If you are a working Singaporean or permanent resident, you are most likely paying 8% - 10.5% of your income into your Medisave account. That money is meant to help cover the cost of medical expenses.
But with the cost of healthcare being what it is, depending on the cash you've stashed away with Medisave to cover your medical costs is a bad joke. The outrageous cost of surgery or treatment for chronic illnesses can wipe out your Medisave account in no time.
In other words, Medisave is a good start, but hardly a solid healthcare financing solution.
After a whole lot of people either went broke or learned to cope without medical treatment, some genius had a bright idea, and in 1990 MediShield was born.
Like any health insurance scheme, MediShield covers part of the costs of healthcare for its members. You can pay your MediShield premiums from the 8% - 10.5% of your income that goes to Medisave, so you don't have to take an extra bite out of your budget.
On the whole MediShield works pretty well, as you can now enjoy much higher coverage than you could ever get from the hard earned dollars tucked away in your Medisave account.
But even with low annual prices of $50 (20 years old or younger) to $1,190 (89 to 90 years old), the high deductibles of $1,500 to $2,000 per annum and co-insurance payments of 10% to 20% have kept the scheme out of reach for many.
Since high healthcare costs aren't going anywhere but up, the kindly folks at the Ministry of Health have set out to reinvent the wheel, and the result is MediShield Life.
Although in many ways this new version closely resembles the old scheme, there are several key differences which you will want to brace yourself for (and enjoy) when MediShield Life kicks in at the end of 2015.
1. Mandatory For All Singapore Citizens And PRs
Call it Obamacare Singapore style if you like, all citizens and permanent residents will automatically be included in MediShield Life, like it or not, unlike MediShield which is voluntary. If you can afford to pay the premiums but don't, you could face penalty charges of up to 17% of the amount you owe. On the bright side, MediShield Life will be available to you even if you have a pre-existing condition including chronic illness, or even if you can't quite afford to pay the premiums.
2. Premium And Transitional Subsidies
If you have low to average income, you can expect to get MediShield Life premium subsidies to help cover the cost of your premiums. This makes sense, since you have to take part in this scheme whether or not you can afford to.
Anyone with a household income of $2,600 per household member (including children) living in a home valued at $21,000 or less per year can expect to receive subsidies (multiple-property owners aren't eligible). Pioneer generation members will receive subsidies of 40% to 60%, along with annual Medisave top-ups of $200 to $800.
It doesn't matter how rich or poor a Pioneer member is, they will receive these perks.
Right now those with very low income can apply for Medifund assistance or subsidies from the Community Health Assist Scheme, but with MediShield Life, you will receive certain subsidies automatically, as your income is already recorded in government databases.
To further help Singaporeans with any net increase in premiums, after taking into account the Premium Subsidies and Pioneer Generation Subsidies, Transitional Subsidies will be applied during the first 4 years - 90% for the first year, 70% for the second year, 40% for the third year, and 20% for the fourth year.
In fact, with just the first year Transitional Subsidies, all Singaporeans will only pay less than $5 per month of the net premium increase in the first year of MediShield Life! And this amount will be even lower if you get Premium Subsidies.
3. More Expensive
MediShield Life will cost more than MediShield for most age groups, although Pioneer Generation members will benefit from slightly lower premiums than those they paid for MediShield thanks to government subsidies.
Most of us can expect to pay a bit more cash or Medisave dollars to cover the increase in premiums. Looking on the bright side, the government has pledged to help subsidize the extra cost of taking on MediShield Life premiums for 4 years, no matter what your income looks like.
After that you are on your own, but lower-to-middle income earners can expect continued government support to make sure they keep their coverage.
4. Bigger Payouts
Medical costs have gone up, so it's about time medical coverage went up too. MediShield Life will cover a larger part of your medical bills compared to MediShield.
For example, the maximum amount of coverage you can get from MediShield is $70,000 per year and $300,000 throughout your whole life - hardly enough to pay for the costs of chronic illness or repeat surgery.
With MediShield Life, you can get up to $100,000 in coverage per year with no limit on lifetime coverage, so you really are covered for life!
Co-insurance payments are also a lot lower with MediShield Life.
You will co-pay only 3% to 10% of your medical bill compared to the 10% to 20% you pay with MediShield.
Since we all have to pay into our Medisave account anyway, you probably won't feel the extra cost of taking part in MediShield Life since it will usually be covered in full by your Medisave payments, so there really are only good things to come as far as your healthcare costs are concerned.
The 1% employer contribution to Medisave that came into effect this year won't only make your boss a bit poorer, it will also help you cover the additional cost of MediShield Life.
Like MediShield, the new MediShield Life provides the most coverage for government subsidized class B2 and C hospital care, but does not cover those extras. You know, things like maternity, ambulance charges, dental costs, sex changes (sorry folks) and overseas medical care among other exclusions.
If you are more of a class A or B1 hospital care type, you may want to get private health insurance or the Integrated Shield Plan offered by MediShield Life.