Can’t make sense of the complex jargon in your insurance policies? Here’s an explanation of 10 common health insurance terms to help you understand what your policy is all about.
Many buy into insurance because it helps leverage the risks. Insurances are significant leverages against financial losses, accidents, medical expenses, and even pay for living expenses. Anyone looking to stabilise their financial plan may find refuge in investing in a good insurance policy.
With so many options available, the variety of insurances presented to you gets overwhelming. Understanding these key health insurance terms will help you sort out the type of insurance that best fits your needs.
Understand your insurance plan with these terms
|Co-payment||The fixed amount you pay (co-pay as the term suggests) for benefiting from certain medical care services.|
|Co-insurance||A portion of the claim that you will pay, once the deductible has been met. Unlike a co-payment, which is a set rate, co-insurance is the percentage of costs you pay after you've met your deductible.|
|Deductible||The amount you have to pay for claims on healthcare services before your insurance payout kicks in.|
|Out-of-Pocket Maximum||The amount the policyholder spends to get medical care once deductibles have been met.|
|Premium||The amount you pay for being actively covered by an insurance policy.|
|MediSave||MediSave is a national medical savings scheme that helps individuals set aside part of their income to pay for their personal or approved dependents’ hospitalisation, day surgery and certain outpatient expenses, as well as their healthcare needs in old age. It also pays for insurance such as DPS/Integrated Shield/Careshield.|
|Point of Service (POS)||The covered service policyholders get for availing of medical services under their in-network umbrella.|
|Free Look Period||A 14-day period where you review your policy and cancel within that period if it does not meet your policy requirement. For integrated shield plans, the period lasts for 21 days.|
|Health Maintenance Organisation (HMO)||A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won't cover out-of-network care except in an emergency. An HMO may require you to live or work in its service area to be eligible for coverage.|
|Policy Exclusions||The conditions or circumstances where benefits will not be paid. Pre-existing conditions, disabilities or illnesses you had before getting private health insurance are usually excluded.|
Co-payment, meaning the amount you pay for making use of certain medical care services, applies to most health insurance policies.
Depending on the service you choose, these could vary from GP to emergency room visits.
A typical co-pay costs less than S$25 and is often lower when you pay a higher premium for your insurance plan. For the most part, co-pays are cheaper for regular doctor check-ups than for visiting a specialist.
So, how are co-payments and deductibles different? Unlike a co-payment, the deductible is the amount you pay for health care services before you can start to claim from your insurance plans.
If you have a covered procedure, insurance companies won't be paying anything until you reach your deductible amount. The co-pay or coinsurance will only come into effect once the deductible amount is achieved.
Cancellation for Integrated Shield Plans deductibles is possible through purchasing a rider, which can be a worthwhile investment.
The out-of-pocket maximum may readily be associated with the deductible insurance meaning in your policy. It is the maximum amount you pay for all covered services you made use of for the year. When you reach your out-of-pocket maximum, your insurance will cover the additional amounts in full.
However, this does not cover premiums and other costs not covered by your insurance plan, outside-the-network consultations, and additional costs higher than the limit dictated in your insurance plan.
A premium is the amount you or your employer pays for being actively covered by an insurance plan. These are monthly, quarterly, or yearly payments and vary depending on age, location, type of plan, and existing health conditions.
Before you buy a policy, make sure that you can afford to pay in the long run. Make sure to go over your policy and look for excessive claims to avoid unnecessary expenditures.
Unlike co-payment, which is a fixed amount you pay, co-insurance is the percentage you pay once your deductible has been met. Co-insurance is typically used for covered procedures or doctor's visits where you have to pay a portion of the total amount. A typical co-insurance is an 80/20 split where you have to pay 20% while the insurance company pays the remaining 80%.
This out-of-the-pocket expense for the policyholder is usually associated with co-pay.
As you know, a portion of your monthly income is deducted and goes into your CPF account if you are a Singaporean or Singaporean Permanent Resident. That amount is then split into your Ordinary Account, Special Account and MediSave account.
MediSave is a national medical savings scheme that helps you set aside part of your income to meet your healthcare needs, including your personal or approved dependents’ hospitalisation, day surgery and specific outpatient expenses, as well as healthcare needs in old age.
Your Basic Healthcare Sum (BHS) estimates how much money you need for primary healthcare expenses in old age. It's the maximum amount you can put into your MediSave account, and it will stay fixed until 65 years old. You and your family, including siblings, parents, and grandparents, can benefit from MediSave.
From 1 January 2022, the BHS will be raised from $63,000 to S$66,000 for those below 65 years old. For those who turn 65 in 2022, their BHS will be fixed at S$66,000 and will not change thereafter.
Point of Service (POS)
The POS is a covered service by your insurance where you can only get access to a specialist under your GPs referral. Any care sought outside the network would mean a higher medical expense. Unlike the doctors you'll encounter under the HMO's network, you have a more comprehensive option outside this umbrella.
Free Look Period
A free look period is the time period where a new insurance policy owner can terminate the policy without any penalties like surrender charges. Most insurance companies typically grant a 14-day free look period, while an Integrated Shield Plan allows a 21-day free look period. This allows you sufficient time to review your policy and see if it meets all of the needs for which you were seeking coverage before signing the policy.
If, upon review, you find that the policy does not meet your requirements, you write to the insurance company notifying them to cancel it within this period to avail of the refund less medical costs and other incurred expenses during the process.
Health Maintenance Organisation (HMO)
A HMO plan is what you will need to choose a general practitioner from the network. This type of health insurance plan usually limits coverage to care from doctors who work for or contract with the HMO. It generally won't cover out-of-network care except in an emergency. Your GPs will be the ones to coordinate with other healthcare providers if there's a need to seek a specialist. An HMO may require you to live or work in its service area to be eligible for coverage.
Policy exclusions are the conditions or circumstances where benefits will not be paid. Pre-existing conditions, disabilities or illnesses you had before getting private health insurance are typically excluded.
MediShield Life CareShield Life are universal and have no exclusions, while all private health insurance policies will contain some exclusions.
In your application for private health insurance, you must provide details of any illness, disability or medical condition you have or had. Then, the insurer will decide whether to cover that medical condition. They may charge a higher premium should they choose to cover it.
The insurer may also provide restricted coverage should you have a health condition or occupational exposure. Hence, it’s crucial to buy health insurance when you’re young and healthy.
There are other exclusions apart from pre-existing conditions, so be sure to read your policy document carefully to find out exactly what you are covered for and what you’re not.
Familiarising yourself with these healthcare insurance terms will help you find a more appropriate policy geared towards your requirements. You won't be groping in the dark and find yourself with an approach that's not only costly but also unnecessary.
You may be in a dilemma about choosing high-cost coverage or a low-cost plan. Choose the one within your means or focused on your needs (e.g. flexibility to select your primary physician).
A plan may be expensive if (1) the policyholder/insured wants more benefits or a higher level of benefits such as broader coverage or higher-end hospitalisation (2) age and health factors drive up premiums. On the other hand, a cheaper plan might be more suitable for younger and healthier individuals looking for basic coverage.
Talking with a trustworthy insurance company or financial advisor could help you streamline your options to fit your needs. They could also elaborate on health insurance terms such as co-payment meaning in your insurance policy, or find out what the deductibles are in your health insurance plans.
Read these next:
Integrated Shield Plan Riders Now Require Co-payment: What You Need To Know
How Can I Get The Most Value Out Of My Integrated Shield Plans?
9 Things You Should Know About Your MediShield Life
Personal Accident vs Life & Medical Insurance: What You Need to Know
5 Health Conditions That Will Affect Your Insurability