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Plan for medical insurance as it gets more costly when you are older

If you want to enjoy a stress-free retirement, it’s critical that you make sure your health insurance doesn’t expire. Not because you forgot to pay, but because you didn’t save enough.

Many working people don’t think twice about the cost of their medical policy, known here as integrated shield plans, because annual premiums are affordable at around $1,000 to $2,000 for those under 50.

But estimated annual premiums for all plans start to increase significantly when you hit 60 ($4,000), 70 ($7,000), 80 ($12,000), and 90 ($15,000).

These are just the average costs derived from the rates charged here by the top six health insurers. But inflation and the fact that companies face more claims as customers age, these costs could rise in the near future.

Mr. Alfred Chia, the CEO of financial advisory firm SingCapital, says: “For those who want to enjoy comprehensive coverage, total premiums from 50 to 90 years would easily exceed $300,000, depending on the insurers. This figure adds up as insurers raise premiums because of medical inflation.”

Here are three things you should know to help you with your retirement planning.

Have sufficient savings and lifelong retirement income

There’s a reason the government requires all employees to contribute to their MediSave account – the money there can save you and your family in a medical emergency. The money is used to pay for MediShield Life, your basic medical plan.

The good news for those who have more than $60,000 in their MediSave account is that the 4 percent annual interest you get on this amount alone will be more than enough to pay your MediShield Life premium, as well as a portion of your private medical plan. .

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MediSave also comes in handy in paying your share of hospital bills not covered by your plan.

For lifetime income, there is CPF Life, a privilege only citizens and residents can enjoy because it is the cheapest and best annuity your money can buy. Those over age 65 who have set aside their Central Provident Fund (CPF) savings to join CPF Life can expect to receive approximately $19,000 or $27,000 annually, depending on the amount they contribute to their CPF retirement account.

For example, to get stable monthly payouts of $1,570 or $2,300, you would need to set aside $192,000 or $288,000, respectively, at age 55. Such payouts will be higher if you contribute more to your retirement account when the pension amount limit is increased annually to combat inflation.

To get private annuities to pay you such amounts, you’ll probably have to spend a lot more money – even so, the payouts are unlikely to be for life and the amount can fluctuate depending on the profitability of the fund.

If you plan this with your partner, having CPF Life alone would ensure that you both get a total annual retirement income of about $38,000 or $54,000 for as long as you live. Having that kind of extra income, on top of your other savings, can certainly go a long way toward paying your annual medical premiums plus other living expenses.

Downgrade your medical plan to save on premiums

If you are affected by the annual premiums, you can choose to pay less without losing coverage for the stay in better wards. Ask your insurer to change your plan to one that only covers public hospitals.

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Prudential Singapore, the only insurer with selected private hospitals in its panel, also has a “preferred” plan that covers private hospitals in the panel.

Such a switch has two advantages: since you are still with the same insurer, the coverage for your existing conditions will not be affected.

Depending on your insurer, you can save up to 40 percent on your annual premiums by opting for treatment in public only or select private hospitals. Having a public hospital plan doesn’t mean you can’t seek treatment at a private hospital; ask your insurer about your maximum cover, so that you know what extra costs you have to pay.



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