CPF Part 2: Using Medisave & Medishield Life to pay hospital bill

Have been missing a few promises I made to myself on blogging.
But I wanted to squeeze out some time today to write up this post!
So here I am, downloading my research and findings into this cyber space.

Today's topic is...

Using Medisave & Medishield Life to pay hospital bill

Recently the hospital has just sent a chaser snail mail to ask my family to pay up my mum's recent hospitalization bill.

So it reminded me on how I was figuring how the hospital determined how much I need to pay.

I believed many others would not have much knowledge what how this part of the CPF system works, until they finally have to deal with the unfortunate incident of a family member being warded into the hospital.

Well, the main realization is this...

MEDISAVE & MEDISHIELD LIFE DON'T PAY EVERYTHING!!!

This feeling of "Why we pay for Medishield Life every year, we still have to pay so much for the hospitalization bill?!?" resonates with my dad the most after he received the bill. haha..

So how much does Medisave and Medishield covers your hospital bill?
Well, it depends on quite a few factors.
I shall try to make it as simple and straightforward as I can here for an easier comprehension as compared to reading off the CPF website.
Alternatively, I believed the nurses at the hospital could help explain this part (but my experience is that some of them are not that knowledgeable too).

Qns 1: What is Medisave and Medishield Life?

As explained in my previous post (Link here), Medisave is one of the 3 accounts in the CPF that an adult Singaporean would have.

It is a mandatory saving scheme which helps Singaporeans to save a fund to use for their personal or immediate family's hospitalization, day surgery, and certain outpatient expenses.

Once you start working, a portion of your income that goes into CPF, goes into your Medisave account (8-10.5% of your income, depending on age group).

Then what is Medishield Life?
Medishield Life is a basic health insurance plan that is mandatory for all Singaporeans. Just recently on 1 Nov 2015, Medishield Life has replaced Medishield with better coverage and benefits.

As an insurance, its aim is to buffer against the times you incurred large hospital bills, or even certain expensive outpatient treatments (e.g. dialysis and chemotherapy).

The good thing about this plan is that the premiums for this insurance can be fully paid using our Medisave accounts, so we don't have to pay out any cold-hard cash.

Qns 2: How does Medisave and Medishield Life works to offset hospital bills?

There are some limitations of how much Medisave and Medishield Life can actually help in paying the bills.
In my opinion, it's not gonna help much whether you know how all these works.
Because in the end, you still gotta pay up whatever is stated.
But it does however gives me a better perspective of why health insurance should be taken up.

Let's use my mum's hospital bill as an example of how these two Ms work.
She stayed for 3 days in a public hospital, B2 Class ward, and had a minor operation.

Total Charges: $6,015.18
Government Subsidy: $3,621.55 (~60%)
Amount Payable: $2,393.60

They round down the $0.03 out of goodwill I guess. hahaha...

So let's see how this amount that is payable goes through the limitations of Medisave and Medishield Life.

Limitation 1: Medisave Claim Limits

Apparently, unknown to me beforehand, there is a limit to how much money can be claimed from the Medisave account to pay for the bill.
There are just too much conditions that would affect the claim limits, so I wouldn't talk about them here.
Here's the link to the MOH website for the whole list (here!).
Specifically in my mum's case, there are 2 claim limitations that were considered.

A) Medical / surgical inpatient cases

I can only claim a maximum of $450 per day for daily hospital charges.
So for a 3-days hospital stay, my mum can claim ($450*3)= $1,350 from her Medisave account.

**Daily limit has been changed to $700 per day for Medishield Life.

B) Surgical operations (inpatient and day surgery)

A fixed limit would be added to the amount claimable from the Medisave account.
The actual limit is dependent on the complexity of the operation (I'm guess the more serious the operation, the higher the limits).

A minor operation like my mum's would add an amount of $253 to the limit.
(I have to work backwards to get this amount because I am lazy to read through the table of operations to find the corresponding limits)

I believed that these two conditions are the common conditions that would be considered in usual cases too.

Therefore, adding these two limits together...

Total Sum claimable from Medisave: $1,350 + $253 = $1,603
Amount Payable: $2,393.60
Total Sum NOT claimable from Medisave: $2,393.60 - $1,603 = $790.60.

So, $790.60 has to be paid in CASH.

Then what about the $1,603?
Is it possible to use Medishield Life to offset this amount so that I do not have to use my Medisave funds?
This leads on to the 2nd limitation.

Limitation 2: Deductible Limit

Deductible is a fixed amount that needs to be paid by the individual before Medishield Life actually has any practical use.
Here's a table that I koped from the MOH website.

Source

You would only need to pay the deductible once every policy year.
So that means if you got hospitalized twice in the same policy year, and you paid the full amount of deductible during the first stay, you don't have to pay the deductive in the second stay.

In my mum's case, a B2 class ward, and my mum being under 80 years, the annual deductible is $2,000.
For the Medishield Life payout to kick in, the amount claimable from Medisave needs to be more than the deductible.
Since $1,603 < $2,000, my mum's bill could not make use of Medishield Life.
The entire $1,603 has to be deducted from Medisave account, without any help from the health insurance (which I emphasized again, is mandatory, and also useless in this situation).

This was definitely not easy to explain to my parents.
I had to explain around 3 times before they started realizing that their son is making sense.
My dad's immediate response to this limitation was,
"我们每年还将多的钱买这个保险，都不可以用。买来做什么？？？"
(Singlish translation: Every year pay so much for this insurance, also cannot use. then buy for what???)

However, if the amount claimable from Medisave account does go beyond the deductible, a third limitation will set in.

Limitation 3: Co-insurance

Simi si co-insurance???
It basically means other than the deductible, it's an additional amount that the insurance company wants you to pay before they actually pay.

But how is this different from deductible?
Why not just lump deductible and co-insurance together instead of separating them?

That's because the co-insurance component is not a fixed amount.
It is calculated according to the total sum claimable from Medisave account.

Here's a table that I edited from the MOH to just display the Medishield Life portion.

Let's say the total sum claimable from Medisave account was actually $9,000.

Total Sum claimable from Medisave: $9,000
Deductible: $2,000
=> Co-insurance applicable for ($9,000 - $2,000) = $7,000

Breakdown of Co-insurance payment.

[$2,001 - $3,000] = 10% * $1000 = $100
[$3,001 - $5,000] = 10% * $2000 = $200
[$5,001 - $9,000] = 5% * $4000   = $200

Co-insurance payable                   = $500

Medishield payable                      = $7,000 - $500
                                                     = $6,500

In the end, you still need to fork out an extra $500 as co-insurance even though Medishield Life has kicked in.

Conclusion

As illustrated, the mentality of thinking that Medisave and Medishield Life are shielding you from the hefty medical or hospitalization bill is fallacious.
Before the policy even begin to take effect, there is still quite a bit of money that you have to pay.

In summary, you pay the following:

1. Amount that can't be claimed from Medisave due to claim limits
2. Deductible (depends on class ward and age)
3. Co-insurance (depends on total amount claimable from Medisave)

So don't get a shock when you receive a hospitalization bill next time, as how my parents felt when they got the letter of payment.

This episode, and together with my dearest's advice, prompted me into action on getting some better health insurance coverage for myself.
There are plans out there to take care of the 3 payments that I have mentioned above.
I am currently in discussion on this and other insurance matters with a financial consultant whom dearest introduced me to.
I will probably write more about this in future when I'm more or less certain on what's the best plan for myself.

On a side note...

It's been very hard to keep to my promise of blogging twice a week (every Wed and weekend).
I thought I would have time to sit down and track my progress every now and then.
But I was seriously disillusioned that this can happen without me really committing to it regularly.
There is usually very little time left in the evening during weekdays after dinner, watching tv with family, exercising, and chatting with dearest.
And I usually fill the weekends with other activities instead of setting aside time for the things I want to achieve (currently would be learning Java).
I need more discipline and more motivation!!!

rawr.