HEALTH INSURANCE

NOTES

Done By : Mohamed Arash

(2020)
 CHAPTER 1 : OVERVIEW OF HEALTHCARE ENVIRONMENT IN SINGAPORE

Healthcare Philosophy
- Quality and affordable basic medical services for all
- Promote healthy living and preventive health programs
- Maintain high standard of living, clean water and hygiene

Enhancing Accessibility
- Plans to increase number of general and community hospital beds
- Actively build up local manpower capability for infrastructure expansion

Enhancing Quality of Care

- Adopt a multi-disciplinary team approach to enhance chronic disease management
- Enhance and strengthen primary health care providers such as polyclinics

Ensuring Healthcare Remains Affordable

- Increase government expenditure on health care through increased subsidies
- Expanding use of medisave funds for more types of outpatient treatment
- Enhancing Collective responsibility for healthcare (Medishield)

3 Main Types of Healthcare Services

- Primary Healthcare→ provide basic medical treatment, preventive healthcare and
education (polyclinics / private clinics)
- Hospital Services → 24 hour emergency department.
- Intermediate & Long Term Care (ILTC) → For persons who require further care and
treatment after being discharged
→ Home-based or centre based healthcare
services

Healthcare Financing
- Government subsidies → not 100% to prevent over consumption
- Compulsory healthcare savings → Medisave
- Risk pooling via insurance schemes → CPF Medishield Life
- Ultimate safety net for the needy (Endowment Fund) → Medifund
 CHAPTER 2 : MEDICAL EXPENSE INSURANCE

3 Categories that Health Insurance can provide for

- Reimbursement for the cost of medical treatment or nursing care
- Fixed cash amount up on disability or major illness
- Periodic income upon disability or hospitalisation

What is covered under Medical Expense Insurance?

- Inpatient expenses
- Outpatient expenses
- Catastrophic outpatient expenses (Kidney dialysis)

Other Benefits under Medical Expense Insurance

- Emergency medical evacuation benefit
- Private nursing home care
- Specific disease insurance
- Final expenses benefit
- Miscarriage benefit
- Daily Hospital cash

Key Features of Medical Expense Insurance

- Geographical Limit
- Family Coverage and Age limit
- Can be offered as a stand alone or rider
- Choice of plans (Variety) → Different level of coverage
- Waiting Period, Premiums, Renewability , Exclusions & Limitations
- Reimbursement Limit and Benefit Limit ( Lifetime / Annual / Event )
- Pro-ration Factor → E.g. Daily hospital cash payout lower for ward A
- Co-Insurance → Pay a certain percentage of total medical expenses covered
- Expense participation → Policy owner to pay up to a certain limit (deductible) before
insurer starts to reimburse

Termination of Cover
- Death of Insured person
- Date at which policy is terminated
- Date of cessation of insured person as employee (Group policy)
- Date insured person enters full time national service (exclude NSF & reservist)
- Date of expiry of last premium paid (did not renew policy)
- Insured person reaches maximum aged covered by policy
- Total amount claimed has reached lifetime limit

Supporting Documents for Claims

- Claim form, physician statement by attending doctor, discharge summary & original bill
 CHAPTER 3 : GROUP MEDICAL EXPENSE INSURANCE

Key Features of Group Insurance

- 1 Master contract
- Minimal underwriting requirements
- Experience rating (Based on past claims)
- Cost effectiveness (Low cost protection due to lower admin costs)
- Plan continuation (Plan is renewable on a yearly basis)
- Eligibility Requirements

Medical Insurance Requirement for Foreign Workers

- Since 1 January 2008, MOM requires every employer to buy, pay and maintain a
minimum Medical insurance cover for foreign workers as foreigner subsidies on
hospital bills have been removed

Advantages of a Compulsory Plan (Non-Contributory)

- Ease of administration → No regular payroll deductions to monitor
- Lower costs → Lesser administrative work and risk pooling
- Employer retain greater control of benefit structures and Provisions

Advantages of a Voluntary Plan (Contributory)

- Employer pays less → participating employees responsible for part of the cost
- Participating employees gain some control over the group insurance plan
- Obtain coverage at a lower premium than buying it individually

Portable Medical Benefits Scheme (PMBS)

- Employer makes additional Medisave contributions instead of providing group medical
life insurance
- Medisave can then be used to buy Medishield Life or any other private Insurer’s
Integrated Shield Plans → Any surplus remaining in medisave collects interest
- Advantage is the person remains medically covered in between jobs

Criteria for 2% Tax deduction for Employers (PMBS)

- Scheme must cover at least 20% of the local employees
- Additional Medisave contribution must be at least 1% of gross monthly salary (Min $16)

Transferable Medical InsuranceScheme (TMIS)

- Employee enjoy coverage up to 12 months from employment termination date
- If person joins new company with TMIS policy, he receives automatic coverage under
new employer’s Group Medical Insurance
- Waiver of any any exclusion on pre-existing if employee has been continuously insured
under TMIS plan for 12 months
- To qualify → 50% of employees need to be under PMBS / TMIS (Min 11 employees)
 CHAPTER 4 : DISABILITY INCOME INSURANCE

Computation of Disability Income Insurance

- Pays a monthly income to insured upon his disability (must meet policy requirements)
- Monthly benefit is a percentage of the average income 12 months prior to disability

Types of Total Disability

- Own occupation Disability → Inability to perform duties of own occupation
→ Occupation Based (Any occupation change affects policy)
- Modified own occupation disability → Inability to perform duties of any similar occupation
- Any occupation Disability → Inability to perform duties of any occupation
- Severe Disability → Inability to perform at least 3 of the 6 Activities of Daily Living (ADL)
→ Washing, dressing, feeding, toiletering, mobility, and transferring

Partial Disability
- When the insured recovers from Total Disability
- Is able to perform some major duties of his occupation but salary reduced to 75%

Recurrent Disability (Linked Claims)

- Recovered from disability and return to work but relapse within certain period (180 days)
- Claim treated as continuation of previous claim

Benefit Period
- Maximum period for which disability benefits are payable to the insured for anyone one
episode of disability

Deferred / Elimination Period

- Benefits are only claimable if disability period reaches minimum time state in policy
- Reduces costly claims for disabilities that are only short term

Types of Benefits Offered

- Total Disability Benefit → Monthly benefit ( 75% of average income prior to disability)
- Partial Disability Benefit → (% of income drop) x (Total Disability Benefit)
- Rehabilitation Expense Benefit → Reimburse rehabilitation costs incurred
- Escalation Benefit → Increase in benefit provided (E.g. 5 %) to protect against inflation
- Waiver of Premium Benefit
- Death Benefit
Cessation of Benefits
- When insured is fit to return to work
- When death occurs or benefit has expired

Exclusions
- Self-Inflicted injury whether sane or insane
- Sexually transmitted disease or pre-existing illness
- Participation in any professional or hazardous sport
- Caused by alcohol or drug taking unless prescribed by a doctor
- Invasion, strike, riot, war (declared or undeclared) or war-like operation
- Illness or injury during full time national service (NSF and reservist not included)
- Any complications arising from pregnancy or childbirth, except if disability continues for
more than 90 days

Documents to Submit for Disability Income Policy

- Claim form and claimant's Statement
- Clinical Abstract Form
- Physicians / Doctor’s Statement
- NRIC or Birth Certificate
- Evidence of Earnings (copy of payslip / income tax)
- Letter certifying termination job
- Copies of Medical certificate
- Copy of police report if it is an accident
- Copy of incident report submitted to MOM
 CHAPTER 5 : LONG-TERM CARE INSURANCE

Types of LTC Policies

- Service-Based Policies → Expense Incurred Method (Reimburse cost incurred)
→ Indemnity Method ( Pays covered amount regardless
of actual cost of services received)
- Disability-Based Policies → Pays a benefit when insured meets a benefit trigger
regardless of the service use
→ Benefit trigger may be based on limitations of ADLs

Eligibility Criteria for Payment of LTC Benefits

- Meets definition of Advanced Dementia
- Meets definition of Inability to Perform ADL
- Meets the deferred period requirement
- Does not cover pre-existing illness (excluded from coverage)

Other Benefits provided under LTC Insurance

- Surgical Procedure Benefit → Medically necessary only
- Hospital room and Board Benefit → daily benefit if hospitalised
- Extended Care Benefit → An extra specified sum payable every 3 / 5 years
- Rehabilitation Benefit → Reduced benefit when insured make partial recovery
- Financial Assistance with Adaptation Benefit → A specified sum if assistive devices are
deemed necessary by a doctor
 CHAPTER 6 : OTHER TYPES OF HEALTH INSURANCE

Eligibility Criteria for Payment of Critical Illness Benefits

- The policy must be in force and cannot be expired due to age limit
- Critical Illness must be the one that is covered and meets policy definition

Acceleration Benefit Critical Illness (CI) Insurance cover

- Provides a percentage of full sum assured when critical illness is diagnosed
- Remaining sum assured will be paid in the event insured dies or suffers from TPD

Additional Benefit Critical Illness (CI) Insurance cover

- Stand-alone Basis → sum assured will be paid upon the diagnosis of the critical illness
covered and policy will be terminated
- As a Rider → It pays an amount in addition to the sum assured of the basic policy

Severity-based Critical Illness Insurance (CI) Plan

- Insurance plan pays claims during early stages and less severe critical illnesses

Multiple Pay Critical Illness (CI) Insurance Plan

- This plan allows for more than one critical illness claim on the policy
- total payout maximum limit of 200% of insured amount

Supporting Documents for Claims

- Claimant's statement
- Attending physicians report
- Proof of critical illness such as biopsy result

Hospital Cash (Income) Insurance

- Pays a daily cash benefit to the insured if he is hospitalized
- Some insurers impose a lifetime limit

Types of Hospital Cash Insurance

- Stand-alone Policy → premium increase with age band
- Riders → Term of rider cannot be longer than basic policy

Medical Expense Benefits under Travel Insurance

- Medical expenses and other related benefits
- Hospital confinement allowance
- Emergency medical evacuation
- Cost of repatriation (return to own country)
- Excludes injuries arising from war, military operation and radiation or contamination
 CHAPTER 7 : MANAGED HEALTHCARE

What is Managed Healthcare (MHC)?

- Refers to an overall strategy to contain medical cost and ensure people receive
appropriate care. It will pay most of the bills when individuals visit a GP

How does MHC work?

- MHC providers set up a healthcare Network to mimic the accessibility cost and quality of
care for its members

Cost Management
- Capitation → MHCO pays a fixed amount for each member’s Medical Care (monthly)
- Discounted-Fee-For-Service → MHCO pays a percentage of the normal fees
- Salary → Compensates Physicians with a fixed salary based on average earnings
- Fees Schedule → Maximum reimbursement (limit) to encourage GP not to charge higher
than average fees

Health Maintenance Organization (HMO)

- Member chooses Primary Care Physician (PCP) who manages primary healthcare
- If member needs to see a specialist he needs to get a referral from PCP
- Member is liable to full cost if he visits Non - PCP or has no referral for specialist

- Staff Model HMO → Employs physicians to provide healthcare service

- Group Model HMO → Enter contract with healthcare provider who employs physicians
- Network Model HMO → Enter contract with multiple healthcare providers wider range

Independent Practitioners coverage Association (IPA) Model HMO

- HMO contracts IPA that works similar group model HMO except they can treat non-HMO
members
- PCP is allowed to refer HMO member outside of network but coverage will be lower

Mixed Model HMO

- HMO operates under a mixed model plan. For example, HMO started with a staff model
HMO but due to increasing demand also includes an IPA model HMO.

Preferred Provider Organizations (PPO)

- Similar to Network Model HMO but do not need select PCP
- Coverage is less if person chooses to visit physician outside of the network

Point-Of-Service (POS) Plan

- Is a combination of HMO and PPO. If he leaves the network, coverage is less.
- At point where person needs healthcare service, he can choose to stay in network or not
 CHAPTER 8: HEALTHCARE FINANCING

Government Subsidies
- Public Hospital Subsidies → Percentage of subsidy based on ward type
- Specialist Outpatient Clinics Subsidies → CHAS eligible clinics
- Other Public / Community Services Subsidies → Polyclinic

Medisave
- Basic Healthcare Sum (BHS) → Contributions are subject to a maximum amount to
meet subsidised healthcare needs in old age
→ Is adjusted yearly to account for inflation

- Removal of Medisave Minimum Sum → In 2016 it was removed and CPF members are
not required to top up min sum at 55

Whose Medisave can be used?

- Patient’s Immediate family members can use their Medisave to pay for hospital bills
- If family members Medisave is not enough, can appeal to use non-family member’s
medisave but patient must have stayed in B2 or C ward

Distribution of Medisave Upon Demise

- If patient was hospitalised before death, Medisave can pay full medical bill without being
subject to medisave withdrawal limit
- Patient must sign an authorization form. Immediate family members (21 years) or
committee of persons can sign if the patient did not sign before death.

Medishield Life
- Is a basic healthcare Insurance scheme for and singaporeans and PRs paid using
medisave.

Medishield Life Subsidies

- Premium Subsidies → For person with monthly income per capita lower than $2,600
- Pioneer Generation Subsidies → 40 - 60% subsidy regardless of monthly income
- Transitional Subsidies → Ease the shift from Medishield and premiums are higher
- Additional Premium Support → Families that still need assistance after the subsidies

Integrated Shield Plans (IP)

- Enjoy the benefits of Medishield Life with IP. Insured only needs to pay one premium
and file claim with private insurer
- Insurer will liaise with CPF for claims of Medishield in the event of a claim
- Medisave can be used to pay for IP (% allowed depends on age group and type of IP)
- Allowed to downgrade IP without underwriting, however switching IP still required
- Risk- Loading → Allowing members to pay higher premiums to cover pre-existing illness
Admission into Hospital
- Upon admission, request for Letter of Guarantee (LOG) from insurer
- When LOG is submitted, hospital will waive upfront fees up to the limit stated in LOG

Eldershield & Supplements

- Is a Severe Old Age Disability Insurance scheme to provide financial protection to those
who need long term care, especially during old age
- Members can use medisave to pay premiums up to the age of 65 but coverage is for life

Criteria for Payment of Benefits of Eldershield

- Meets waiting period from date of insurance coverage commencement
- Unable to perform specified number of Activities of Daily Life (ADL)
- Deferment Period → Disability must last longer than specified period
- To make a claim insured needs to be assessed by appointed assessor (fees to be borne
by insurer if claim is valid)

Pioneer Generation Package

- Eligible to person who was 16 years old and above in 1965
- Additional subsidy of outpatient care
- Additional subsidy of Medishield Life
- Annual medisave top-up ($200 - $800)
- Pioneer Generation Disability Assistance Scheme → Lifelong payout of $100 a month

Interim Disability Assistance Programme for the Elderly (IDAPE)

- Launched to take care of Singaporeans that were not eligible for the Eldershield scheme
in 2002 due to pre-existing illness or age limit
- In the event participant suffers disability, specified monthly payout for 72 months (based
on per capita household income)
- Participant need not pay premium
 CHAPTER 9: COMMON POLICY PROVISIONS

Purpose of Insuring Clause

- Provide any definitions required
- Describe the general scope of coverage
- Outlines conditions under which benefits are payable

Definitions
- Premium Warranty Clause → Coverage will not begin until premium is paid
- Actively At work → Accident / health deterioration must occur at work
- Optionally Renewable Policy → Right to refuse renewing of policy
→ Increase / decrease premium if add / reduce coverage
- Conditionally Renewable Policy → Only allowed to renew if conditions are met (Age)
→ Conditions cannot be health related
- Incontestability → Insurer is liable to pay claims under unless grounds on fraud
- Coordination Benefits → Benefits payable are reduced if insured person is eligible for
reimbursement from other sources
- Last Payer Status → If an insured receives reimbursement from other sources, the
insurer is the last to pay (I.e. pays only the remaining bills)
- Endorsements → Separate document that modifies the policy (Amend terms and
conditions of the policy)

Policy Owner’s Protection Scheme

- Administered by the Singapore Deposit Insurance Corporation (SDIC)
- Set up to protect the policy owner in the event of failure of an insurer which is a PPF
scheme member
 CHAPTER 10: HEALTH INSURANCE PRICING

Key Factors that Affect Premium

- Morbidity Experience → number of illness, injury, failure of health for a group of people
- Investment Income → Part of premiums is used to invest
- Mode of Premium Payment → Lump sum or recurring
- Extent of Underwriting
- Operating Expenses
- Scope of Benefits
- Medical Inflation
- Insurer’s Profit

Parameters for Premium Rating

- Age
- Gender
- Lifestyle
- Occupation
- Health Status
- Claims Experience
- Group Participation Level
- Persistency → Percentage of policies renewed each year
 CHAPTER 11: HEALTH INSURANCE UNDERWRITING

Factors that Affect Underwriting

- Age Factor
- Medical History
- Occupational Factor
- Current Physical Condition
- Avocation, Lifestyle Risks, & Habits
- Financial Factors → Affect benefits payable

Moratorium Underwriting
- Proposer does not need to fill in a health insurance declaration or go through medical
examination
- Insurer will declare a waiting period (2-5 years) → If inured does not have any
symptoms, treatment or medication or medical advice, insured will be covered

Factors that Affect Group Underwriting

- Group Size
- Group Stability
- Medical Inflation
- Employee Classes
- Level of Participation
- Reason for Existence
- Expected Persistency
- Past Claims Experience
- Medical Utilisation & Trend
- Age and Gender Within the Group
- Insures Company's Nature of Business

Sources of Underwriting Information

- Proposal Form
- Agent’s Statement
- Medical Examinations / Tests
- Attending Physician Statement (APS)
- Supplementary Questionnaires
 CHAPTER 12: NOTICE NO: MAS 120

Scope of Notice No: MAS 120

- Comprises both mandatory requirements and best practices standards
- Disclosure of information and provision of advice to policy owners for A&H and life
policies

Disclosure Requirements - Division 1

- General requirements for A&H policies → No insurer should use shield in the naming
of A&H policy unless medisave approved

Disclosure Requirements - Division 1A

- General information about the A&H insurance intermediary
- Marketing material, Telemarketing, and Direct Marketing
- Explanation of benefit illustration and product summary
- Remuneration of the A&H insurance intermediary
- Conflict of Interest
- Disclosure when providing advice → Details of Insurer
→ Nature and objective of policy
→ Provision of Free Look Period
→ Risks, Benefits, Exclusions, & Warnings
→ Contract Rights, Obligations , and Claims

Mandatory Requirements - Division 2

- Person providing advice must be intermediary of A&H insurance and
- A&H insurance representative of a licensed or exempt financial advisor

Mandatory Requirements - Division 3

- Meet industry standard when preparing benefit illustration and product summary
- Disclosure of relevant information for respective documents
- Required Font size of Times New Roman 10 or larger
- Explain policy terms and amendments if any

Mandatory Requirements - Division 4

- Must have reasonable basis when providing advice
- Comply with requirements for switching policy
- Proper documentation and record keeping
- Conduct Needs Analysis for clients
- Know - Your - Client

Mandatory Requirements - Division 5

- Person giving advice should comply with requirements of the Financial Advisors Act
Mandatory Requirements - Division 6
- Failure to comply → Guilty of an offence punishable under section 55(2) of the Insurance
Act (Cap. 142)

Non-Mandatory Best Practices Standards

- A&H intermediaries are expected to meet disclosures of all product marketing
information given to policy owners
- A&H Intermediary should ensure that the policy owner declares in writing whether he
had been advised by representative to switch policy
 CHAPTER 13: FINANCIAL NEEDS ANALYSIS

Needs Selling vs Product Selling

- Service Orientation → Recommending a product based on needs of a client
- Do not pressurise to buy product → Help client find product he needs
- Long Term Relationship → Return to review clients needs periodically

Common Sections of the Fact Finding Document

- General Information about Financial Advisor and Representative
- Application Typer (Type of services that the client needs)
- Personal Information
- Employment Details
- Details of Spouse and Dependents
- Existing Health Insurance and Insurance Portfolio
- Client Priorities and Objectives
- Health Condition
- Replacement of Policy
- Customer Financials
- Representative’s Declaration

Identifying needs
- Emergency Fund → useful to guard against breadwinner’s loss of job
- Employment Status and Occupation
- Life Stages
- Dependents
- Existing Insurance Policies
- Need for Health Insurance

Quantifying Needs
- Disability Income Protection Needs
- Medical Costs Coverage
- Hospital Cash Insurance
- Critical Illness Insurance

Product Recommendations
- Product Suitability
- Affordability
- Important Points on Policy Selection
 SUPPLEMENTARY NOTES

Sarcoma
- A malignant tumour of connective or other non-epithelial tissue (Cancer)

MAS 120 Applies to

- Direct insurer licensed under the Act
- Direct or Exempt Insurance Broker or person acting for them
- Licensed or Exempt Financial Advisor that provides advice on life policies
- Any Insurance agent operating under section 35M or is not required to comply with 35M

Eldershield Scheme
- Launched in 2002 → Eldershield 300 ($300 monthly payout for 60 months)
- Launched in 2007 → Eldershield 400 ($300 monthly payout for 72 months)

Interim Disability Assistance Program (IDAPE)

- Per Capita Income less than $1800 → $250 monthly payout for 72 months
- Per Capita Income $1,801 - $2,600 → $150 monthly payout for 72 months

Medical Expense Insurance

- Can be extended to cover to immediate family members of insured
- Also known as Hospital and Surgical Insurance

Assisted Conception Procedure

- Medisave Lifetime Limit of $15,000 per patient