Sunday, March 02, 2008

Coping with future increases in medical insurance

Dear Mr. Tan
I am informed that the premium rate on Medishield increases with age, and may be subject to future revision. Is there a medical insurance plan that offers a guaranteed rate of premium? I am willing to pay a higher premium now, so that I do not have to incur future increases.

REPLY.
It is not possible for the insurance company to gurantee the future premium rates, as they are subject to the future increases in medical expenses, which cannot be predicted or controlled.

A similar situation is with the cost of living. It is not possible for the Government to guarantee you the prices of basic necessities in the future, as they are subject to the market situation.

You can manage the future increases as follows:
1. Leave sufficient savings in the Medisave account to pay the higher premium at older ages.
2. Be prepared to downgrade to a cheaper insurance plan when you get older
3. Do not spend your Medisave for expensive insurance plans that you do not need.
4. Stay healthy.
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3 comments:

Anonymous said...

Dear Mr Tan,

Thank you so much for your advice in insurance.

Could you describe more about medical insurance ? I have the basic MediShield with CPF. However, my agent friends recommends me to sign on for more shield, such as PruShield, IncomeShield, etc.

What is your view ?

Thank you

March 03, 2008 10:14 AM
Anonymous said...

Mr TAN,
what is your view on means testing.

Look like middle income group is better off to stay B1 ward.

Is this what the means testing is about?

March 04, 2008 9:56 AM
Anonymous said...

In a nutshell, means testing means you will receive subsidies depending on how much you earn and how big a house you live in. The current lowest subsidy is still quite substantial; do not opt for a higher ward merely because you are enjoying less subsidy.

In the future, it is likely (in my opinion) the subsidy will reduce. Medical inflation was 7.4% last year. An aging population means a higher utilized healthcare system. The government has a finite pool of money to split between the different ministries. Someone has to pay more.

blackbox

March 04, 2008 11:22 PM

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