When it comes to health insurance, Singaporeans are generally well covered, from MediShield Life to Integrated Shield Plans to Personal Accident Plans. However, with changes to MediShield Life set to take effect in April 2025, private health insurance policies are expected to follow. Health insurance in Singapore is a necessity to help keep medical costs affordable, but the type of policy you choose can significantly affect your finances.
According to the WTW Global Medical Trends Survey findings, medical insurance costs are expected to increase by 12% in 2025. Rising healthcare costs are driven by Singapore’s ageing population, more expensive medical treatments, and a higher prevalence of chronic diseases as we age.
In such a context, having the correct insurance policy plays an important role in healthcare financing, especially when it comes to Integrated Shield Plans.
In Singapore, Integrated Shield Plans come in two primary types: claims-based pricing and as-charged policies, each offering unique features and benefits.
This article explores these policy types in detail, explaining how they work, their pros and cons, and how they can help you make well-informed decisions about your health coverage.
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What is a claims-based pricing policy?
A claims-based pricing policy determines premiums based on your claims history. The premiums you pay in the future will be impacted by the claims you make or don’t make.
In short, when you make claims during your policy year, your premiums will increase during the next renewal period, as insurers view you as a higher-risk policyholder. For instance, if you make multiple claims for specialist consultations or hospital stays, your premiums will increase at the next renewal. Conversely, if you don’t make claims, your premium may remain the same.
This pricing model aims to encourage policyholders to file claims only for necessary medical expenses and avoid overusing insurance benefits.
Claims-based policies often cover a range of hospitalisation costs, but policyholders must carefully weigh their claims to avoid future cost increases.
Examples of claims-based policies include: Prudential’s PRUExtra (rider for PRUShield), Great Eastern’s GREAT TotalCare (rider for GREAT SupremeHealth), and AIA Max VitalCare (rider for AIA HealthShield Gold Max).
While all these policies are claims-based, each policy is still unique, with its own percentages of how much the premium increases with each claim. For example:
Prudential’s PRUExtra adjusts premiums based on the total claims amount, with higher claims leading to a proportionate increase in future premiums. Great Eastern’s GREAT TotalCare employs a tiered approach where the premium increase depends on the claim category and amount. Similarly, AIA Max VitalCare uses a claims-based tiering system, adjusting premiums based on the frequency and size of claims made during the policy year.
Here is a breakdown of how claims-based policies work in Singapore:
- Prudential’s PRUExtra: If you make a claim of $5,000 during the year, your premium might increase by 10% at the next renewal. So, if your current premium is $1,000, it would increase to $1,100.
- Great Eastern’s GREAT TotalCare: This policy uses tiers. For example, if you make a claim under $3,000, your premium might increase by 5%. But for claims over $10,000, your premium could increase by 15%. If your premium was $800, it could increase to $840 or $920, depending on the size of your claim.
- AIA Max VitalCare: This policy might increase your premium by 20% if you make multiple claims in a year, even if the total amount is small. For example, if you claim for two specialist visits costing $500 each (total of $1,000), your premium could go from $900 to $1,080.
These examples (accurate at the time of writing) show how claims-based pricing works: the more or larger the claims, the more your premiums will increase. To avoid higher costs, only make claims when necessary. Always check your policy terms to understand how claims will impact your premiums.
Advantages of claims-based pricing policies
- Encourages mindful claims: Policyholders are incentivised to avoid unnecessary claims to keep premiums stable.
- Potential for cost savings: Individuals who make few or no claims may benefit from lower premiums over time. Fewer claims generally result in more predictable premium rates at renewal.
- Promotes better health management: By reducing minor claims, individuals may focus on preventive care to maintain their health. This might include regular health screenings and lifestyle modifications to prevent medical conditions.
A claims-based pricing policy isn’t just about managing insurance costs—it’s also about encouraging better health management. By making claims only when necessary, you can keep your premiums more stable at renewal and avoid unnecessary increases.
This approach aligns well with national initiatives like My Health 360, Healthier SG, and the Kallang Alive Master Plan, all designed to inspire us to lead more active, healthier lives. By adopting healthier habits, we can reduce the risk of lifestyle-related diseases like type 2 diabetes, heart disease, and stroke—potentially making fewer medical claims in the process.
This combination of claims-based pricing and proactive health initiatives not only saves on premiums but also promotes long-term well-being. After all, the best way to keep your insurance costs down is to stay healthy and avoid the need for medical treatment altogether.
Disadvantages of claims-based pricing policies
- Premium hikes after claims: Even necessary claims will increase premiums, creating financial strain for some. For instance, if you require treatment for a newly diagnosed chronic condition, your premiums will increase at renewal.
- Discourages seeking treatment: Fear of premium increases may result in people delaying or avoiding necessary care, leading to more serious health problems in the long run.
- Complexity in managing claims: Policyholders may find it challenging to assess when to make claims versus absorbing costs out of pocket.
While claims-based pricing policies aim to encourage mindful claims and better health management, it’s essential to consider their potential downsides. In fact, an article in The Straits Times was recently published, putting Great Eastern in the limelight.
It highlights a significant shift in how Great Eastern’s Integrated Shield Plans (IPs) work, particularly when seeking treatment in higher-class hospital wards. Starting in October 2024, Great Eastern reduced coverage for policyholders (A Plus and B Plus plans) seeking treatment in private hospitals or higher-class wards, making it more expensive for those who choose treatments beyond their plan’s basic coverage. This change is directly linked to the concept of claims-based policies, where premiums are adjusted based on the claims you make during the policy year.
For instance, if you are on a Class A plan and choose to seek treatment in a higher-class private hospital, your coverage could drop substantially, as reported in the article. This shift reflects the broader trend among insurers, where claims-based pricing models are being used to align premium rates with actual healthcare usage better, ensuring that costs are distributed more fairly.
Balancing the need for medical care with the financial implications of claims can be challenging. That’s why understanding your policy terms, maintaining a healthy lifestyle, and planning for unexpected healthcare expenses is crucial. Ultimately, the key is finding a policy that aligns with your health needs and financial situation, ensuring you’re covered when it matters most without unnecessary stress about rising premiums.
How do riders work in a claims-based policy?
In claims-based policies, the insurer reimburses policyholders for medical expenses up to a predefined limit, usually after the policyholder has paid any excess costs or deductibles. By adding a rider to your claims-based policy, it offers additional coverage on top of your base policy.
For example:
- Maternity rider: A maternity rider can provide extra coverage for childbirth-related expenses, such as prenatal care, delivery, and postnatal care, which may not be covered under the standard policy.
- Critical illness rider: A critical illness rider can offer lump-sum payouts in the event of diagnosis of covered illnesses like cancer or heart attacks to assist with direct medical costs and indirect financial burdens like lost income.
Riders enhance the overall policy, ensuring that you have access to a broader range of treatments or care. However, it’s important to note that adding riders may increase premium costs, depending on the type of rider selected.
What is an as-charged policy?
An as-charged policy covers eligible medical expenses as they are incurred, without limits imposed on specific treatments or procedures, up to the policy’s annual coverage cap. Unlike claims-based policies, your claims history or amount doesn’t directly affect your premium amount.
As-charged policies offer more flexibility, making them suitable for those who want comprehensive coverage without worrying about claims impacting their future premiums. However, they can come with higher upfront premiums compared to claims-based policies.
Examples of as-charged policies include: Great Eastern’s GREAT SupremeHealth, Prudential’s PRUShield, and AIA HealthShield Gold Max.
While all these policies are as-charged, each policy is still unique in its coverage. For example:
- Annual coverage cap: All three policies have high coverage limits, but they can vary slightly, with coverage caps ranging from $1,000,000 to $2,000,000, depending on the chosen plan level.
- Co-payment and deductibles: While all policies have co-payments (ranging between 10% to 20%) and deductibles, the exact amounts can vary. Prudential’s PRUShield typically has lower deductibles (around $150 to $500), whereas Great Eastern and AIA tend to have similar co-payment rates.
- Flexibility for higher-class wards: AIA HealthShield Gold Max and Prudential’s PRUShield both allow for higher-class ward treatment with additional riders, but they might cost extra. GREAT SupremeHealth also provides flexibility but may have different co-payment structures for private room stays.
- Premiums: All three policies have higher premiums than claims-based policies but are generally considered good value if you need extensive coverage and flexibility. Premiums can vary depending on age, coverage amount, and rider options.
If you’re looking for comprehensive coverage with the flexibility to choose private hospitals and specialist consultations, GREAT SupremeHealth and AIA HealthShield Gold Max offer similar coverage and flexibility.
If you want a lower-cost option that still provides excellent coverage with the flexibility to upgrade to private hospitals and higher-class wards, Prudential’s PRUShield offers a good balance, especially with additional rider options.
Ultimately, the choice between these policies depends on your personal health needs, preferred coverage limits, and budget.
Advantages of as-charged policies
- Comprehensive coverage: As-charged policies provide broader financial protection without having to worry about future premium increases from claims. This is particularly beneficial for individuals with ongoing medical conditions or those who require regular medical attention.
- Simplicity: Claims are processed as incurred without needing to strategise when or how to claim. This simplifies the decision-making process when seeking medical treatment.
- Flexibility: Suitable for individuals with ongoing or high medical needs who require robust and predictable coverage. Someone with a chronic condition can seek treatment whenever necessary without worrying about premium increases.
Disadvantages of as-charged policies
- Higher premiums: These policies tend to have higher upfront costs than claims-based policies.
- Potential for overuse: Unlimited claims (within the coverage cap) may encourage overuse of medical resources.
- Not suitable for low-usage individuals: Such policies are less cost-effective for people with minimal medical needs as they may not fully benefit from the higher premiums.
How do riders work in an as-charged policy?
In an as-charged policy, the insurer reimburses eligible medical expenses up to policy sub-limits or without specific monetary caps (depending on the policy structure). Riders in as-charged policies typically focus on enhancing the comprehensiveness of coverage by:
- Adding coverage for non-standard treatments: For instance, a cancer treatment rider might include immunotherapy or proton therapy, which could otherwise fall outside standard policy coverage.
- Broadening facility access: A private hospital rider ensures that policyholders can choose premium care facilities without worrying about sub-limits.
- Extending coverage periods: Riders for pre- and post-hospitalisation can lengthen the number of covered days before and after a hospital stay, ensuring a smoother recovery process.
How to choose the right policy for your needs
Choosing between a claims-based pricing policy and an as-charged policy depends on various factors, including your health status, medical needs, and financial situation. Both types of policies offer unique benefits and considerations, and the right choice for you should ultimately align with your personal preferences and healthcare requirements.
Differences Between Claims-Based and As-Charged Policies
Feature | Claims-Based Policies | As-Charged Policies |
|---|---|---|
Premium Adjustments | Lower initial premiums; may increase based on claims history. | Higher initial premiums; relatively stable regardless of claims history. |
Coverage Limits | Predefined limits for specific treatments, hospital stays, and surgery costs. | Covers actual hospital bills, subject to overall policy limits. |
Ideal For | Individuals with basic healthcare needs or cost-conscious individuals. | High-income individuals or those seeking premium private healthcare coverage. |
Hospital Choice | May restrict private hospital or specialist treatment due to sub-limits. | Allows full access to private hospitals and specialists. |
Deductibles & Co-payment | Generally lower; percentage co-pay may apply. | Higher deductible or co-payment, but covers larger claims. |
Real-Life Example | Covers $250/day for ward fees; policyholder must co-pay any excess. | Covers full private hospital charges, including ward fees and specialist charges. |
If you are generally healthy and anticipate few medical claims, a claims-based policy might be more cost-effective in the long term. These policies tend to offer lower premiums, especially if you rarely require medical treatment. If you are proactive about your health and believe that you won’t need to make frequent claims, claims-based policies provide an opportunity to save on premiums while encouraging better health management. However, it’s important to assess whether the potential premium hikes after a claim outweigh the initial savings, especially if you develop chronic conditions or need extensive medical care in the future.
On the other hand, if you have ongoing medical needs or prefer more comprehensive coverage without worrying about rising premiums, an as-charged policy may be a better fit. This type of policy ensures that you can access a wider range of medical treatments without the concern of how much you’ve claimed in the past affecting your premiums. It offers more flexibility, especially for individuals who anticipate needing frequent treatments or procedures. As-charged policies can also be advantageous for those seeking treatment in private hospitals or higher-class wards, as they typically cover the full cost of care up to the annual coverage cap. However, the higher upfront premiums associated with these policies should be factored into your decision-making process.
Additionally, it’s important to consider your long-term health trajectory. If you expect to face increasing healthcare needs as you age or if you have a family history of chronic conditions, an as-charged policy might provide peace of mind, knowing that you’ll be covered regardless of your future claims. Conversely, if you’re still in the early stages of your career or a young adult with minimal health concerns, you may find a claims-based policy to be a more affordable option while still ensuring you have coverage for emergencies and unexpected medical issues.
Ultimately, the key to selecting the right policy is understanding your own health needs and how each policy aligns with your current and future medical costs. Taking the time to compare premiums, coverage limits, co-payments, and deductibles across both types of policies will empower you to make an informed decision and select the best health insurance policy for you and your family.
How do I switch insurance policies?
Health insurance portability is critical for individuals looking to switch insurance providers or plans while maintaining continuity of coverage, particularly for pre-existing medical conditions. In Singapore, portability allows you to transfer your insurance coverage from one insurer to another without losing benefits or facing waiting periods for conditions that were previously covered. This is a valuable option for those who want to upgrade their coverage, reduce premiums, or align their plan with changing needs while still being protected against ongoing health concerns.
Portability plays an important role in both claims-based and as-charged policies, but how it works can vary significantly between the two. For claims-based policies, portability ensures that when you switch plans, the new insurer must continue covering pre-existing conditions previously covered under your old policy. However, there are some conditions attached, such as ensuring there are no gaps between the old and new coverage. The transfer must be handled properly to avoid disruptions in coverage, which could result in new waiting periods or exclusions for pre-existing conditions. To make portability smoother, your new insurer may require a medical check-up or a declaration of your health status to assess the extent of your pre-existing conditions.
For as-charged policies, portability also protects policyholders from losing coverage for pre-existing conditions when changing providers. However, one of the key differences is that as-charged policies often have higher premiums due to the more comprehensive nature of their coverage, including treatment for a wider range of conditions. As a result, insurers may be more cautious about accepting policyholders with complex health histories or pre-existing conditions and may impose certain terms and conditions on the portability process. Despite this, the benefit of switching to a more competitive or suitable plan without losing coverage is still a significant advantage for policyholders in the long term.
In Singapore’s health insurance market, portability provides peace of mind for people who may want to switch insurers due to dissatisfaction with customer service, premiums, or coverage options without worrying about the impact on their health coverage.
Before you go about switching your policy or insurance provider, you must understand that portability is not an automatic process and requires certain formalities, such as notifying your old insurer and new insurer within a set timeframe, and may involve submitting medical reports to ensure the transfer is done smoothly. Some policies also impose restrictions on how soon portability can occur after you’ve been enrolled in a policy, so it’s important to check the terms before making any decisions.
Know Your Coverage, Before You Need It
Both claims-based pricing policies and as-charged policies have their unique benefits and drawbacks. The right choice depends on your health needs, financial situation, and preferences for managing medical expenses.
Remember that healthcare needs can change over time, so it’s important to review your coverage periodically to ensure it continues to meet your requirements. By understanding how these policies work, you can select a plan that offers the best balance of cost and coverage for your needs.
Not sure how your current policy works or what you are covered for? Use our Coverage Checker to find out!
