Riders work well when they are designed to reduce or eliminate additional expenses.
How health insurance rider works
A health care insurance rider can help take the sting out of large medical bills, allowing policyholders to pay next to nothing or nothing for their treatments. This is because hospitalisation plans typically don’t cover a full medical bill. The insured has to pay a portion of the bill, such as a deductible (the threshold at which the insurance company will start to reimburse the insured for treatments) and a co-payment (the percentage
of the rest of the bill that the insured pays).
For example, if the bill is $10,000, the deductible amount is $3,000, and the co-insurance percentage is 10 per cent, the insured will have to pay the first $3,000, plus 10 per cent of the remaining $7,000 before insurance kicks in. In other words, he pays $3,700 and the insurance company pays $6,300.
Hospital bills for major ailments and critical illnesses can run into the hundreds of thousands, so even with insurance, patients can end up forking out daunting five-figure sums. But having an insurance rider that covers the deductible and co-payment – either partly or totally – he may then pay little or no out-of-pocket expenses.
Having a rider is particularly pertinent amid concerns of mounting health care costs, but some argue it inadvertently drives up health care costs, leading to a vicious circle of overconsumption of treatments and rising premiums.
Riders may encourage the so-called “buffet syndrome” in which the insured goes overboard on medical treatments. Since patients do not feel the pinch of co-sharing the bill, they are more likely to opt for unnecessary or non-essential treatments, or over-consume medical
services. And health care professionals may be tempted to over-treat or overcharge patients.
Indeed, a task force set up by the Life Insurance Association of Singapore, the Ministry of Health, and the Monetary Authority of Singapore found that patients with full coverage racked up bills that were 20-25 per cent higher than that of their co-paying counterparts. This pushes
health care and insurance premiums up for everyone in the longer term.
That said, from a consumer’s perspective, it is advantageous to invest in a rider. A policyholder need not worry if he wants to be attended to by more experienced specialists, to stay in a single room, or be warded at a private hospital.
The extras in some riders
Riders don’t cover just deductibles and co-payments. Some are designed for the insured to add on other needs. For instance, some riders pay an allowance for every day that the insured has to stay in hospital, to help make up for lost income for family breadwinners and the self-employed. Another bonus: choosing to stay in an A, B1, B2 or C ward in a restructured instead of a private hospital may allow the insured to enjoy a daily hospital incentive of between $75 and $300.
Insurance usually offers coverage for standard hospital treatments, and not alternative medicines or treatments. But premium riders such as PruShield Extra (Prudential), AXA General Care, AIA Max Essential, and Aviva’s MyHealthPlus will reimburse the insured for post-hospitalisation care, and even traditional Chinese medicine (TCM ) treatments.
Some other riders, like AXA Home and Great Eastern’s Total Health Plus, even cover home visits by doctors, nurses and physiotherapists, and so are useful for patients with long-term illnesses such as stroke, cancer or dementia.
To encourage speedy recovery, some insurance companies provide get-well incentives. NTUC Income’s Daily Cash Rider includes a get-well benefit upon discharge, Great Eastern’s Total Health includes a lump sum payment of $500 for health supplements or fitness classes,
and AIA offers a discount on its Max Essential premiums for participation in their wellness programme to encourage a culture of holistic wellness and reduce burgeoning health care costs.
Examples of riders offered by some insurers
“Lite” riders pay a percentage of the deductible or co-insurance, and provide a daily hospital incentive for staying in a cheaper ward.
- PruShield Extra Lite
- NTUC Income’s Assist Rider
|No-frills coverage preferred|||
“Basic” riders cover 100 per cent of the deductible and co-insurance, and provide a daily hospital incentive for staying in a cheaper ward.
- AXA Basic Care
- NTUC Income’s Plus Rider
|Focus on healing and holistic wellness|||
Premium riders cover 100 per cent of the deductible and co-insurance, post-hospital
follow-up costs, and include TCM. Some also include complementary treatments such as podiatric, chiropractic or osteopathic treatment.
- PruShield Extra
- AIA Max Essential
- Aviva’s MyHealthPlus
Some riders cover home visits by doctors, nurses and physiotherapists, for patients with long-term illnesses such as cancer, stroke or dementia.
- Great Eastern’s Total Health Plus
- AXA Home Care
|Parents or breadwinners|||
Some riders provide daily cash benefits for each day you are hospitalised, or coverage for the insured’s child(ren) as well.
- NTUC Income’s Daily Cash Rider
- NTUC Income’s Child Illness Rider
For more information and updates of the various Integrated Shield Plans (IPs), visit www.moh.gov.sg and the IPs’ home pages.
So are riders necessary?
While all these add-ons can be very persuasive, many may not be absolutely necessary. Bear in mind that Medisave savings cannot be used to pay for riders, and that rider premiums tend to increase with age. A rider may cost a person $30 per month, or $360 a year, in his 20s, and escalate to $150 a month ($1,800 a year) in his 60s – when he is likely to be retired and have to mind his finances more carefully.
Many insurance companies tier their riders and price them based on the benefits they offer, so consider investing in the “lite” or “basic” versions if longterm affordability is a concern.