DOC Money answers questions about which is the best health insurance to buy.
1. Do I really need health insurance?
It is not compulsory. You can pay hospital bills with your Medisave or cash. But a big bill might break your piggy bank. You could even go bankrupt.
When buying health insurance, you have three ways to go:
i) Medishield: It is an opt-out plan run by the CPF Board.
ii) Group health plans: If you work for a big company, you probably have it already.
iii) Private shield health insurance: We have about 20 plans, offered by the five big life insurance companies: NTUC Income, AIA, GE Life, Prudential and Aviva.
My advice: Buy one. Health insurance is practically a necessity.
2. Should I go for double coverage?
For group health plans, the employer pays part or all of the premiums, which makes this type of insurance a great deal.
Many people ask, 'If I have a group plan, should I go for double coverage?'
It means taking a private shield plan or Medishield in addition to your group insurance.
Financial advisors tell a story about how you will lose your group coverage when you leave your company. If it happens when you are 65 and in poor health, you could find yourself uninsurable.
They say, 'You had better buy back-up health insurance now.'
It isn't exactly unbiased advice since they receive a healthy commission if you buy.
Of course, double coverage doesn't mean double claims. You can claim from only one insurer at a time. Otherwise you could profit from being hospitalised.
The big question is: Which policy to charge? It turns out that people with double coverage often send the bill to their group insurance.
Why?
i) First, the group coverage may pay more.
ii) Second, they may want to establish a record of no claims from their private shield insurer and
iii) the group plan's deductible and co-insurance may be low or even zero if it is paid by the company.
Insurers love it when you pay premiums and don't send them any claims. It makes for big profits.
My advice: If you want back-up health insurance, go for Medishield. Paying 20, 30 or 40 years for a private insurance is expensive, especially if you never use it.
A slightly more risky but cheaper route is to go with just one plan: Your company's health insurance.
3. I have no group insurance. What to do?
The low-cost option is Medishield.
If you prefer to be sick in luxury, you can choose among 20 or so private shield plans from five life insurers.
Which is best? Each has its own set of bells and whistles such as
i) lifetime and annual limits,
ii) riders to pay your deductible and co-insurance,
iii) global coverage and
iv) as-charged plans, with no limit on the size of the bill.
Both the costs and benefits vary, which makes comparisons next to impossible.
Private shield plans are costly, especially for the elderly. At age 75, you pay only $225 per year for Medishield. For the five private shield plans, however, the average premiums are $2,000 per year - nearly 10 times more.
Besides the premiums, a private plan commits you to permanently higher deductibles and co-insurance.
My advice: No preference. None of the private shield plans has a clear-cut advantage over the others.
4. How does Medishield compare to private plans?
Ah. Now we have something to compare. You can do it by looking at the benefits and costs of each.
Benefits are claims the insurance company pays to policyholders. Costs are the premiums that policyholders must pay.
Divide one by the other and ta da ... you have a benefit to cost ratio.
Then look for the biggest number. It tells which health insurance gives you the most value for money.
