Why You Should Care About Your Parents’ Health Insurance Needs
18/09/2016 at 11:13 am #549
Growing up, most of us would have been reliant on our parents for our daily living costs. They provided us with all that we needed and more – shelter, food, clothes and education. They also took care of our financial and healthcare needs. And they afforded us entertainment and privileges that they often denied themselves. They were our heroes who looked after us and whom we assume can always look after themselves.
We forget that our parents get older and frailer and actually require our help. While we may strive to be filial as we love our parents, have any of us realistically considered the eventuality of a role reversal – that our parents’ living and healthcare needs may one day be our responsibility?
If we consider it, it is logical that their healthcare needs matter to us. If they should fall ill, the onus would be on us, their children, to not only provide physical support and affection, but also to take up the financial responsibility of paying for their medical bills.
This is why it is in our interest to ensure that our parents’ health care requirements are taken care of today.
How Can We Help Our Parents?
The first thing we can do is to have a conversation with them about the current status of their healthcare coverage and to understand the health insurance policies they own. Don’t be surprised if you find out that your parents may not be as well protected as you think.
One of our writers recently initiated such a conversation with his mom. Initially, his mom assured him that she already had insurance coverage, but of what sort, she wasn’t exactly sure of the details.
Upon further probing, our writer found out that his mom only had one life insurance policy (which was bought more than 30 years ago) and no health insurance policies, aside from what was provided by her company and MediShield Life. This came as a surprise to our writer since we always assume as children that our parents, having taken such good care of us, would naturally have taken care of their own needs as well.
If your parents are not sure about what they are actually covered for, ask them to check with their financial adviser. Better still; go with your parents to meet the financial adviser. Most of us today should be more financially savvy than our parents, and we need to aid them in ensuring they are adequately covered.
When you are checking on the health insurance coverage they have, be sure to also understand if the insurance policies they hold contain any exclusions or other conditions. This could be nothing or it could be a big issue in the future.
In Singapore, all Citizens and Permanent Residents are automatically covered under MediShield Life. If you (or your parents) don’t already know, MediShield Life is a basic health insurance plan that helps cover large hospital bills and selected costly outpatient treatments, such as dialysis and chemotherapy. MediShield Life includes even those with pre-existing conditions.
To keep premiums affordable for all, coverage provided by MediShield Life is pegged to a level such that a significant portion of Class B2/C wards bills would be covered.
That being said, your parents can still opt for hospitalisation at a higher-class ward or at a private hospital. In such instances, MediShield Life will cover a smaller proportion of the bill.
Integrated Shield Plans
To increase coverage beyond Class B2/C wards, one can purchase additional insurance coverage in the form of an Integrated Shield Plan (IP). These plans are provided by private insurers and cover additional costs of hospitalisation and treatments at higher ward classes in public hospitals (e.g. Class B1 and A wards) and even private hospitals.
Additionally, a Standard IP was introduced earlier this year which covers treatment at Class B1 wards at a lower premium.
A common misconception is that people sometimes think IP coverage replaces their MediShield Life plan. This is not true. IP coverage is an additional private insurance coverage that is on top of MediShield Life. There is no duplication of coverage.
How Should You and Your Parents Decide Which Plan to Opt For?
When it comes to deciding on hospitalisation plans for our parents, we should not apply the same thought process we used to decide for our personal coverage. Instead, we need to take into consideration their specific needs and affordability at their age.
The reason is simple; the cost of hospitalisation plans provided by insurance companies increase significantly as people grow older, and they increase significantly for IPs.
For example, a young adult below the age of 30 may pay less than $400 each year for an IP that provides maximum coverage at private hospitals or Class-A wards. Compare this to what a 75-year-old today would have to pay – which could easily be more than $3,000 a year for the same coverage.
You should also take note of the following when discussing the types of IPs your parents can opt for.
#1 Quality Of Coverage Vs Affordability
Everyone wants the best. Cost notwithstanding, we would prefer the undivided attention and services of the best doctors and nurses in the most comfortable hospital suites.
But we have to be realistic. We live in a world where these things cost serious money. And like everything else in life, we need to weigh the cost of the things we want against how much we have to pay for them. It is no different for healthcare.
Healthcare costs money and so do the insurance policies that provide for them. For example, today, an IP for private hospitals could cost a total of $3,484 per year for a 75-year-old as compared to $1,645 for a Standard IP.
You can refer to this table for the comparison of Integrated Shield Plans across various insurance companies.
#2 How Much Can You Use From Your Medisave?
Singaporeans can use their Medisave to fully cover their MediShield Life premiums. That means no cash outlay is required for MediShield Life, as long as you have sufficient money in your Medisave.
If your parents opt for additional coverage on top of MediShield Life by buying an IP, they can also use their Medisave to help pay for the premiums, up to the limits allowed. The table below shows how much can be used from Medisave each year to pay for the additional coverage portion of IPs.
Age Additional Withdrawal Limits (AWLs) for additional private insurance component of IP premiums 1 – 40 $300 41 – 70 $600 71 & Above $900
# 3 You Can Still Choose Higher Class Wards Even If Your Insurance Policy Does Not Specifically Cover It
When it comes to healthcare, a common way of thinking would be to choose the best plan that you can afford, and to then obtain the highest level of treatment that the plan would provide for thereafter.
There is nothing wrong with that style of thinking. But here is another alternative that you and your parents can consider.
Instead of opting for plans that offer the highest coverage which would easily cost a few thousand dollars each year, why not consider opting for a cheaper plan (e.g. Standard Integrated Shield Plan), and save about $1,500 each year in premiums (based on the example we used of a 75-year-old).
Over a 5-year period, you would have saved about $7,500. Should the need to be hospitalised occur, your parents can still choose between Class B1 ward, which would be comfortably covered by the insurance company, or a Class A ward in a public hospital or a private hospital.
For the last two options, the bill would be higher and you would have to pay more as a patient since insurance coverage is sized at B1 level. But this can be paid for from the premiums that you would have saved. You and your parents still have a choice.
#4 Don’t Ignore Healthcare Needs
Helping your parents provide for their healthcare needs via open conversations, sharing of knowledge and understanding their requirements are very practical ways of expressing our love.
Your conversation could also extend to other types of insurance policies that your parents may have bought. Don’t put off having that conversation; it could be more important than you think.
This article was written in collaboration with the CPF Board. All views expressed in the article are the independent opinion of DollarsAndSense.sg
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