Riders for Health Insurance :Is it Necessary?

Getting Health Insurance? You might want to add riders to it.

Following up on our Health Insurance Series, this time we will be exploring Riders in a Health Insurance policy. Health insurance is an important part of the investment for the family. With rising costs, higher coverage can provide assurances of better healthcare facilities when one is sick.

What are Riders

Do you know that having Health Insurance does not mean that there will be no out of pocket expenses? 

Despite paying a premium for Health Insurance, you would still need to come up with cash for hospital expenses due to Deductible, Co-Insurance and Co-Payment. This could be a significant expense especially if you are facing large medical bills. Riders provided by insurance companies that are attached to your health insurance can reduce such unexpected bills.

Riders are optional benefits that one can add to their insurance.  Most insurance companies will provide riders with their health insurance policy. A Rider is an added benefit to the insurance policy that would help to either reduce costs or provide added benefits such as cash for hospitalisation stay. It would usually require you to foot additional premium to add a rider to the policy.

To see how riders are effective, we must understand what out-of-pocket expenses are. These are the three main types of added expenses that one should look out for when purchasing a Health Insurance Policy

1) Deductible 

This is a fixed amount that you have to pay in a policy year prior to any policy benefits are paid out. For example, if you have a deductible of $2000, the first $2000 spend on a hospitalisation bill will be paid by you before insurers pick up the tab. Deductible usually differs between the different wards chosen for hospitalisation.

2) Co-Insurance

Co-insurance refers to a fixed percentage of the medical bill after deducting the deductible amount. For example, if you have a 90/10 plan, the insurance company will over 90% and you pay 10%. As mentioned, this amount is on top of the deductible that you must foot yourself

3) Co-Payment

Co-Payment is a fixed percentage of the medical bill that you must pay. As of 7 March 2019, the Ministry of Health (MOH) has announced changes to health insurance where co-payment features are to be incorporated into health insurance. This is paid BEFORE you pay any deductible and co-insurance. Co-Payment might vary between a private and public hospital, the different treatments, as well as the ward chosen. 

How can Riders Help?

To reduce out-of-pocket expenses, we should add riders to our policies. Riders on Co-Payments are now the norm. These are some of the riders that insurance companies provide

• Co-Payment at 5% or 10%
• Cap at Co-Payment Limit
• Extra Bed Benefits for parents with insured child 18 years and younger (NTUC IncomeShield)
• Early detection benefits from age 40 onwards (AIA Max VitalHealth)
• Claims based pricing for renewal (Prusheild)

The Rider premium would also rise with age.  It will also be dependent on the plan chosen and the % of Co-Payment selected. While riders are affordable when you are younger, it can get as high as over $8000 if you are choosing the plan with the best coverage at an older age.

How much can you save with a Rider?

Below is an illustration of how much you can save with a rider. This is only an indication, but it will give you an overview of what you can save. 

As you can see, a rider can significantly reduce the amount of out-of-pocket expenses. Without it, you would most probably pay more for hospitalisation. For treatments that require a large expense, this savings could be significant.

To compare the difference between Health Insurance policies, we do recommend visiting an aggregator website like Moneysmart. There, you could easily check the key features of health insurance by different insurance companies. It will be most useful and less time consuming that compared to visiting the individual insurance company page to check.

Different Insurance Companies will provide different terms for their riders. In layman term, riders would distinguish one company from another. It is like choosing between Pepsi and Coke. Each insurance company offering is different and it will be up to the consumers to choose the right one for themselves. The subtle difference could be the deal-breaker when it comes to choosing the right insurer for yourself, so choose wisely!

Remember, when you are getting health insurance, always check if you can get riders to attach to it.

Disclaimer

This is not an offer for Health Insurance nor an invitation to treat. For more information on Insurance, do consult your Financial Consultantfor details.