Friday, March 3, 2017

Integrated Shield Plans... Co-Pay or No-Pay?

having health insurance is like having clothes... do you want to be running around naked?
if you have health insurance, you have swag, trust me (okay, maybe not)

First thing first, I am considering changing my Shield plan. Why? I just received a letter notifying me of premium increases and I have realized that there are objectively better shield plans out there.

I currently have the NTUC Enhanced Income Shield (Preferred) with the Assist Rider. The rider covers all hospitalization expenses except a 10% co-pay up to $3000, and has a daily cash benefit.

You can see what insurance I have at the time of Oct 2016. Since then, I have thought about my critical illness coverage and I have added a standalone plan with Aviva. 

Probably once I finalize the switching of my shield plan, I will do an insurance update for 2017 and that will probably be it for a very long time.

I've never been hospitalized before, but if nurses looked like this...

Co-Pay or No-Pay?

Now there are 6 insurers offering shield plans. GE, Aviva, AXA, Pru, NTUC and AIA.

All 6 insurers have Shield plans that covers up til private hospitals, and all of them offer "No-Pay" riders as supplements to the base Shield plan.

"No-Pay" riders means that if you need to claim this insurance, the usual deductible and co-insurance will be completely covered by the rider. This means $0 out of pocket expense for hospitalization and surgeries.

Only 2 of the insurers have a "Co-Pay" option, and that is NTUC and Prudential.

"Co-Pay" riders mean that if you need to claim the insurance, you will only be liable up to a certain amount, which is so far up to a maximum of $3,000.

The "Co-Pay" Options

As mentioned, there are only 2 insurance providers with a "Co-Pay" option, and they are NTUC with their Assist Rider and Prudential with their Extra Lite rider.

They are slightly different in the way that things are calculated. NTUC looks at the total claimable amount, and 10% is payable up to $3000. For Prudential, the amount payable for the co-pay is simply 50% of the deductible, up to $1,750. 

So correct me if I am wrong, but this means for a person covered with NTUC, his final out of pocket expenses for being hospitalized will be slowly increasing until the claimable amount is over $30,000, and which point his maximum liability is $3,000.

However, for someone with Prudential, they are looking at a $1,750 bill every single hospitalization, unless the total bill is under $3,500.

Theoretically, if you have a $500 payable amount, you will pay $50 with NTUC, or $250 with Pru.
Theoretically, if you have a $5,000 payable amount, you will pay $500 with NTUC, or $1,750 with Pru.
Theoretically, if you have a $25,000 payable amount, you will pay $2,500 with NTUC, or $1,750 with Pru.
Theoretically, if you have a $50,000 payable amount, you will pay $3,000 with NTUC, or $1,750 with Pru.

Looking at it this way, NTUC seems better than Prudential if you are hospitalized frequently for minor stuff (total bill under $17,500). Prudential is better than NTUC if you are only hospitalized for major stuff, where the total bill would be over $17,500.

MOH data shows that at private hospitals, the 50% to 90% percentile of hospital bills is roughly between $13,000 and $28,000.

Of course, with medical inflation being one of the world's great constants, we should expect that number to slowly rise over time and that would make the Prudential offering more attractive, pari passu.

However, all things are NOT equal between the 2 insurers.

NTUC only covers 90 days pre and 90 days post hospitalization.
Prudential covers 180 days pre and 365 days post hospitalization.

NTUC annual max limit is $1m while Prudential is $1.2m

And finally, Prudential has a lower premium. Pru is about 10% cheaper until age 40, and the discount rises up to almost 20% at age 50, and the gradually falls down to 6% cheaper at age 80. For someone covering themselves from 30 to 80, the difference is roughly about 10%.

Mind you, this is AFTER NTUC has "buffed" up their offering, which is what they are using to justify their premium increase.

For me, it seems like a no-brainer that Prudential is the better choice when it comes to "Co-Pay" options.

The "No-Pay" Options

The "No-Pay" options are plentiful. You have 6 insurers and each of them have one to a few choices of riders to give you "additional benefits".

Personally, I hate bundling of insurance coverage. I don't need daily cash, ambulance fee is really not very expensive at all, extra bedding is usually restrictive to immediate family, I wouldn't want to go for TCM treatment and if I really need prosthesis, I would just pay for it out of pocket.

I don't find any of these extra benefits as real benefits that I want to be paying for year after year. For some people in special circumstances, it may be necessary or a good bonus to have such options, but for me, I really don't see them as necessary at all. 

Strangely, only AXA has prescence of mind to have a truly Basic and no-frills options with their Base Care rider which will just simply and honestly cover all the liable co-payment and deductibles. I really like this option.

With the removal of all those redundant (at least to me) bells and whistles, it isn't surprising that the premiums of AXA is a very significant 20% discount to other "No-Pay" options. 

Okay, so the "best" Co-Pay vs. No-Pay face-off

Both AXA and Prudential has 180 days pre and 365 days post operation. Prudential has an annual limit of $1.2m while AXA is $1m. AXA is more modular, meaning that you can add on the additional riders or remove them without affecting your Basic rider. Prudential allows for planned overseas treatments. There are slight pros and cons to each, but the fundamental difference of co-pay vs no-pay is really the main differentiator.

Finally, the premium difference between the Prudential "Co-Pay" option and the AXA "No-Pay" option is actually 10%.

Of course the conclusion is rather easy. A healthy person would go for the "Co-Pay" option. Not only would they visit the hospital less frequently, their treatment cost might not be high if their problems are not severe.

For someone who is prone to medical issues, the "No-Pay" option allows them to effectively limit their medical expenses, regardless of how ill they might be. This option is "more worth it" if you are always in and out of the hospital.

Someone with the Pru "Co-Pay" option could get hospitalized once at 41, twice at 51, thrice at 61, up to 4 times at 65... up to 6 times at age 78 and they would still breakeven with someone on the AXA "No-Pay" option. Of course, if they don't, they will have quite a fair bit of extra cash saved!

So... perhaps the best choice is to just be very healthy, go for the "Co-Pay" option, pray that nothing happens to you, but have an emergency fund just in case?


This dilemma is a real one for me. I will be deciding which route to go by the end of next week.

'Scus mi Nurse, I need some help ar ...
"Sure, I am totally qualified to give you personalized financial advice about health insurance"

I know many people go for the "No-Pay" route. After all, it was only a while ago that NTUC was the only insurer offering a "Co-Pay" option and it wasn't even widely known. Most people don't know that there is such a rider that limits your co-pay and gives you a cheaper insurance premium for your rider.

Plus, I know that there are companies that have medical benefits that "pays" for their employees' personal health insurance. In that case, of course go for the biggest and best. 

Coughing up an extra 10% for that "peace of mind" is a very easy argument to make for the "No-Pay" camp, but remember, the "Co-Pay" option has hard limits on maximum co-payment as well. To me, that is a big peace of mind as well, as compared to the "naked Shield plans" that some people have. I don't need 100% certainty. 95% is good enough for me. I know that I can afford $1,750. It isn't a catastrophe for me to reach into my emergency fund and pay for it. For some people, an unexpected $1,750 bill can really screw up their lives.

I think the question comes back to: What is the main point of an Integrated Shield Plan insurance and insurance riders?

If the answer is to protect yourself from excessively large medical bills, then honestly, both options will do the trick.

Like previously how I thought about this and eventually decided to stick with my NTUC Assist Rider "Co-Pay" option, I am actually leaning towards switching to the Prudential "Co-Pay" option rather than the AXA "No-Pay" option.

But like I said, both plans are great and definitely better than nothing. I might just be splitting hairs, but and I guess it might come down to just personal preference and comfortability with the insurers and working with their respective agents assigned to me.

What do you guys think? Did you know about "Co-Pay" options? What Shield plan and rider do you have and what was the reason you decided on that? Does the "Co-Pay" or "No-Pay" option sound better, and why do you say so?

Regardless though, I have a feeling that in the near future the "No-Pay" schemes might be scrapped (as advised from expert panels) and current policy holders will either be allowed to keep it as a legacy plan, or will be phased into co-pay models. Whatever happens though, I am sure that this isn't going to be the last time I think about Shield plans, although I really wish it was.


  1. i was again just looking at hospital plans today, after just receiving my new yearly premiums deduction of Aviva (a whopping $500+! due to the private hospital choice). I'm decided that I surely won't go to private hospital for my treatment 90% of the time, so i feel the plan is overkill for me.

    Now I'm looking out for alternatives and was looking at, guess what, NTUC with plus rider (that no-pay option). Interested to know your take on which plan is better, NTUC or AXA and if co- or no- is better. I'm thinking the option for B1 ward is good enough for me.


    1. Hi again SH,

      I think the level of shield plan coverage should definitely match your own personal expectations of your medical care.

      I'm definitely moving out from NTUC because of their short pre/post coverage, but the co- or no- is still undecided as of yet.

  2. Hi GMGH! I too am covered by the Enhanced Income Shield (Preferred) but with the Plus Rider that you mentioned. Been on this plan and rider since I was an infant. Recently I got admitted into the hospital and decided to review my health insurance too! Took me a while but I finally wrote my thoughts down here ( Funny how we reached pretty similar conclusions! :) Which is a relief for me, knowing that an expert like you are considering those too. :) good day!

    1. Hi Blur Young Adult,

      I gave your post a good read and I was really quite surprised that we have both come to rather similar conclusions about the products!

      I've narrowed it down to AXA no-pay vs Pru co-pay and... it seems like I am leaning towards the AXA no-pay plan. The difference in total premiums paid starts off at a pretty big 23%, but it narrows down with age until a surprisingly low 3% difference between the ages of 88-91, which is roughly my personal age target.

      To be faith to Pru, the difference in total premiums from now until age 50 is still a big 20% and the reduction in premiums gap only starts accelerating from age 75 onwards. This might be a problem for people who are cash-strapped, but I am not in that situation, so that benefit isn't a huge plus factor.

      There is also a psychological factor at play here too because I quite like the idea of not being liable for anything since the no-pay rider takes care of everything.

      After reading your post, I think that if I was in your position I would actually switch over to the insurer and plan which I am planning to keep for the rest of my place. Not only do I then not have to worry about any pre-existing illness possible complications, but I also don't really have to think about shield plan insurance for a very long time until there are some major changes in the plans!

    2. Thanks GMGH for your reply! I like your idea of a personal age target.

      I went to read up more on Pru and AXA. Am pretty impressed with Pru's claim speed. But at the same time, I had a really great claim experience with NTUC Income. So on its own, it's not a significant point to win me over.

      As for AXA, I'm not sure if you are aware but LOG for private hospitalisation will only be released if referred from their panel of specialist (i.e. Fullterton Health). My concern with this clause is that admissions our age tend to be sudden and acute by nature. Does it mean I have to wait till my appt at these clinics before I can be hospitalised? Also, what if these specialists deem that I do not require hospitalisation? Wouldn't the consultation costs at these clinics be way more expensive than my GP or polyclinic?

      My inertia for changing shield plan now is very high despite the increase in premium rate by NTUC Income. I guess past experiences do matter.

  3. Hi GMGH, mine is Aviva MyShield plan 1. Frankly speaking, I don't know how much I would need to pay if I were hospitalised. I just hope I don't need to use this insurance coverage.

    1. Hi starlight, having a shield plan is definitely better than nothing at all. I know that I am being picky here, but all the shield plans are great. I'm just splitting hairs of very tiny differences, which actually seems to be a difference in subjective preference of the consumer.

      You might want to spend a while to read up about your plan and compare it to other plans. Who knows what you might find out while you do a review for yourself? Plus, it's always a good idea to do a "stock check" every once in a while haha

  4. Hi GMGH,

    Really good post. My dad(in late 50s) was thinking to actually switch his pru plan to ntuc. I thought ntuc was cheaper actually as well, looks like its not true. Your post was a great reference in the decision making process. Thanks!
    - Ben

    1. Hey Ben, I'm glad my post helped you and your dad! It's good to hear that there are people there that actually look at and review their health insurance from time to time! I know of friends that don't even know what a shield plan is!

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