Health insurance terms: Know what you're paying for

Health insurance seldom covers 100% of your medical costs. Most policy features such as deductibles and co-insurance help to keep your premiums affordable. This means you will have to pay for some out-of- pocket medical costs.

What affects your coverage and claims

So make sure you know exactly what and how much you are covered for. These are some of the policy terms that may affect your coverage and claims:

Premiums

The payment to keep your health insurance going is known as a premium. It could be a lump sum (single premium) or in smaller sums (regular premiums) every month, quarter or year.

Premiums for health insurance usually increase with age, are not guaranteed and subject to change. Insurers may choose not to renew a plan or charge a higher premium when there are excessive claims.

Before buying a policy, make sure you can afford the premiums over the long-term. If you are unable to pay your premiums, your policy may lapse and you will lose coverage.

Deductibles and co-insurance

A deductible is the initial amount you have to pay for your medical expenses before your health insurance makes a payout. You usually only need to pay the deductible once in a policy year.

Plans with lower premiums usually have higher deductibles. After paying your deductible, you may still have to pay for co-insurance or co-payment.

Co-insurance is how much you have to co-pay or split the cost with the insurer after you pay the deductible. It is usually expressed as a percentage. For example, if you have a co-insurance of 10%, you will pay 10% of the cost after the deductible.

You can use MediSave up to prevailing limits to pay for the deductible and co-insurance not paid by your insurance policy.

Claim limits

There are limits to what you can claim under a policy. For example, limits may be included for all claims as well as for each illness, disability, per month, year, or for a lifetime.

Benefits

For medical expense insurance, having more policies does not necessarily give you more benefits, as you can claim only up to your actual medical expenses. At no point will your combined policies pay you more than 100% of your actual medical expenses.

Age limit

There is no age limit for MediShield Life. It covers you for life, and there is no age limit for entry into the scheme.

There is also no maximum age limit to join CareShield Life. However the minimum age of coverage for CareShield Life is age 30, as it is intended to provide basic coverage for severe disability in old age. Once enrolled, CareShield Life covers you for life as well.

Private insurance plans may have an age limit, and may not be available to you once you reach a certain age. Some health insurance policies provide cover for your whole life, while others cover for a fixed period or up to a certain age. Choose a product that suits your needs.

Policy exclusions

MediShield Life is universal and has no exclusions. CareShield Life is also universal (has no exclusions) for cohorts born in 1980 or later.

On the other hand, all private health insurance policies contain some exclusions. Exclusions are conditions or circumstances where benefits will not be paid. Pre-existing conditions, illnesses or disabilities you had before obtaining private health insurance are usually excluded.

You must give details of any illness, disability or medical condition you have or have had in your application. The insurer will then decide whether to cover that medical condition.

The insurer may charge a higher premium (loading). Your coverage may also be restricted for a health condition or due to occupational exposure. That is why you should buy health insurance while you are young and healthy.

Exclusions vary from policy to policy. Besides pre-existing conditions, look out for other exclusions. Read your policy document carefully to find out exactly what you are covered for.

Waiting period

Most health insurance policies impose a waiting period of between 30 days and 90 days from the approval of cover. No benefits will be paid for illnesses arising or treatments carried out during the waiting period.

Deferred period

A ‘deferred period’ means benefits may only be paid after you have been disabled or sick for more than a certain number of days.

Before you take up a health insurance policy, check the scope of coverage and waiting or deferred period, if any.

Policy riders

A policy rider may be added to an existing policy, which provides additional coverage. If the rider accelerates the basic policy’s benefit, the policy may expire after the rider is paid out.

Rider benefits include:

• Coverage of deductible and co-insurance, which helps pay the deductible and co-insurance subject to limits. For riders attached to Integrated Shield Plans (IPs), all new riders from March 2018 will need to incorporate a co-payment (what you pay) of 5% or more.

• Daily hospital benefit, which pays a certain amount of cash for each day that you're warded.

• Critical illness benefit, which pays a lump sum upon diagnosis of any of the critical illnesses covered by the policy.

Policy renewal

Always ask about the policy renewal conditions. Some health insurance policies:

• Guarantee that your cover stays in force as long as you pay the premiums on time (e.g. IPs). Even so, the insurer may change the benefits, premiums or conditions when it is due for renewal

• Are short-term and cover you for only a limited period. For example, staff medical benefits which end when you stop working for the employer

If the renewal is not guaranteed, the insurer can decide not to renew the policy after a major medical claim. It is essential to check if your product covers you for the duration you need and if the renewal is guaranteed. Read the terms and conditions of the policy before you buy it.

Free-look period

Insurance companies minimally grant a 14-day free-look period. IPs have a 21-day free look period. It starts from the date you receive your policy documents. During this period, you should review your policy carefully to see if it meets your needs. If you decide not to keep it, write to the insurance company to give them notice of cancellation.

Written notice to the insurer must be given within 14 days (21 days for IPs) from the date you received your policy. The company will refund all your premiums, less medical and other expenses they have already incurred.

Switching between policies

Health insurance policies do not usually cover pre-existing conditions when you sign up for them. Before switching to another health insurance policy, assess if your health has changed from the time you bought your current policy and whether you now have any new health conditions.

If you have developed any health conditions, the new policy that you switch to may not provide you with the same coverage as your current policy. The new policy may also require you to pay more premiums in order to provide you with specific benefits. Do watch out for this.

Do your research

Healthcare costs differ greatly between public and private hospitals, and between ward classes. Before you go to the hospital for treatment, ask about:

• Ward charges and cost of medical treatment recommended by your doctor

• Ward class entitlements under your health insurance plan

• How much your health insurance policy can cover

• What options are available to you

• Whether you selected the treatment or ward that you can afford

You should also check with your insurer if they can issue a letter of guarantee (LOG) to you. The LOG tells the hospital how much the insurer will cover. Ask the hospital for an estimate of the bill.