Integrated Shield Plan Riders Now Require Co-payment: What You Need To Know

From 1 April 2021, all Integrated Shield plan riders will require 5% co-payment, including renewals of existing IPs with full-riders. What does this mean for consumers and how will it impact premiums? Read on to find out. 

A refresher on Integrated Shield plan 

An Integrated Shield plan (IP) is a private health insurance plan that helps policyholders cover the cost of hospitalisation and surgical bills – the premiums can be paid using our MediSave account. 

Though IPs are not compulsory, they act as an additional layer of insurance on top of our MediShield Life. 

While MediShield Life provides coverage for B2/C wards in public hospitals, IPs can help to provide additional coverage if you choose to stay in B1/A wards or at private hospitals. IPs also help to cover pre and post-hospitalisation costs and increase our total claim limit beyond the yearly $100,000 provided by MediShield Life. 

There are also riders we can add to our IP in order to limit the amount of out-of-pocket expenses we end up paying for hospitalisation and/or medical bills. Prior to 1 April 2019, IPs offered full-riders that allowed consumers to enjoy zero co-payment regardless of the size of the bill. There was a one-year buffer between the time the Ministry of Health (MOH) announced that new riders would require policyholders to pay part of the bill, in order to give insurers time to come up with new riders that included the co-payment and cap.

Full-riders will be completely phased out from 1 April 2021 onwards due to the increasing healthcare costs, as well as over-consumption of medical services. This means that all IP riders available will now require policyholders to co-pay a percentage of their medical bills.

How will this affect me as a consumer? 

#1 You’ll need to foot part of the bill 

You will no longer be able to opt for a full-rider. This means you’ll have to fork out a portion of the bills . However, fret not – insurers have capped this at $3,000 to ensure that it remains affordable for policyholders. 

So, how much will you end up paying? Here’s an example to help paint a clearer picture: 

Ben undergoes surgery that requires a hospital stay. His bills amount to $100,000. Without a co-pay rider for his IP, he would have to first pay an annual deductible of $3,500 for staying in a Class A ward in a public hospital before incurring a 10% co-insurance [10% x ($100,000 - $3,500) = $9,650] on that balance. This adds up to $13,150 ($9,650 + $3,500). 

However, with the co-pay rider that he purchased for his IP, there is a cap of $3,000. Instead of paying $13,150, Ben pays just $3,000 for his medical bill.

#2 More accountability and responsibility 

Rather than going for the most expensive (or even non-essential) treatment available, you’ll now have to weigh your options. Going for the most expensive option also means that you’ll have to pay more, unless it reaches the cap.

#3 Lower premiums 

With the shift to co-pay riders, premiums are expected to be lower. 

For example, NTUC Income has announced that premiums will be reduced by up to 50%, though this would depend on the policy as well as the policyholder's age. Similarly, AXA Shield with the new AXA Enhanced Care co-pay rider is 28% to 54% cheaper than AXA Shield with the discontinued full-pay riders.

What happens if I have an existing IP with a full rider?

Since 1 April 2019, new IP riders sold have already included a minimum 5% co-payment. However, if you bought IP riders between 8 March 2018 to 1 April 2019, you’ll have to transition to the new IP riders from 1 April 2021. 

This means that ultimately, like everyone else, you will have to co-pay part of your bills once they’re renewed after 1 April 2021. Existing policyholders should already have been notified by their insurer about the new changes to the rider. 

For example, since 3 February 2021, policyholders of NTUC Income’s IPs with riders covering hospital bills in full have been notified that they will soon have to co-pay part of their bills for policies that are renewed after 1 April 2021. Those with serious medical conditions will start co-payment only from next year.

Some insurers have also introduced claims-adjusted pricing, whereby policyholders who do not make a claim enjoy a 20% discount on premiums.

Panel vs non-panel specialists

An important note: the co-payment cap of $3,000 applies only if the policyholder receives treatment from the insurers’ panel of specialists. Opting for a non-panel specialist could require you to pay additional costs, as the $3,000 co-payment cap might not apply. 

These panels offered by insurers were devised to ensure that doctors do not overcharge, keeping the cost of healthcare manageable for both policyholders and insurers. 

While this issue has been a cause of unhappiness for some private sector doctors that are finding the selection criteria stringent and not entirely transparent, consumers can rest assured knowing that black-listed doctors will not be included in the panels. 

If you stay healthy, you can enjoy discounts on future premiums thanks to the new claims-based pricing implemented by insurers such as AIA, Great Eastern and Prudential.

How will this co-pay rider impact insurance companies? 

This co-payment helps to make healthcare costs more affordable and sustainable for insurers. 

While the wheels have been set in motion since 2019, from 1 April 2021, having only co-pay riders available will require insurance companies to shift existing full-riders to new co-pay riders. This also includes re-evaluating the premiums that policyholders will have to pay for an IP with a co-pay rider. 

Why the need for co-payment? 

Over-consumption, over-servicing and over-charging. 

Overconsumption uses precious resources of the hospitals and has a knock-on effect on healthcare costs. Coupled with rising medical costs, this has resulted in mounting claims for insurers that are unsustainable, even leading to heavy losses. 

This problem stems from having IPs with full riders whereby the consumers do not need to fork out a single dollar, with the insurer covering the entire cost. This is akin to going to a buffet: you eat more even when you’re full, simply because it’s ‘free’ and you’re not charged extra for greater consumption. 

Case in point: IP policyholders with full riders have bills that are 60% higher than those without riders. 

As such, IP riders have since been redesigned to feature a co-payment component, where policyholders have to pay for a fraction of the bills. 

This puts more accountability on consumers and also deters them from taking advantage of or overclaiming on their IP by going for the most expensive option, especially when it isn’t needed or recommended. Rather, consumers are encouraged to be more prudent with their medical treatment decisions by going for the most appropriate one for their circumstances. 

This not only protects consumers’ own wallets, but also that of the insurers, in turn keeping health insurance premiums affordable and sustainable in the long run. 

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