MediShield Life to account for bigger chunk of Integrated Shield payouts

SINGAPORE — Claims paid out by insurers for the “top-up” portion of Integrated Shield Plans (IPs) are expected to come down because of the increase in coverage from MediShield Life, which takes effect later this year.

This was revealed for the first time yesterday by the five insurers offering such plans, namely AIA, Aviva, Great Eastern, NTUC Income and Prudential.

The top-up portion refers to the additional private insurance portion of IPs that covers stays in private hospitals, and class A and B1 wards in public hospitals.

For IPs that target class A and B1 ward users, the proportion of claims paid out by the top-up portion would decrease by an estimated 14 percentage points, the Life Insurance Association (LIA) said.

For a B1 Ward plan, the additional private insurance portion would account for one-third of the claims payout, with MediShield Life accounting for the remaining two-thirds.

For an A Ward plan, the claims payout would be split evenly between MediShield Life and the additional private insurance portion.

The insurers reiterated their pledge to freeze the top-up portion of premiums for IPs for 12 months.

The freeze would apply to the first year of MediShield Life, the universal insurance scheme that protects against large hospital bills. It would allow for a smooth transition of renewals of the IPs, the insurers said.

With this freeze, any increase in Integrated Shield premiums during this period would be due to MediShield Life. But insurance premiums will go up in the longer term due to rising healthcare costs, the LIA said.

Claims for IPs targeting A and B1 wards have increased by about 12 per cent per year since 2011, the LIA said. The double-digit annual growth is due to larger medical bills, greater healthcare consumption, and newer and costlier procedures.

Six in 10 Singaporeans have IPs, and questions have been raised on how they would be impacted by MediShield Life.

The Government announced in March that Medisave withdrawal limits for these plans would change, with limits to be set for what can be used to pay for the additional private insurance component.

Meanwhile, claims for IPs targeting private hospitals are rising the fastest, at about 17 per cent a year, the LIA said yesterday.

The average bill amount from private hospitals is about two to three times that of public hospitals.

With MediShield Life, the claims payout from the top-up portion of IPs targeting private hospital wards will decrease by about six percentage points — from 86 per cent to 80 per cent, the LIA said.

This means MediShield Life will account for 20 per cent of the claims payout. NEO CHAI CHIN