Are You Worried About Medical Expenses?

Last year, an online survey by NTUC Income revealed that most Singaporeans (74% of respondents) were afraid of being diagnosed with a critical illness or meet with an accident that leaves them paralysed. 61% of respondents feared not being able to afford sufficient healthcare.

It seems like we are pretty paranoid when it comes to health and healthcare issues. Or is there a basis for such fears?

Medical Inflation at 10%

Aon, a speciality insurance broker, recently published their latest Global Medical Trend Rates Report. They expect medical inflation for Singapore to hit 10% in 2019, versus the global average of 7.8% and Asia Pacific average of 8.6%. That's a lot more than the expected general inflation rate of 1.0% for Singapore in 2019. The top medical conditions were listed as cardiovascular conditions and cancer.

It thus looks like there is a basis for fearing that healthcare costs would outstrip salary increases and have a detrimental impact on our long-term savings. As such, long term healthcare should figure as a critical risk factor in our financial planning.

Company Healthcare Plans

Many working executives and professionals typically expect their company’s healthcare plans to fully cover them in any such medical emergency, and this can make them procrastinate on thinking about such matters.

Unfortunately, many forget that their company’s coverage of medical expenses lasts only as long as they are employed by that company. Different companies will have varying degrees of coverage, and all such coverage abruptly ends the moment they stop working. Some realise, to their horror, that they may be uninsurable at the time when they try to take up a personal healthcare plan, due to pre-existing medical conditions acquired over their working life.

As such, it is always advisable to take up a personal healthcare plan while you are still relatively healthy and insurable. Although this may now run concurrently with your company’s plan, it will ensure you remain covered when you suddenly stop working, either through retrenchment or retirement.

Adequacy of MediShield Life Coverage?

With the compulsory inception of MediShield Life for all Singaporeans, many likewise get lulled into a false sense of security that their medical expenses will be taken care of by the government. But is this really enough?

Most of you would have read the recent plight of the 83-year-old man whose MediShield Life insurance paid only $4.50 of his $4,477 subsidised bill after an eye operation at the government-run Singapore National Eye Centre. The low coverage was attributed to his bill exceeding the policy claim limits by more than 50 per cent.

Since the news broke, it was further revealed that two in 10 subsidised patients are not getting full cover from MediShield Life. This means there is a possibility that you may need to fork out more cash than expected to pay for some procedures, even when treated in government or related hospitals. Note that MediShield Life is also a basic healthcare plan; so don’t even think about expecting it to cover you for a single-bedder at any hospital!

Private Integrated Shield Plan and Critical Illness Plans

For those who are already covered under the Medisave-approved private Integrated Shield Plan, particularly if they have taken up the riders (to cover deductibles and co-insurance), it is expected that these plans would greatly reduce any requirement to pay out of pocket.

When combined with life insurance plans that cover critical illness as well as early critical illnesses, they can limit medical costs – especially as one grows older and risks experiencing a greater onset of more serious medical conditions.

International Healthcare Plans

With increasing international mobility, there are also some who opt to take up an international healthcare plan which would cover them for all conditions in the covered countries. These plans are typically more expensive than localised plans, but they offer you peace of mind should you need, or choose to be, hospitalised in those countries (e.g. when seeking a preferred doctor in the covered country).

Note that in contrast to travel insurance plans, which only cover hospitalisation due to accidents or unforeseen illnesses, and which exclude pre-existing conditions, such international plans typically cover hospitalisation costs for almost all reasons and certain pre-existing conditions.

Proper Medical Risk Planning

At the end of the day, with healthcare costs expected to continue rising due to higher demand from an ageing population and a host of other factors, it is definitely recommended that you talk about the adequacy of your long-term coverage with your financial adviser.

Failing to do so could have devastating consequences on your savings – especially when you are retired with no further income and no expectation of future coverage.