They sound the same, but their medical benefits aren’t. Wonder no more with these 6 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.
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.
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, MediSave and MediShield Life are two different things.
MediShield Life is a national medical insurance policy designed to provide basic universal healthcare to Singaporeans and Permanent Residents. 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.
Which brings us to our next point…
Difference #2: MediSave is funded via 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.
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. (However, contributions to your CPF Ordinary Account or Special Account are not mandatory.)
As we’ve 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.
If you do so, the premiums for your IP may be paid for partly using MediSave, and any remainder in cash.
Difference #3: Both MediSave and MediShield Life have separate claims 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 claims 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.
Your MediSave 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 general rule, MediShield Life comes in first, and any excess is payable using MediSave or cash. See below for an example.
|Hospital stay (normal ward)||$1,500 per day|
|MediShield Life||$700 per day|
|MediSave||$450 per day|
|Balance payable in cash||$350|
Do note that you DO NOT have to use your MediSave. You may choose to pay the remaining $800 all in cash.
However, if you decide to use your MediSave, you are bound by the withdrawal limit. In this case, $450 per day for a normal ward. MediSave withdrawal limits apply no matter how much you have in your MediSave account at the time.
(If you have an Integrated Shield Plan, it may be able to cover more than the $700 per day provided by Medishield Life for your hospital stay in a normal ward. That enables you to pay less cash).
Difference #4: MediSave may be depleted, MediShield Life coverage is for life
As you continue to use your MediSave 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.
MediShield Life has an annual claims limit of $100,000, which means you may make eligible claims up to $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.
Difference #5: MediSave may be used for loved ones, MediShield Life is for individual use only
Every eligible Singaporean will be covered by MediShield Life from birth or when they gain permanent residency status, with each person given their own individual policy.
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).
MediSave may be used to cover your own medical expenses, as well as that of approved dependents (defined as spouse, children, parents, grandparents and siblings). You may use your MediSave to pay 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 $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 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.
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.
Read these next:
Best Integrated Shield Plans in Singapore (2020)
9 Things You Should Know About Your MediShield Life
Personal Accident vs Life & Medical Insurance: What You Need to Know
5 Best Cancer Insurance Plans In Singapore (2020)
6 Signs You Need a Rider For Your Insurance Plan
By Alevin Chan
An ex-Financial Planner with a curiosity about what makes people tick, Alevin’s mission is to help readers understand the psychology of money. He’s also on an ongoing quest to optimise happiness and enjoyment in his life.