How much does private health care cost

In truth, the cost for private health insurance in Singapore is certainly not cheap. However, if you want the best coverage, then most of us will opt for the private health insurance scheme. Under those circumstances, you must be prepared to fork out more capital for your insurance coverage. At the same time, it is my duty to inform you not to forget about the cost for private health insurance in old age. After all, what’s the point of buying the best coverage now if you can’t afford it in the future? With this intention in mind, let’s conduct an in-depth calculation to find out the cost for private health insurance at each life stage.

Table of Content:

1. Assumptions
2. Terminology
3. From 0 to 21 Years Old
4. From 22 to 55 Years Old
5. From 56 to 90 Years Old
6. From 91 to 100 Years Old
7. Lifetime Cost for Private Health Insurance
8. Non-Guaranteed Premium Rates

One Minute Summary:

• To point out, the premium rates for health insurance is not guaranteed. Consequently, the insurer may revise the premium rates from time to time.
• If you are buying a health insurance policy for your child, then you will spend a total of $14k on average for each child.
• Generally, you will spend around $42k for your private health insurance scheme as an adult (during your working years).
• Thereafter when you retire, the cost for private health insurance increases by more than six times to over $275k!
• Given that high cost for private health insurance, it is imperative to conduct comprehensive financial planning and to start planning for your future today.

Part 1: Assumptions

In order to boost clarity in this post, there are three assumptions that we need to make.

Part 1.1: Integrated Shield Plan and the Rider

In summary, an integrated shield plan is an optional healthcare insurance policy that provides coverage for medical bills in public or private hospitals. At the present time, there are seven insurers that provide such coverage; namely,

• AIA Singapore: HealthShield Gold Max
• Singlife with Aviva Singapore: MyShield
• AXA Singapore: AXA Shield
• Great Eastern Singapore: GREAT SupremeHealth
• NTUC Income: Enhanced IncomeShield
• Prudential Singapore: PRUShield
• Raffles Health Insurance: Raffles Shield

As I have noted in my starter’s guide, the basic integrated shield plan does not cover the deductible and co-insurance component of the medical bill. In other words, you need to pay for these cost from your own pockets. In order to reduce such out-of-pocket cost, you may choose to enhance your health insurance coverage with the rider for an integrated shield plan. To that end, the rider will cover both the deductible and co-insurance component of the medical bill. Under those circumstances, you will pay a smaller portion of the medical bill; that is the co-payment. Given that each insurer may offer a slightly different scope of coverage, our comparison will be based on

SEE ALSO:  Private vs Public Healthcare Insurance in Singapore

1. The integrated shield plan that covers as many private hospitals, together with the least number of restrictions; and
2. The rider that covers the largest amount for the deductible and co-insurance.

To this end, this allows us to conduct a fairer comparison across the respective insurers and their plans.

Part 1.2: Additional Withdrawal Limit

Under the Private Medical Insurance Scheme, you are allowed to use CPF MediSave to pay for the integrated shield plan. However, we need to abide by the Additional Withdrawal Limit set by Ministry of Health, Singapore.

Additional Withdrawal Limit:

• $300 if you are 40 years old or younger on your next birthday;
• $600 if you are 41 to 70 years old on your next birthday;
• $900 if you are 71 years old or older on your next birthday.

For any amount above the Additional Withdrawal Limit, you will need to pay the insurance premium in cash. Given that information, we will also conduct a breakdown for the cost payable via CPF MediSave and in cash.

Part 1.3: Average Cost of Premium

Emphatically, the respective insurers may adjust the health insurance premium from time to time. As a result, the calculations that I have made in this post may not be entirely accurate (this depends on when you read this post). Additionally, the intention of this post is not to rank the insurer according to the premiums that they charge. Consequently, I will use the average annual insurance premium across the respective age bands.

Part 2: Terminology

Next, I will use the following terms to define the breakdown for each of the cost component.

• Payment via CPF MediSave (Basic Plan): Generally, you may use CPF MediSave to pay for the integrated shield plan. In order to differentiate between the integrated shield plan and the rider, we will refer to the integrated shield plan as the “basic plan”. Accordingly, the premium in this section refers to the amount that you can pay via CPF MediSave.
• Payment via Cash (Basic Plan): As I have noted earlier (Part 1.2), the use of CPF MediSave for the basic integrated shield plan is bounded by the Additional Withdrawal Limit. If there is any cost above the Additional Withdrawal Limit, then you will need to pay it in cash.
• Payment via Cash (Rider): All things considered, you will need to pay for the rider for the integrated shield plan in cash.
• Total Cash Payment (Basic Plan + Rider): By and large, this accounts for the total amount that you need to pay for both the basic integrated shield plan and the rider in cash.
• Total Capital Outlay (CPF + Cash): Summing up, this is the aggregated amount that you will pay for both the basic integrated shield plan and the rider. In detail, it accounts for both the amount that you pay via CPF MediSave and in cash.
• Annual Average Capital Outlay (CPF + Cash): To explain, this refers to the average amount that you need to pay for both your integrated shield plan and the rider each year. It is important to realise that most insurers charge an insurance premium based on the age band. Hence, this figure is merely an average amount based on the presented age in each section.

SEE ALSO:  Integrated Shield Plan Singapore: A Starter’s Guide

Now that we have defined all the assumptions and its terms, let’s go through the cost for private health insurance in Singapore.

Part 3: From 0 to 21 Years Old

To begin with, let’s look into the cost for private health insurance from birth till adulthood. Generally, the younger you are, the cheaper the premium rates. Hence, it is no surprise that the average capital outlay is merely $674.44 a year for the first twenty-one years.

• Payment via CPF MediSave (Basic Plan): $4,039.57
• Payment via Cash (Basic Plan): $0
• Payment via Cash (Rider): $10,123.57
• Total Cash Payment (Basic Plan + Rider): $10,123.57
• Total Capital Outlay (CPF + Cash): $14,163.14
• Annual Average Capital Outlay (CPF + Cash): $674.44

Private Health Insurance: Cost Breakdown

Part 4: From 22 to 55 Years Old

In general, the premium rates are adjusted based on your age band. Consequently, you may expect an increase in the average premium during your adulthood. In detail, you will pay an average premium rate of $1,282.28 a year as an adult.

• Payment via CPF MediSave (Basic Plan): $13,982.57
• Payment via Cash (Basic Plan): $4,127.43
• Payment via Cash (Rider): $24,205.14
• Total Cash Payment (Basic Plan + Rider): $28,332.57
• Total Capital Outlay (CPF + Cash): $42,315.14
• Annual Average Capital Outlay (CPF + Cash): $1,282.28

To point out, you are able to utilise your CPF MediSave to pay for the entire premium for the basic integrated shield plan. For the most part, this is without any additional cash outlay due to the CPF MediSave Withdrawal Limit.

Part 5: From 56 to 90 Years Old

In time to come, this is the period when you retire. Despite that, most of us will continue to keep our health insurance policy. Under those circumstances, you must be prepared to pay a much higher rate of premium. In fact, the average annual premium is $8,105.56 during your old age!

• Payment via CPF MediSave (Basic Plan): $27,000
• Payment via Cash (Basic Plan): $117,485
• Payment via Cash (Rider): $131,104
• Total Cash Payment (Basic Plan + Rider): $248,589
• Total Capital Outlay (CPF + Cash): $275,589
• Annual Average Capital Outlay (CPF + Cash): $8,105.56

SEE ALSO:  Total Cost for Public Health Insurance Singapore

Part 6: From 91 to 100 Years Old

In the event that you outlive the average life expectancy, the average cost for private health insurance will be $17,016.35 a year. As a matter of fact, most of the plans are guaranteed to be renewable for a lifetime. Hence, you may continue to pay the insurance premium to enjoy the private health insurance coverage beyond your 100th birthday.

• Payment via CPF MediSave (Basic Plan): $9,000
• Payment via Cash (Basic Plan): $79,545.86
• Payment via Cash (Rider): $64,601.29
• Total Cash Payment (Basic Plan + Rider): $144,147.14
• Total Capital Outlay (CPF + Cash): $153,147.14
• Annual Average Capital Outlay (CPF + Cash): $17,016.35.

Part 7: Lifetime Cost for Private Health Insurance

Summing up all the figures above, you may expect to pay an average sum of $485k from life till death. In other words, the average capital outlay will be $4,852 a year throughout your life. This is after taking into account the adjustments in premium rates at each age band.

Private Health Insurance: Lifetime Cost across the Insurers

Part 8: Non-Guaranteed Premium Rates

Now that you know these figures, how ready are you for retirement? Before you think that it is achievable to save $275k by the time you reach 55 years old, think again. Above all, the premium rates are non-guaranteed and are expected to be adjusted from time to time. In detail, this will depend on the insurer’s claim experience, medical inflation, as well as the general cost of treatments, supplies or medical services in Singapore. In other words, there exists a possibility that the premiums may increase (or decrease) in the future.

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