What is co-pay and how does that improve your health insurance?

With healthcare costs increasing steadily, it's understandable that both the cost of healthcare as well as health insurance are an increasing concern for everyone.

One method to manage the costs of health insurance is co-payments; Co-Pay is a mechanism that allows insurance providers to reduce the cost and present a win-win scenario for both insurers and the insured.

A health policy with a co-pay clause can help you make savings in the long run in the right circumstances.

Let's cover what are co-payments and who it might be best suited for.

What is Co-pay?

Co-pay is an agreement between the insured and insurer that the insured will pay a percentage of the hospitalisation expenses and the rest will be covered by the insurer.

The percentage paid by the insured with co-pay can vary from 10-30 per cent of the sum assured.

What's the benefit of co-payments?

Considering many of us buy insurance because we don't want to foot a large hospital bill, co-pay might sound counterproductive.

However, that's not necessary the case; as a co-pay clause reduces the risk incurred to the insurer, it often results in the reduction of premiums for your Integrated Shield Plan.

MediShield Life

MediShield Life is the basic health insurance plan that protects all Singapore citizens and permanent residents against large hospital bills, regardless of age or pre-existing conditions.

It's possible for Singaporeans to enhance their existing MediShield Life coverage using MediShield approved Integrated Plans (IP).

IPs such as Prudential PRUShield Health Insurance Plan can expand the coverage beyond what the basic MediShield Life policy offers.

Furthermore, MediSave can be used to fully pay for your MediShield Life, and can contribute towards your IP as well up to withdrawal limits.

PRUShield

PRUShield along Prudential's suite of supplementary plans are designed to complement MediShield Life and provide you with a more comprehensive medical coverage depending on your age & budget.

• Co-insurance: 10 per cent
• Hospital type: Private
• Eligibility requirement: Singapore Citizens, Permanent Residents, Foreigners
• Last entry age: 75 (Age Next Birthday)

PRUShield provides you with a strong set of benefits even without the complimentary plans, including:

PRUShield Benefits
Covering up to $1.2 million in medical treatments yearly Covers 180 days of pre-hospitalisation coverage and 365 days of post-hospitalisation coverage No medical underwriting for new plan purchases at significant life events Emergency and planned overseas medical treatments covered

There are three main PRUShield plans: Standard, Plus and Premier, with different levels of coverage.

Main plans	Coverage	Supplementary Plans
PRUShield Standard	Coverage for medical and surgical expenses at restructured hospitals (up to Class B1 ward)	No supplementary plans
PRUShield Plus	Coverage for medical and surgical expenses at restructured hospitals (up to Class A ward)	PRUExtra Plus Copay & PRUExtra Plus Lite Copay
PRUShield Premier	Coverage for medical and surgical expenses at private and restructured hospitals	PRUExtra Premier Copay, PRUExtra Premier Lite Copay & PRUExtra Premier Lite Copay

PRUExtra

PRUExtra plans are supplementary plans that can be used to further augment PRUShield plans that you may be considering so that your coverage matches your needs. There are 2 highlight features that are part of all PRUExtra plans.

The PRUExtra plans cover 50per cent of your co-insurance amount

There is a S$3000 stop-loss for Panel providers and Extended Panel specialists

PRUShield Premier Supplementary Plans

PRUExtra Premier Copay

PRUExtra Premier Copay provides the best coverage that PRUShield can offer, offering coverage at all Singapore private and restructured hospitals.

PRUExtra premier covers 95 per cent of your deductible amount.

PRUExtra Premier Lite Copay

PRUExtra Premier Lite provides most of the benefits of the regular premier version, including coverage of private hospitals and cutting your co-insurance amount by half.

However, in exchange for lower premiums, it only covers 50 per cent of your deductible amount.

PRUExtra Preferred Copay

PRUExtra Preferred Copay provides nearly all of the benefits of PRUExtra Premier Copay.

However, it only covers select private and restructured hospitals.

Thankfully the list of healthcare providers and specialist that PRUExtra Preferred Copay covers is quite extensive and can be found on the PRUPanel Connect website.

Aside from this small restriction, PRUExtra Preferred Copay share the 95 per cent deductible coverage with PRU Extra Premier Copay.

PRUShield Plus Supplementary Plans

There are two PRUExtra supplementary plans for PRUSheild Plus, PRUExtra Plus Copay and PRUExtra Plus Lite Copay.

PRUExtra Plus Copay covers 95 per cent of your deductible whilst both PRUExtra Plus Lite Copay covers 50 per cent of your deductible.

These PRUExtra supplementary plans have the same hospital/ward coverage as PRUShield Plus, covering all Singapore Restructured Hospitals (up to Class A Ward).

Extended Panel (EP)

The extended panel is an initiative set up by the Multilateral Healthcare Insurance Committee (MHIC) allowing IP insurers to recognise each other's panel doctors mutually.

Eligible policyholders seeking treatment from EP specialists benefit from a $3000 stop-loss.

For a Registered Medical Practitioner to be considered an EP specialist, they should:

• Be on another IP insurer's approved panel list.
• Obtain pre-authorisation from Prudential.
• Follow Prudential fees schedule.
• Meet pre-Authorisation terms and conditions.

Claim-based pricing

PRUExtra Premier Copay as well as PRUExtra Preferred Copay both benefit from a claim-based pricing model.

With this pricing system, you start paying the lowest premium of your age band and the PRUWell reward, giving 20 per cent savings if your policy is incepted with no exclusions.

Your premium level is determined by previous claims during the review period. As long as no claims are made, you'll continue to pay the standard level premium.

Conclusion

Co-pay, alongside other mechanisms such as claim-based pricing, allows insurers to create a pricing model that is cheaper for us.

Allowing us to spend more on the coverage that we need, allowing us to have peace of mind with our health insurance coverage at an affordable cost.

This article was first published in ValueChampion.