They sound the same, but their medical benefits aren’t. Wonder no more with these six key differences between Medisave and Medishield Life.
Despite the extensive coverage regularly given to government policies, I was still surprised to learn so many new things when doing my research for a recently posted article on MediShield Life.
In today’s related article, we’ll be taking a closer look at the differences between MediSave and MediShield Life – a topic that causes no little confusion among Singaporeans. It doesn't help that there are a ton of government schemes or programmes to keep up with, no matter how young or old you are.
And if that includes you, don’t feel bad. After all, both schemes have similar names, and both concern medical and healthcare issues. However, the two have very different functions altogether, and teasing out how they piece together isn’t exactly a walk in the park.
Here are the six key differences between MediSave and Medishield Life.
6 key differences between MediSave and MediShield Life
|Savings in CPF account used to pay for medical care in Singapore||Insurance plan that covers medical costs. Covers Singapore citizen and PRs|
|Funded via CPF contributions||Premiums paid via MediSave or cash (if needed to)|
|Separate claims limit from MediShield Life||Separate claims limit from MediSave|
|May run out or be depleted||No lifetime claims limit, coverage is for life|
|May be used to pay for family members’ medical premiums and outpatient treatments||For individual use only|
|May not be used for certain medical expenses||Covers wider range of medical expenses, when enhanced with IP|
Difference #1: MediSave is a CPF savings account, MediShield Life is an insurance policy
Despite their close associations no thanks to their similar names, MediSave and MediShield Life are two very different things.
MediShield Life is a national medical insurance policy designed to provide basic universal healthcare to Singaporeans and Permanent Residents. It's purpose is to defray large healthcare costs, including expensive outpatient treatments like chemotherapy and dialysis. Like all insurance policies, MediShield Life collects premiums in order to fulfil claims made by beneficiaries.
So how are the premiums for MediShield Life paid for? Using the funds in your MediSave account! In fact, you can think of your MediSave account as a savings account dedicated to medical uses only. And how is this savings account funded, exactly?
This brings us to our next point.
Difference #2: MediSave is funded by your CPF contributions, MediShield Life premiums are paid via MediSave or cash
Your MediSave account is funded by your CPF contributions. If you’re an employee, part of your monthly CPF deductions are automatically deposited into your CPF MediSave Account. The proportion dedicated to your MediSave Account rises as you move up the various age bands, starting at 8% of your monthly salary for employees under 35 years old. This figure is capped at 10.5% for employees age 50 and above.
For self-employed persons, it is compulsory for you to make your own MediSave contributions; this is dependent on your age, trade income and other factors. This contribution depends on your Net Trade Income and age band, slightly complicating things. In essence, you're required to contribute 4% if your Net Trade Income is between S$6,000 and S$12,000. This is capped at 10.5% if you are above 50 years old and drawing a Net Trade Income of above S$18,000. (However, contributions to your CPF Ordinary Account or Special Account are not mandatory.)
As mentioned previously, your MediShield Life premiums are automatically paid via your MediSave Account. However, you may apply for an Integrated Shield Plan (IP) to increase the coverage of your Medishield Life plan. Although Medishield Life's coverage has been enhanced from its previous iteration, Medishield, do consider applying for an Integrated Shield Plan to further protect yourself.
If you do so, the premiums for your IP may be paid for partly using MediSave, and any remainder in cash.
Difference #3: MediSave and MediShield Life have separate claim limits
This is perhaps the most confusing thing about the two. You can use both to claim for your medical expenses, but there are different claim limits for each.
MediShield Life is a medical insurance policy, so it provides certain benefits that kick in when you need to pay for medical bills. As you’d expect, there are limits to how much of your claims are covered and any amount in excess will have to be paid via other means. Naturally, there are exclusions too, including ambulance fees, private nursing charges, most dental procedures, and more.
Your MediSave Account can also be used to pay for your medical needs (the balance in excess of what your Medishield Life limit would’ve covered), but only up to a certain amount each time.
So when you need to pay for, say, a hospital stay, which should you use to pay?
As a rule of thumb, MediShield Life comes in first, and any excess is payable using MediSave or cash. See below for an example.
|Hospital stay (normal ward)||S$1,500 per day|
|MediShield Life||S$700 per day|
|MediSave||S$450 per day|
|Balance payable in cash||S$350|
Keep in mind that you DO NOT have to use your MediSave. You may choose to pay the remaining S$800 all in cash. Because of this flexibility, you don't need to worry about your MediSave Account balance or withdrawal limits all the time.
However, if you decide to use your MediSave to pay for your medical expenses, you are bound by the withdrawal limit. In this case, it's S$450 per day for a normal hospital ward, specifically, a B2 or C class ward. MediSave withdrawal limits apply no matter how much you have in your MediSave account at the time.
Take rehabilitative care for example. If you're required to stay in an approved community hospital, there's a withdrawal cap of S$250 per day and S$5,000 a year. Simply put, you're subsidised for 20 days in an approved community hospital annually.
(If you have an Integrated Shield Plan, it may be able to cover more than the S$700 per day provided by Medishield Life for your hospital stay in a normal ward. That enables you to pay less cash up front.)
Difference #4: MediSave may be depleted, MediShield Life coverage is for life
As you continue to use your MediSave Account to pay for your MediShield Life premiums, deductibles, co-insurance and other medical expenses like long-term care, your MediSave balance will be drawn down, and may one day be depleted. This rings especially true for retirees, who are no longer contributing to their CPF accounts.
MediShield Life has an annual claims limit of S$100,000, which means you may make eligible claims up to S$100,000 within a year. However, there is no lifetime limit – your MediShield Life policy will be in force for life.
Despite the wide-reaching nature of MediSave and MediShield Life, it is important to balance your medical needs with your financial means when deciding on a treatment plan. Taking stock of your private insurance plans is crucial as well, because all three are working in tandem to prevent income loss as far as possible.
Difference #5: MediSave may be used for loved ones, MediShield Life is for individual use only
Every eligible Singaporean and Permanent Resident will be automatically covered by MediShield Life from birth. For Foreigners, this is granted when they gain permanent residency status, with each person given their own individual policy. No application or appeal is required.
As such, MediShield Life is for one’s own use and any remaining or unused claims limits cannot be transferred to another individual’s use (unlike joint insurance policies). On the other hand, if you are residing overseas and don't foresee yourself returning to Singapore, you can apply to suspend premium payments. There's a list of eligibility criteria though, so take of note before you make the application.
On the other hand, MediSave may be used to cover your own medical expenses, and that of approved dependents (defined as spouse, children, parents, grandparents, and siblings). Furthermore, these individuals can be of any nationality, bar your grandparents and siblings, who have to be Singaporeans or Permanent Residents. And you may use your MediSave to pay the premiums for MediShield Life on behalf of your dependents if they are unable to do so.
You may also use your MediSave to help pay for outpatient treatments for your dependents. The limit here is S$500 per year per MediSave account, and a co-payment of 15% applies.
Difference #6: MediSave may not be used for related expenses, MediShield Life with IP provides more extensive coverage
While MediSave has a wide range of uses, there are some expenses that it does not cover.
For example, you may require ambulance transport and accident and emergency services during a medical emergency, but you cannot use MediSave to pay for them. Ditto for cosmetic surgery.
MediShield Life, too, has its own set of exclusions (yes, including ambulance and A&E), which means you will have to pay cash to cover these expenses.
However, adding an IP to your MediShield Life can extend your medical cover to include these other expenses, thereby reducing your out-of-pocket costs when dealing with a serious medical event. Alternatively, Medishield Life is still crucial even if you have a top-tier IP policy as you stand to enjoy the benefits of both insurance plans in the event that anything untoward happens to you.
Furthermore, Medishield Life covers all pre-existing conditions. This applies even if your own IP policy excludes it. Another reason why this national insurance scheme is a key component of your income loss protection plan.
Read these next:
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9 Things You Should Know About Your MediShield Life
Personal Accident vs Life & Medical Insurance: What You Need to Know
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