You will be able to work out what you pay on a hospital bill under a plan with and without a rider.
A colleague of Jun Hao's was in hospital for a week after an appendix operation that went wrong. The bill came to about S$30,000. She had a shield plan and was relieved, until a letter arrived asking her to pay several thousand dollars of it. She had always thought her plan "covered everything". It covered most of the bill. The rest was her share, and the rules for that share were in her policy all along.
This lesson shows you how to work out your share of a bill, with and without a rider, and how to decide whether a rider is worth its premiums.
Most hospital plans make you pay part of every claim, for two reasons: it keeps premiums lower, and it gives patients and doctors a reason not to run up bills.
The deductible is the first part of a claim that you pay before the plan pays anything. It typically applies once per policy year, and it can depend on your ward class and your age.
Co-insurance is your percentage share of the claimable bill above the deductible. The plan pays the rest, up to its claim limits.
MediShield Life and every Integrated Shield plan set their own deductible, co-insurance and limits, and these change. Find your plan's current figures in its product summary, and MediShield Life's on the MOH website. You can usually use MediSave to pay part of your share, within withdrawal limits that CPF publishes.
Here is the method, with invented plan terms that are not any insurer's: a deductible of S$3,000 and co-insurance of 10%. Assume the whole S$30,000 bill is claimable, Jun Hao stayed in the ward class his plan covers, and the bill is within the plan's limits.
Without a rider, he pays the deductible first, S$3,000. That leaves S$27,000. His co-insurance share is 10% of S$27,000, which is S$2,700. His total share is 3,000 plus 2,700, or S$5,700, and the plan pays the other S$24,300.
A common mistake is to take 10% of the whole bill, S$3,000, and add the deductible, getting S$6,000. Co-insurance applies only to the part above the deductible.
If the ward was above his plan's class, the pro-ration factor from lesson 4.2, Ward class, panel doctors and pre-authorisation, would apply first, and his share would be much larger.
A rider pays some or all of the deductible and co-insurance for you. Under rules set by MOH, newer riders must leave you paying part of every bill yourself, called a co-payment, and some cap that co-payment each year, often only when you use a panel doctor or get pre-authorisation. MOH has tightened these rules more than once, and what applies to you depends on when your rider was bought. Check the current rules on the MOH website and your own rider's terms with your insurer.
Because riders differ, work the bill both ways if you're not sure which kind you have. Again, the terms are invented.
Rider A covers the deductible and co-insurance but leaves you paying 5% of the bill. Jun Hao pays 5% of S$30,000, which is S$1,500. The rider has saved him 5,700 minus 1,500, or S$4,200.
Rider B does not cover the deductible, and leaves you 5% of the rest. He pays the S$3,000 deductible plus 5% of S$27,000, which is S$1,350, so S$4,350 in total. The rider has saved him S$1,350.
The two riders sound alike in a brochure, and on this bill one saves more than three times as much as the other.
A rider's premium is cash, it is stepped, and it rises steeply in later life. So the fair comparison is not one year's premium against one bill. It is the rider's premiums over the years you'll hold it against the bills it would realistically save you.
In Jun Hao's example premium table, which lesson 4.4 sets out, his rider's cash premiums from now to age 80 add up to about S$55,000. Rider A saves him S$4,200 on a S$30,000 admission. He would need about 13 admissions of that size over his life just to get back what he paid in premiums. Rider B, saving S$1,350 a time, would need far more.
That doesn't make a rider a bad buy. Some people are admitted many times, especially later in life, and bills can be much larger than S$30,000. The rider also gives certainty: a known yearly cost instead of an unknown share of a bad year. But it changes the question. Instead of "do I want my bills covered", ask: would I rather pay a rising cash premium every year for decades, or keep that money and pay my share when it happens?
Your emergency fund is part of the answer. If it could absorb S$5,700 without strain, the rider is buying peace of mind rather than protection from ruin. Some people keep the rider while young and the premium is small, and plan to drop it later when it becomes expensive. That's a valid plan if you write down the age at which you'll review it.
The activity uses a sample bill of S$30,000. Use your own plan's real deductible and co-insurance from its product summary, and your rider's real terms, instead of the invented ones above. Work it out with the rider and without, and write the difference beside the rider's yearly premium.
Take a sample hospital bill of S$30,000 as an example and work out what you would pay with your plan, with and without a rider.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).