Making sense of the changes to Integrated Shield Plan riders

Anything to do with Medishield Life always seems very difficult to understand.

According to news reports, Ministry of Health announced at the Budget COS debate that to curb the “buffet syndrome” among healthcare consumers who do not have to pay out-of-pocket for their hospital bills, new Integrated Shield Plan (IP) riders must include a co-payment component of at least 5%.

What impact does this announcement have on the various parties?

If you are the government …

Get ready to be scolded. From “no need to pay” to “having to pay 5%”, it’s almost like an increase in cost of living for those with IP full riders.  Actually the government doesn’t stand to gain much from this change, so why did it still want to push this through despite knowing that it may not be a popular decision?

But an unpopular decision doesn’t mean it’s not the right decision.  According to MOH, 33% of Singaporeans have IP but no rider at all. In fact, 32% don’t even have IP – they only have the basic MediShield Life.  So you see, IP itself is already “one level up” in terms of healthcare, to add riders to IP is at least “two levels up”. Riders can be considered a luxury for Singaporeans who are not as well off.

The government fears that If the current excessive claiming by those with IP full riders are left unchecked,  it would push up healthcare costs for EVERYONE. This includes an increase in premiums for those on the basic MediShield Life only.  In fact, as it is, the premiums for full riders and IPs have gone up by up to 225% and 80% respectively for the past two years! (ST explains more below)


Furthermore, the latest announcement is not a standalone policy change. It is part of a series of changes that MOH is implementing, so that our healthcare cost remains affordable and sustainable. Previous changes affected healthcare providers and doctors more. (see below for speech excerpt from Senior Minister of State for Health Chee Hong Tat) Now, MOH is trying to nudge consumers into thinking more carefully when they decide on what treatment is necessary and what is not (although sometimes we don’t have options actually). And knowing Singaporeans, the most effective nudge is usually one that includes the dollar sign.


If you are planning to buy a full rider…

Don’t be surprised if insurance agents are still trying to sell existing full rider plans to you because they can do so. But take note that whatever riders you buy now will transit to the new riders that require co-payment from April 2021. That is, no more full riders by then.

If you still want to better protect yourself or your loved ones, and to have less financial considerations to worry about when you want better (and hopefully more efficient and effective) medical treatment, by all means go ahead with buying a rider as long as you bear the 5% co-payment in mind. The payment can be paid using Medisave and will be capped at $3,000 annually if you are treated by the insurer’s panel of doctors, or have received pre-treatment approval from the insurer.

If you are an existing policyholder with full rider…

You belong to 29% of 3.9 million Singaporeans (or 1.1 million) who bought IP full riders hoping that, touch wood, your insurer will pay your entire hospital bill when the need arises. According to the Health Ministry, within this group, 9% made claims in 2016. Despite being generally younger and supposedly less susceptible to chronic disease compared to policyholders of other age groups, statistics showed that the claimants among this group have claimed more frequently and their bills are also higher.

Investigations into the claims showed that many of these policyholders are  claiming for medicals treatment that are unnecessary, or have chosen to be hospitalised instead of taking up the day surgery option. This is one important reason for the change.

For now, you are not affected unless your insurer changes the terms of the existing contract (which in the spirit of this announcement, seems likely to happen..)


If you are the insurer…

Well… the new change will result in a “double decrease” for you. The amount of excessive claim is expected to be reduced, and with the co-payment, the amount to be paid out for claims will come down too. All eyes will be on the new riders that will be launched – whether the coverage are comprehensive enough to the policyholders’ benefits and whether the premiums will indeed be lower. Will the insurers continue to suffer losses despite the change? Are the excessive claims under IP full riders the main reason for the losses? The public will definitely be scrutinising.