Update of EnhancedIncomeshield Shield hospitalisation cover
March 15th, 2008 by ALVIN SOONG
Update of Shield hospitalisation cover - A client asks me today again about the new assist rider compared to the old rider in enhanced incomeshield. I decide to extract the last sunday newspaper for him again to be placed here, in case there might be many others who like to find out more on the difference….
What it is
THE new Assist rider for the Incomeshield hospitalisation and surgical plan was launched on Nov 16 for new and current policyholders of the plan.
First, to recap what a rider is and what it covers: All Shield hospitalisation plans include a ‘deductible’ portion - the first layer of charges that the policyholder has to bear. Depending on the type of plan, the deductible amount typically ranges from $2,000 to $3,000.
The plans must also have a co-insurance feature, which means the policyholder shares part of the cost of the bill, usually 10 per cent over and above the deductible.
For example, if an A-class ward bill is $10,000, the policyholder bears the first $3,000 as the deductible and $700 as co-insurance (10 per cent of the remaining $7,000). The insurer pays the remaining $6,300.
Insurers offer riders, payable with a cash premium, which waive the deductible and/or co-insurance.
In the case of Income’s new Assist rider, it covers the deductible but it will not completely cover the co-insurance portion of the bill.
Instead, the insured will bear the co-payment portion, which is 10 per cent of the claimable amount, subject to a maximum cap of $1,500 (for Plan C) to $3,000 (for Plan P).
Let’s assume you incur a $1,000 hospital bill. With an Assist rider, you are liable for $100 (10 per cent of $1,000) only. If the bill is $100,000, your exposure is capped at $3,000, not $10,000.
Before the Assist rider, the older Incomeshield Plus rider fully covered both the deductible and co-insurance portions of the claimable amount.
Policyholders who bought the Plus rider can opt to stay with the cover, but will face higher premiums, which were revised up from the start of this year by about 53 per cent.
It is believed that the Assist rider has come about because Incomeshield medical claims have been rising. With lower premiums and greater shared responsibility on the part of the customer, the new rider is an attempt to ensure that Income will be able to offer the hospitalisation cover over the long run.
Income chief executive Tan Suee Chieh explains that the Assist rider offers policyholders lower premiums and greater savings in the long term, compared with ‘full’ riders that cover both the co-insurance and deductibles.
‘The premium for the Assist rider is about half of that for ‘full’ riders offered in the market, which can translate into substantial savings for the policyholder,’ he says.
He adds that the experience in other countries has shown that, when the co-payment element is not included in health insurance plans, there tends to be over-servicing and over-consumption of health services.
This is not in the best interest of policyholders as health-care costs will escalate and insurers will end up having to raise premiums regularly.
What financial advisers say
For current Incomeshield policyholders who have bought the Plus rider, Mr Patrick Lim, the associate director of financial advisory firm PromiseLand, suggests that the decision to switch to the Assist rider should be put off as long as possible.
This is particularly so for those who can afford to pay the higher premiums and are afflicted with medical conditions, since the Plus rider offers a higher benefit of covering both the deductible and co-payments fully.
Providend’s head of risk management and special projects, Mr Eddy Cheong, believes that though the premium for the Plus rider has increased by about 50 to 85 per cent, it is worth keeping.
‘That is because the old premium was very affordable to begin with and, even after the hike, it is still one of the lowest in the market,’ he said.
However, policyholders might want to switch to Assist when the premiums become unaffordable, either because they have reached higher age bands or because of periodic repricing of premiums on the part of Income, says Mr Lim.
extracted from Sunday 9th March 2008 Straits TImes
