her birthday month, Linda's MediSave drops by about S$1,500 in one go and her credit card shows a charge from her insurer. For years she didn't connect the two. When she finally read the renewal notice properly, she found that her MediSave paid three different premiums, and that part of one of them, plus the whole of a rider she had forgotten about, came out of her own pocket.
Most people pay at least one premium from MediSave without thinking about it. Knowing which premiums it can pay, and how much, tells you what your MediSave is committed to every year and how much cash your cover really costs.
MediShield Life is the basic health insurance that every Singapore citizen and permanent resident has for life. Its premiums can be paid fully from MediSave, and for most people they are. You don't need to do anything. The premium is deducted each year.
CareShield Life, the long-term care insurance for severe disability, works the same way for those covered by it: premiums can be paid fully from MediSave. Older members may instead have ElderShield, the scheme it replaced, whose premiums MediSave also pays. Who is covered by which, and the current premiums, are on the CareShield Life website.
An Integrated Shield plan is a private plan from an insurer that sits on top of MediShield Life. It adds cover for higher ward classes or private hospitals. Its premium has two parts. The MediShield Life part is paid from MediSave in full, as above. The private insurer's part, the extra cover, can be paid from MediSave only up to a yearly limit that depends on your age. Anything above that limit must be paid in cash.
The limit doesn't rise as fast as premiums do at older ages. So the cash part of an Integrated Shield plan tends to grow as you get older, even if the total premium seems manageable today. Check the current MediSave limit for your age band with the CPF Board or MOH, and look at your insurer's premium table for the ages you will reach.
Many people add a rider to their Integrated Shield plan to reduce the deductible and co-insurance they would pay on a claim. Riders can't be paid from MediSave at all. Every dollar of a rider premium is cash.
Riders also tend to rise steeply with age. That makes them one of the largest cash costs of health insurance in later life, and one that many people only notice when the renewal notice arrives. Whether a rider is worth keeping at each age is a question for Insurance Decoded, lesson 4.4, Premiums at 30, 50 and 70: can you keep paying.
Here is what Linda found, with made-up figures. Her MediShield Life premium was S$560, paid from MediSave. Her Integrated Shield plan's private part was S$900, and the MediSave limit for her age band was S$700, an invented figure, so S$700 came from MediSave and S$200 was cash. Her CareShield Life premium was S$300, from MediSave. Her rider was S$450, all cash.
Added up, her MediSave paid S$560 plus S$700 plus S$300, which is S$1,560 a year. Her cash cost was S$200 plus S$450, which is S$650 a year. She had been thinking of her health insurance as "paid by CPF," when in fact S$650 of it came from her take-home pay.
Rising premiums affect your MediSave as well as your cash. While you work, your contributions usually cover your premiums and more, so your balance grows or overflows. After you stop working, contributions stop, but premiums keep coming, and they keep rising with age. At some point, a retiree's premiums plus any bills can exceed the interest MediSave earns, and the balance starts to fall.
That is not a reason to drop cover. It is a reason to know the numbers. Lesson 5.4, List what your MediSave pays each year, builds the list that shows when your own MediSave might start shrinking. Financial independence: planning the number and the path, lesson 7.2, Premiums rise with age, looks at the same problem for people planning to stop work early.
Find every premium paid from your MediSave each year in your CPF transaction history, and the cash part of any shield plan or rider from your insurer's renewal notice or app. Have both sources open before you start the list.
List every premium paid from your MediSave each year and the cash part of any shield plan or rider.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).