Prushield Extra ‘A’ Premier is the rider of Prudential’s private hospital coverage that covers both the deductible and co-insurance. This rider ensures that in the event of a hospitalization, policyholders do not have to pay a single cent as it is all taken care of by Prudential, i.e. coverage from the first dollar.
In end-March this year, Prudential announced changes to its rider PRUShield Extra A Premier’s premium structure, which is to take effect on 1 May 2017.
Have You Met Up With Your PRU Agent? If Not, Read All About It Here
This new structure ties the rider renewal premium to claims made by the insured. If you have not made any claims in the past 3 years, you will get a 10% premium discount, known as the PRUwell Reward. But, if you have made a private hospital claim, your renewal premium will go up a few levels in line with the size of the claim. So how exactly do these levels translate to your premium hike? The following table will explain:
If you are currently at PRUwell level and you make a private hospital claim this year, your premium level will go up 4 levels and your rider premium will become double of the standard premium. It then goes down a level for every year that you did not make a private hospital claim. The rider premium is not affected if you make a public hospital claim.
Umm, What Does It Mean For Me?
If in the unfortunate event you have had to make 2 private hospital claims within 4 years, you will reach level 5 on the 2nd claim’s 1st renewal year. At level 5, the rider premium is 3 times that of the standard premium.
To illustrate the implication of this change, let’s look at the following example of policyholder James who makes two claims within a few years at 3 different ages:
Based on the above example, the additional premiums James must pay in cash out of his own pocket would be $4,143, $12,144 or $23,013 at the 3 different ages. It is a substantial amount of money and would deeply impact James if he is in a tight financial situation and did not cater for this unexpected expense.
If you think this example of making multiple claims and making claims above $5,000 is far-fetched, I would like to share that this example corroborates Prudential’s claims experience:
Huh, Why Is Prudential Doing This?
With the introduction of this premium structure, it is obvious that there are two outcomes that Prudential is urging its policyholders towards:
- Getting a rider that requires co-payment (where the rider’s premium is not affected by claims)
- Downgrading to a government hospital entitlement plan
In both outcomes, Prudential is trying to reduce the hospitalization costs of their policyholders. For the first outcome, Prudential is encouraging its policyholders to be more careful about their bills by making them pay part of it. This may also deter doctors in the private healthcare from adding unnecessary procedures or charging more if they are aware that the patient must foot a portion of the bills.
To give an example, I have had an unscrupulous dentist who ordered X-ray and fluoride treatment for me upon knowing that my bill is claimable from my company. My teeth are in good health, and I had merely wanted to do the usual scaling and polishing of my teeth.
The second outcome does away with the expensive private hospitalization costs that Prudential has to bear.
Prudential’s move to restructure the rider premium is understandable because private healthcare cost has been escalating at a rate of 9% per annum – compare this with the public healthcare ‘A’ class ward’s rate of increase of just 2%, which is aligned with inflation rate. If not curbed, private healthcare will become out of reach for most of us in the future.
Contrary to what some believe to be the indiscriminate consumption of private healthcare that led to the escalating costs, I believe the cause is in part due to policyholders not being medically informed to discern which treatment are necessary and which are excessive. Policyholders also do not have benchmarks to compare the costs of treatment against.
Although this rise in costs is no fault of the policyholders or the insurers, insurers have to let policyholders bear part of the high costs because they have no control over which doctors the policyholder visits. It would not be fair to let the insurers bear all the high costs while the private healthcare providers benefit from all of it (which is the current situation now).
Hence, some insurers have tried to solve this issue by encouraging policyholders to visit their panel of private specialists, incentivizing the insured with a higher claim limit or a higher Letter of Guarantee when they do so.
The Health Insurance Task Force has published a lengthy report on managing healthcare costs in Singapore if you are interested to find out more.
Okay, But I Still Want to Be Covered From the First Dollar Can?
If you are healthy and still prefer coverage from the first dollar with a premium structure that is not tied to your claims, all other insurers in the market still offer this option. I will be happy to share with you the benefits of each insurer and the most affordable plan in the market – please feel free to drop me a message here.
While enjoying this first-dollar coverage luxury, we could all do our part to keep healthcare costs sustainable by considering specialists in government hospital/insurer’s panel of specialists first. If our preferred specialists are beyond the lists due to the illness that we seek to treat, we always have the option to see our preferred specialists without having our premiums “penalized” by the insurer.
If you would still like to be insured with Prudential, you might want to consider opting for a rider that has a limited co-payment option as these riders are not affected by your claims, such as PRUshield Extra A Premier Saver. The limited co-payment portion can be paid by Medisave, up to the Medisave limit for hospitalization expenses.
Hmm, If Other Insurers Also Change Their Premium Structure Leh?
To be fair, we have absolutely no idea if the other insurers will follow suit. If they do, you will just be in the same position as being insured with Prudential – that is, having a rider that requires a small co-payment of bills.
If they do not follow suit, you will still get your coverage from the first dollar and peace of mind in knowing with certainty what your premiums will be.
Just remember we all have a part to play to keep healthcare costs sustainable if we want to continue enjoying this benefit!
A Serious Note of CautionIf you currently have any pre-existing condition, you should not at any point switch insurer because you run the risk of not getting coverage for that pre-existing condition. Do not believe any adviser/agent who tell you otherwise or who do not highlight this to you.
If you would like to find out more about other insurers’ plans and the most affordable plan in the market – please feel free to drop me a message here.
Note: Author is an adviser with one of the largest independent financial advisory firm that partners with most of the insurers in Singapore.