Integrating MediShield Life into Employee Benefits Programme. Specially prepared by

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1 Integrating MediShield Life into Employee Benefits Programme Specially prepared by

2 What is? A compulsory National Health Insurance offered by CPF with effect from 1 November 2015 Replaces Medishield with several enhanced features and offer Better Protection for all Singaporeans and PRs

3 Overview of Covers Pre-existing & serious conditions* No Lifetime Limits Higher Limits (annual/treatment/surgical) Premium Subsidies/Discounts (Transitional, Permanent & Pioneer) Lower Co-payments Treatment in C2/C Wards at Singapore Restructured Hospitals no change *subject to Additional Premium of 30% over 10 years for serious conditions

4 from MediShield to Medishield Life Medishield was launched in 1990 Underwent 3 radical changes in 2005, 2008 and 2013 Its not compulsory, no default Opt-in About 75% of SGP/PR are covered under Medishield What happen to the remaining 25%? 1. Excluded due to pre-existing serious conditions 2. Coverage lapsed at age Opted out

5 Medishield and ISP population HEALTHCARE FINANCING Medisave No. of Accounts (m) Total Medisave Balance ($b) Average Balance per Account ($) 13,600 14,100 14,900 15,700 16,900 18,200 19,400 20,600 21,800 Amount Withdrawn for Direct Medical Expenses ($m) MediShield & Integrated Shield Plans No. of MediShield Policyholders ('000) 2,760 2,870 3,076 3,299 3,390 3,500 3,541 3,593 3,656 No. of MediShield Policyholders with 1,510 1,660 1,790 1,930 2,068 2,200 2,318 2,404 2,485 Private Integrated Shield plans ('000) ElderShield No. of ElderShield Policyholders ('000) ,013 1,019 1,167 No. of ElderShield Policyholders with Supplements ('000) FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Medifund No. of Applications Approved 1 ('000) na Grants Disbursed to Institutions ($m) na Notes: 1 - In the past years, applications for all ILTC services were classified together as a category. For FY12, Medifund applications for ILTC services were further differentiated into three types of services - i) Non-Residential Services (by attendances), ii) Intermediate Term Residential Services (by admissions), iii) Long Term Residential Services (by bed months) - to better reflect the different nature of the services. The number of ILTC Medifund and Medifund Silver applications in FY12 is a summation of these services in their respective units. Hence FY12 ILTC figures onwards are not comparable with preceding years. na - not available Updated 7 Sept 2015

6 Case study on claims under MSHL

7 CPF Contribution Rate Interest earned % 4% 4%

8 MEDISAVE Medisave is a national savings scheme which helps individuals put aside 8% % of their monthly salary in their Medisave Accounts to meet their personal or their dependents' healthcare expenses, subjected to withdrawal limit. Dependents refer to spouse, children, parents and grandparents. Grandparents must be Singaporeans or Singapore Permanent Residents. Refer to for the full list of withdrawal limit Source: CPF Website

9 Basic Healthcare Sum (BHS) From 1 January 2016, the Medisave Contribution Ceiling will be renamed as the Basic Healthcare Sum (BHS). The BHS is designed to be enough for a CPF member's basic, subsidized healthcare needs in old age. Amount in excess of the BHS will be transferred to the member's SA, RA or OA, just like in the case of Medisave Contribution Ceiling. The BHS will be set at $49,800 on 1 January 2016 for all CPF members. The BHS will be adjusted yearly in January to keep pace with the growth in Medisave use by the elderly. Once each cohort turns 65, the BHS will be fixed for them. Therefore, all members aged 65 and above in 2016 will thus have the same BHS of $49,800 for the rest of their lives. Between now and January 2016, there will be no adjustments to the current Medisave Contribution Ceiling. The current MCC is $48,500

10 Integrated Shield Plan Private health insurance that sits on top of MSHL Higher coverage as compared to MSHL Covers hospital claims for B1/A class stay in public Hospitals, or private hospitalization Claims as Charged (no sub limit) 100% full coverage via riders Pre and post hospitalization claims ISP is open for purchase by all Singaporeans /PR and foreigners(payable by cash only)

11 100% Coverage

12 Integrated Shield Plan with Rider What is the difference between ISP and ISP rider? You pay less when the hospital bills come. Because this plan provides user with the choice to purchase the rider from insurance companies to cover both the deductible and co-insurance (See below) ISP Payout ISP Payout MSHL payout CO-insurance (You pay) Deductible (You pay) MSHL payout Rider pays Rider Pays

13 Employee Medical Benefits under Employment Act of Singapore Medical reimbursement If you have worked for at least 3 months: Your employer must bear the cost of your medical consultation fee. Your reimbursement for other medical costs, such as medication, will depend on the medical benefits in your employment contract or the company's collective agreement with its union. If you fall sick during public holidays, annual leave, rest days or non-working days, you will be able to claim reimbursement for medical consultation fees. Note: Employers are not required to grant paid sick leave or pay medical fees for cosmetic procedures. The doctor performing the examination will decide whether a procedure is for cosmetic reasons.

14 What are my obligations as an employer With the exception of S Pass and Work Permit holder, it is not compulsory for employers in Singapore to provide Health Insurance coverage! However most companies do provide some form of Health Benefits through : 1. Self Insured 2. Purchase of Group H&S Coverage 3. Make contribution to employee Medisave Account & hope employee used WISELY!

15 Coverage Company Medical Benefits (Outpatient generally) WICA (Max $30k/year Or 1 yr from accident) Overview of EMB Singaporean and PR Work Permit and S Pass holders Others (Employment Pass) Foreign Medical Insurance CPF Contribution to Medisave NA Yes up to $15k per year-by LAW! Not obligated

16 General practices in the industry Defined Benefits Company purchase Group Hospital & Surgical Plan from private insurers such as AIA, NTUC, AVIVA, GE Life etc. Self Insured up to a lump sum for employees. Usually differentiated by Job grade or length of service or a combination of both. Not performance related. Defined Contributions Company contributes a % of salary to employee s CPF account. (Co-sharing principles), assuming that employee owns a Private Shield Plan! The reality!

17 Defined Benefits is the popular mode of providing Healthcare Benefits CEO or HR usually decides on the benefits for employees But it is a One Size Fits All approach Surely, no employee s needs are the same as another Hence, this buying method is sub-optimal Worst! We have a ageing workforce, Premium will only go UP!

18 Workforce healthcare costs will rise significantly 20

19 Implications for employers offering healthcare cover The current Employer-sponsored Group Health Insurance (Defined Benefit) model is NOT sustainable 21

20 Shield Pays Insured co-pay 10% ~ Overlap of GHS and MSHL The employee has an annual CPF deduction for ISP, but at the same time, the company also purchased GHS! GHS- Company pays for the premium This is Duplicate and wastage because inpatient claim is a reimbursement policy and not a payout policy. Your original claim can only surface at 1 place at any one Deductible time

21 Double Premium $ Double Coverage Assuming it cost employers $500 /pax for a GHS Plan Ward Entitlement B1 Ward Restructured A Ward Restructured 1 Bed Private Annual Limit Up to $250k p.a. limit Up to $500k p.a. limit Up to $700k p.a. limit Today s Shield Premiums p.a $123 $137 $ $186 $233 $ $360 $444 $ est. Shield Premiums (90% subsidy) $136 $150 $ $207 $254 $ $382 $466 $ est. Shield Premiums (no subsidy) $252 $266 $ $391 $438 $ $575 $659 $905

22 Employee s Behavior Employee always protects it own benefit and try to tap on Company s provisions. Case Study :Staff warded for 5 days and total bill size is15k Scenario A Staff submit the bill to Company for GHS claims. GH&S to reimburse all legitimate claims. Balance may be deducted from EE Medisave account or via other medical benefits. Scenario B Staff files MSHL claims MSHL to reimburse all legitimate claims. All the Deductible and Co-sharing will be drawn down from Medisave account.. Company GHS can cover the rest, if any Scenario C Staff files for MSHL claims Staff ISP with rider paid out Deductible and Co-sharing -Company bears zero cost

23 Can GHS be replaced completely? Yes for Singaporeans and PR. Not possible for replacement for a workforce with high ratio of foreign staff as MSHL is not applicable to foreigners. GHS will have to continue. Workforce with high numbers of staff of preexisting conditions may better benefit from MSHL than GHS

24 Options for Benefits Restructuring Restructured GHS + Define Contributions! Re-design GHS to cover the deductibles and Cosharing purely. This would mean that company can potentially save premiums. Employer to consider using the savings to purchase a ISP rider equivalent Via DC- Employer credit a fixed quantum to employee s Medisave Account for MSHL premium deduction.

25 MSHL ---- ISP---- GHS

26 Medishield Life Comparators ISP Group H&S Cover Pre Ex Excluded According to Company HR Policy Pre and Post Claims Not Included Include Pre and Post Claims Can bundle Outpatients /Dental Others Self Administration for Claims Self and Insurance Company-Claim Claims either In-house admin or TPA

27 Case Scenario 45 year old employee with a AIA Healthshield Gold Max A Plan incurred a $10,000 Hospital Bill GHS Employee pays nothing as GHS covers from the 1 st dollar Consequence: Increase premium rate Benefits capped ISP Deductible $3,000 Co-insurance $700 (10% of the bill) Employee Medisave draws down :$3,700 Consequence: No increase in premium Continual coverage

28 Illustration : Enhanced IncomeShield Preferred Plan Age Next Birthday Enhanced Incomeshield Preferred Plan MediShield Component Income's Component Additional Withdrawal Limit Cash Top-up Assist Rider (CASH) Plus Rider (CASH) $665 $220 $445 $600 No $239 $ $690 $220 $470 $600 No $270 $ $972 $345 $627 $600 $27 $321 $ $1,013 $345 $668 $600 $68 $347 $ $1,401 $455 $946 $600 $346 $490 $ $1,909 $540 $1,369 $600 $769 $633 $ $2,572 $560 $2,012 $900 $1,112 $882 $1, $3,155 $646 $2,509 $900 $1,609 $1,037 $1, ^ $3,770 $775 $2,995 $900 $2,095 $1,240 $2, ^ $4,264 $885 $3,379 $900 $2,479 $1,443 $2, ^ $4,903 $1,123 $3,780 $900 $2,880 $1,606 $2, ^ $5,360 $1,150 $4,210 $900 $3,310 $1,771 $2, ^ $5,911 $1,190 $4,721 $900 $3,821 $1,933 $3, ^ $6,386 $1,190 $5,196 $900 $4,296 $2,097 $3, ^ $6,842 $1,190 $5,652 $900 $4,752 $2,172 $3,660

29 What is it in for me as HR Assuming a 44 year old ee on the third band of the Income group Ee has a ISP Plan of annual premium of $665 Company provides a GHS plan of $350 per year of similar coverage of Enhanced Income shield plan On 1 November 2015 The ISP will cost him $445 + Medishield Life Premium of $435. Therefore ISP Premium now $445+$435. =$890/year After subsidy, the Medishield life premium reduced to $242. This will be fully deducted from the Medisave Account. Ee continues to self fund the $445 from his medisave account How about Employer? Continue with GHS, do nothing? Do something! Remember GHS is not a pay out policy.. It s a Reimbursement policy