A lot has changed in the past year, but the upcoming changes to the government’s health insurance scheme, MediShield Life, might have gotten lost in the noise.

While the system has undergone little tweaks every now and then, in early 2021 there will be a major review of the MediShield Life scheme — which also means significant premium hikes!

Since most of us will have to pay more for health insurance coverage in the near future, here’s what every informed Singaporean should know about the MediShield Life premium and coverage changes.

TL;DR: MediShield Life changes in 2021 at a glance

The reason for updating MediShield Life is pretty simple and intuitive: Healthcare costs have risen so much in the past years that MediShield Life is no longer sufficient to cover a lot of our hospital bills.

We’ve known for some time that MediShield Life coverage has been skimpy, and have always advocated getting your own Integrated Shield plan as a supplement. Some two-thirds of Singaporeans already do this.

But MediShield Life is meant to be social safety net even for the remaining folks who don’t know enough or can’t afford to buy their own Integrated Shield plans. So the 2021 MediShield Life changes are meant to improve coverage across the board.

If you don’t have time to read, there are just 3 important takeaways to note:

1. MediShield Life premiums will increase, although the government will cushion the blow with subsidies over the next 2 years)
2. MediShield Life coverage will be more extensive with raised claim limits in several categories.
3. However, coverage for private healthcare will be reduced

Below are more details about these 3 points.

1. MediShield Life premium increases from 2021

With the ever-present risk of Covid-19 and our rapidly aging population, we saw this one coming — MediShield Life premiums will rise in 2021, with people paying up to 35 per cent more.

How much more you will pay depends on factors like age, with older people likely to bear the highest premium hikes. People will pay up to 35 per cent more, and the people who face the greatest differential could be paying over $500 more per year.

Knowing that people wouldn’t be happy about seeing their expenses rise in a pandemic, the government will be offering special Covid-19 subsidies over a period of two years to cushion the effect of the premium hikes.

The Covid-19 subsidies are for Singapore citizens and distributed according to per capita household income, age and annual value of home. Those with >1 property or homes with annual value of >$21,000 will not get subsidies.

The government will also continue to offer their current subsidies for lower-to-middle income Singaporeans, as well as the Pioneer and Merdeka Generation subsidies. PRs who qualify can get 50 per cent of what Singaporeans receive.

ALSO READ: MediShield Life review 2020: Why are our premiums still increasing in this economic climate?

2. Higher MediShield Life coverage for public healthcare

Unlike price hikes for other things like public transport and utilities, where you get forced to pay more for the same thing, the MediShield Life premium hikes actually entitle you to better benefits.

The premium hikes will be accompanied by more generous claim limits. Here’s a summary of the increased coverage:

• Higher annual claim limit: Raised from $100,000 to $150,000
• Higher daily ward and treatment limits for acute hospital stays: Basically, you get to claim more per day if you get hospitalised, whether in a normal ward, ICU, or psychiatric ward.
• Extra $200 per day for first 2 days of stay: Since most of the diagnostics/lab tests are done in the first 2 days
• Higher limits for community hospital stays: Raised from $350/day to $430/day
• Higher claim limits for 2 types of outpatient treatment: Kidney dialysis and immunosuppressants for organ transplants
• Higher claim limits for radiotherapy for cancer: Increased from $140/treatment to $300 OR $900 (depending on type of treatment)
• Lower day surgery deductible for patients above 80: From $3,000 to $2,000. To enable older patients to go for day surgery instead of getting warded just to qualify for a MediShield Life claim
• Removal of exclusions: MediShield Life now covers attempted suicide, intentional self-injury, drug addiction and alcoholism (previously excluded)

ALSO READ: CPF MediShield Life in Singapore: Everything you need to understand & use it

3. Lower MediShield Life coverage for private healthcare

With private healthcare inflation far outpacing that of public healthcare, this was bound to happen. From 2021, MediShield Life will reduce its coverage of private hospital bills from 35 per cent to just 25 per cent.

“But I thought MediShield Life only covers public hospitals?”

… It’s complicated.

Actually, Integrated Shield Plans are (as the name implies) integrated with MediShield Life. So whenever you make a claim under an Integrated Shield Plan or IP, a portion of the payout comes from MediShield while the private insurer tops up the rest.

Let’s say you have an AIA Integrated Shield Plan and you claim $10,000.

• Under the current 35 per cent allocation, this means MediShield Life pays $3,500 while AIA pays $6,500
• With the new 25 per cent rule, this means AIA now needs to pay out $7,500 (i.e. $1,000 more)

And if private insurers are paying more, they’ll need to find ways to cough up the funds… meaning we can expect our private IP premiums to go up too.

Note that people who are receiving private care at public hospitals will not be affected, and will continue to enjoy the previous cap of 35 per cent. Not sure what that even means? 

With all these MediShield Life changes, what’s next for us?

There’s nothing much we can do about the MediShield Life premium and coverage changes. All the above recommendations have already been approved.

But it’s likely to impact those of us with Integrated Shield Plans. None of the insurers have increased their premiums yet, but we expect them to do so in the coming years, especially for the private tier health insurance and co-payment riders.

If you don’t want to pay more, you might have to switch out your IP for one at a lower tier, or switch to a cheaper insurer when the time comes. 

Nobody likes a premium hike, even if it does come with increased coverage. But we should bear in mind that the changes are meant to make healthcare more affordable for our seniors and lower-earning Singaporeans.

This article was first published in MoneySmart.