Medishield Life

Understanding MediShield Life & What should you do (Part 2: Is MediShield Life Affordable?)


Article Author - Eddy Cheong
By Eddy Cheong
Jul 16, 2014

Is MediShield Life Affordable?



With better insurance benefits and universal coverage that includes all regardless of health, the new MediShield Life premiums will naturally cost more. The burning question is how affordable it is going to be and who will be most affected?


To begin, let's compare the premiums for MediShield and MediShield Life before any subsidy.


 MediShield vs MediShield Life

Observations on MediShield Life premiums:

  • A steep increase in premium by 160% for age 1 to 20 and nearly 200% from age 21 to 40.
  • From age 41 to 60, the increase in premium will be around 83% to 98%.
  • From age 61 onwards, the increase will be smaller ranging from 66% to as low as 11%.
  • You pay more when you're young so that the rise in premium will be lesser during retirement.

Obviously with such premium rates, MediShield Life will not be cheap. However, the government, will incorporate a series of subsidies, top-ups and measures to make it more affordable.


Financial support

The government will provide support to all Singaporeans so as to ensure MediShield Life's affordability. Those who will benefit the most are the lower-to-middle income households, the elderly and the needy. There are Permanent Subsidies which will be ongoing and Transitional Subsidies which will apply only for the first 4 years.


Permanent Subsidies

For Who

Eligibility Criteria / Amount of Subsidies

Remarks

(A) Lower-to middle income households

  • For Singapore citizens

    The amount of subsidy depends on:

    • (1) Per capita household income, and
    • (2) Annual value of residence

    If your Per capita household income (PCHI)1 is within eligible range, subsidy will be given. The lower the income, the higher the subsidy.

    • Lower-income =<$1,100/mth
    • Lower-middle income: $1,101 to $1,800/mth
    • Upper-middle income: $1,801 to $2,600/mth

    If Annual Value (AV) of your residence is within eligible range, subsidy will be given. The bigger the house, the smaller the subsidy.

    • AV =< $13,000 (enjoy full benefit)
    • AV: $13,101 to $21,000 (10% points lesser)
  • For Permanent residents

    Receive 50% of the subsidy than that of Singapore citizens

  • It will benefit 2/3 of the population
  • High income households (PCHI 1 above $2,600/mth) do not enjoy
  • Those staying in big property (AV above $21,000) do not enjoy

(B) Pioneer Generation
(age 65 and above in 2014 and has obtained citizenship on or before 31 Dec 1986)

  • Subsidies ranges from 40% to 60% (as a % of premium) depending on age. Older pioneers wil receive more.
  • Subsidies given regardless the income level
  • In addition, annual Medisave Top-ups of $200 to $800 is given for life (July 2014). Higher amount for older cohorts.

1Per capita household income (PCHI) is calculated by taking the total gross household monthly income divided by the total number of family members living together

Transitional Subsidies

For Who

Eligibility Criteria / Amount of Subsidies

Remarks

(C) All Singaporeans, regardless of income
  • Given on the net premium after subsidy
  • Only for the first 4 years
  • Not applicable for PRs

Support for the Needy

For Who

Eligibility Criteria / Amount of Subsidies

Remarks

(D) Needy Singaporeans
  • Anyone who cannot afford the premium can apply for it
  • Not applicable for PRs


Compare MediShield Life premium after financial support given

The 2 tables below show the premium outcome after including the Permanent and Transitional Subsidies.


(1) In the first year (2015) with Transitional Subsidies

 

Age

Current MediShield Premium

MediShield Life Premium Before Subsidy

2015 MediShield Life Premium
(staying in residence with AV =< $13,000)

Lower-Income

Lower-Middle Income

Upper-Middle Income

High
Income

1 - 20

50

130

55

55

56

58

31 - 40

105

310

118

119

121

126

51 - 60

345

630

355

358

361

374

61 - 65

455

755

459

462

466

485

71 - 73*

560

885

562

566

570

593

81 - 83*

1,123

1,250

750

813

875

1,136

Figures updated 3 September 2015

(2) In year 2019, after Transitional Subsidies are phased out


Age

Current MediShield Premium

MediShield Life Premium Before Subsidy

2019 MediShield Life Premium
(staying in residence with AV =< $13,000)

Lower-Income

Lower-Middle Income

Upper-Middle Income

High
Income

1 - 20

50

130

98

104

111

130

31 - 40

105

310

233

248

264

310

51 - 60

345

630

441

473

504

630

61 - 65

455

755

491

529

566

755

71 - 73*

560

885

575

620

664

885

81 - 83*

1,123

1,250

750

813

875

1,250

Figures updated 3 September 2015

Observations & Remarks:

  1. The Pioneer Generation (see *) will end up paying less than the current MediShield premium
  2. During the first year of MediShield Life (2015), the maximum premium increase will be less than $30 per year for the lower-income and not more than $60 per year for the high income.
  3. After phasing out the Transitional Subsidies of 4 years (Year 2019), the premium will increase by an average of $36 to $128 per year for the lower-income and $80 to $300 per year for the high income.
  4. The above premium tables are for those staying in residence with an Annual Value (AV) less than $13,000. Those with an AV > of more than $13,000 will receive lesser subsidies, hence a higher increase in premiums.
  5. PRs will receive half the amount of subsidies than that of Singaporean citizens if they belong to the lower-middle income. However, they will not be able to enjoy the Transitional Subsidies.

Other Financial Support

To make the increase in premiums less painful, other sources of financial support will be implemented.


  • Additional 1% Medisave contribution by employer

    This can be quite significant especially for the high-income group who do not enjoy the Permanent Subsidies that the lower-middle income group get.

    For example, those earning more than $5,000/mth will see an increase of $600 per year added into their Medisave account.

  • MediShield Life premiums can be fully paid through Medisave

    Hence, no out-of-pocket expenses for MediShield Life provided you have sufficient Medisave for deduction.

  • Premium rebates for MediShield Life starting earlier from age 66

    Existing policyholders will start receiving rebates from age 71, which would help reduce the net premium. Having paid a prepaid premium at a younger age, Singaporeans aged 66 and up will get to enjoy the benefits earlier. The rebate is structured such that those who join the Medishield scheme earlier will receive more rebates. In addition, the older you become the higher the rebate given.


Conclusion

After understanding the various subsidies and modes of support, do you think the new MediShield Life premium is affordable? I reckon it really depends on an individual's perspective on the social benefits of universal coverage.

Considering the range of protection benefits and financial support given, I personally think that the premium increase is justifiable. Also I would like to commend the MediShield Life Review Committee for putting together a well thought out recommendation report for the benefit of all Singaporeans.


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