Thoughts On The NTUC Enhanced IncomeShield Plan Premium Increase

Effective from 1 May 2020, NTUC Income has increased the premiums for its integrated shield plans (‘ISP’). The upward revision would only affect its Plus and Assist riders as these are riders introduced before the Singapore government’s announcement on 7 March 2018. Since that fateful announcement, the medical health insurance landscape has witnessed the following changes:

• days of purchasing riders so that the insured pay zero hospitalisation expenses are long gone
• premiums on health shield plans, especially riders have been escalating

That premiums have been rising on full rider waivers is an event that Heartland Boy has been cautioning for some time. Many other stakeholders have similarly proclaimed this to be an inevitable outcome. What should be brought to attention is the extent of the increase and the subtle message that insurance providers are sending. Here is Heartland Boy’s thoughts on the NTUC Enhanced IncomeShield Plan premium increase.

Summary of Premium Revision For NTUC IncomeShield Plus and Assist Riders

As a quick recap, here is the function of NTUC Enhanced IncomeShield’s Plus and Assist Riders:

• Plus Rider waives the requirement to pay both deductibles and co-insurance charges. Insured person pays zero out of pocket expenses.
• Assist Rider waives the requirement to pay deductibles. 10% co-insurance amount is still applicable, but subject to a maximum co-payment cap ranging from $1,500 to $3,000 per year.

As aforementioned, the premium increase for the Plus Riders is much more substantial compared to the Assist Rider. Depending on the age group the insured falls under, the revision in premium ranges from 15% to 65% as shown on NTUC Income’s website. In absolute quantum, the increase in premium on Plus Riders, is as high as $2,386 for those that are tagged to the Preferred Plan* under NTUC Enhanced IncomeShield! And note that premiums for riders can only be paid in cash and not from MediSave.

*Preferred Plan entitles insured to a standard room in private hospital/private medical institution

As shown in Diagram 1, a policyholder will find that the total premiums payable has increased from $6,735 to $9,121 if the insured is within 66-70 years of age at the next birthday. To be shelling out close to a 5-digit premium for health insurance, the bulk of which is payable in cash, is a scary proposition for Heartland Boy to fathom.

Another word of caution is for the group of people who are approaching the next tier at their next policy renewal as they will be dealt a double whammy:

• Higher premiums on the MediShield Life (most basic and compulsory), the supplementing Integrated Shield Plan and the Riders to offset the higher risk of them getting hospitalised
• Increase in premium on Riders as insurance providers try to alleviate their underwriting losses

If caught off-guard by the increase in premium payable, the seniors (particularly the retirees who will not have CPF contributions toward MediSave) will have to re-assess their cashflow adequacy since cost of medical inflation is outstripping the consumer price index.

What is implicit in the premium revisions by major insurance providers is their wish to see existing policyholders under the grandfathered regime (those full-waiver riders are allowed to function in its original form) to switch to the new riders that comes with mandatory co-payments.

Heartland Boy’s Health Insurance Situation

Heartland Boy had earlier revealed that he tried to plug the hole in his ISP coverage by adding the Assist Rider to his NTUC Enhanced IncomeShield, which occurred only after the Ministry of Health’s (‘MOH‘) announcement on March 2018.

Unfortunately, his Assist Rider will cease after 30 June 2021. Thereafter, he will automatically be transitioned to the Classic Care Rider. For context, the Classic Care Rider and the Deluxe Care Rider were introduced on 1 March 2019 and replaced the Assist Rider and Plus Rider respectively.

• Deluxe Care Rider- Insured pay at least 5% in co-insurance, capped at $3,000 per year for panel treatment. There is NO cap on the co-insurance if non-panel doctors are sought.
• Classic Care Rider- Insured pay at least 10% in co-insurance, capped at $3,000 per year for panel treatment. In addition, there is an additional $2,000 payment and NO cap on the co-insurance portion if non-panel doctors are sought.

With the latest revision in premiums by NTUC Income, the premium on his Assist Rider will increase from $118 to $136, a 15% increase. This is definitely still tolerable but it is definitely not too early to review the options on his plate when the Assist Rider eventually ceases.

With reference to Diagram 3, if Heartland Boy does nothing come 30 June 2021, he will be effectively be placed on Option D. Based on existing pricing, his total premium payable would actually decrease.

Heartland Boy had a discussion with his insurance agent. They concluded that if he stays on with NTUC Income, he should stick to Option D. His most recent brush with government restructured hospitals was his daughter’s hospitalisation at KKH in 2018. She stayed in Ward A and Heartland Boy felt that the entire experience met his expectations. This led him to conclude that health insurance coverage at Ward A government restructured hospitals is adequate for him. Besides, the premiums on riders tagged to restructured hospital are unlikely to experience astronomical growth since that is not where the battle is fought by the insurance companies. Upgrading from the Classic Care Rider to the Deluxe Care Rider to mitigate the $2,000 additional fee for non-panel treatment does not make much sense too since seeking private specialists would always be a last resort under his Advantage Plan. As there is still 13 months before his Assist Rider ceases, and provided that he still has a clean bill of health then, he may also apply for other health insurance plans.

Conclusion of NTUC Enhanced IncomeShield

The government is clearly advocating prudence in consuming healthcare as this is a merit good. Incentivising the public not to over-consume hospitalisation & surgery (‘H&S’) services and to move to panel treatments provides a grip on medical costs. As a final example shown in Diagram 4, a peer member who downgrades from the most expensive medical plan to a level of coverage that Heartland Boy finds acceptable will reap annual cost savings of $1,158. (~70% reduction in his health insurance bill)

What is clear to Heartland Boy is that private hospital treatment is a luxury that he can live without. In exchange for significantly lower premiums, he is prepared to make this financial trade off.

Disclaimer: Note that all figures quoted here are extracted from NTUC Income’s Premium Table applicable to Singapore Citizens and Singapore Permanent Residents only. Therefore, foreigners should not rely on the figures illustrated here.

Article was published on 10 May 2020.