Dear Mr. Tan,
Someone told me that you recommend paying premium for Shield out of pocket, instead of Medisave. You also said to pay the co-payment using cash, instead of claiming against Medisave. Why?
REPLY
If you have the cash, it sits in the bank earning less than 1% per annum. You can use it to pay the Shield premium and the co-payment (for hospitalisation).
If you do not touch your Medisave savings, it will earn interest at 4% plus 1% bonus, making a total of 5%. This is a good yield.
You will need your Medisave savings to pay for the insurance premium and hospital co-payments when you grow old. If you do not use it, the excess, above the cap, can be transferred into your retirement account to be paid out monthly.
The Medisave account is a good form of investment earning 5% without any risk.
Read this FAQ for more explanation:
http://www.tankinlian.com/faq/shield.html
Once premium is paid by cash, the Shield Plan is no more considered an integrated shield plan.
ReplyDeleteThis means the plan will be on reimbursement basis, and the claim is more troublesome.
Those who use Medisave to pay the premium, the plan is an integrated claim plan and claims are settled by electronic means between hospitals and insurer.
I think it is not a matter of saving on the interest, it will make claiming more troublesome.
Also, infact if your Medisave + Special Account + Retirement Account is beyond the minimum sum of 60k SGD (at this moment), it makes 'slightly' more sense to use Medisave for the excess over 60k SGD, as the excess would make you earn less 1% interest.
ReplyDeleteBut of cause if you really want the 4% interest in excess funds in your CPF account or you do not have enough for that 60k. Claims using cash are fine, depending on your need.