Lifetime cost of health insurance

The following table shows the cost of Shield insurance from age 25 to 85:

Age                        Medishield      Private Shield
                                             Ward A
25 to 65                    $5,755           $12,870
65 to 85                    $12,263          $34,951
Total                       $18,018          $47,821

It will cost the insured a total of $18,018 to pay for the premium for Medishield from age 25 to 85 (assuming that the premium does not increase due to inflation). To insure for class A, the cost increases to $47,821. The difference is nearly $30,000.

In both cases, the patient has to pay the deductible and 10% of the excess (i.e. the co-insurance). The co-payments that has to be borne by patient is expected to be an additional 50% of the cost of premium.

If you wish to be treated under class A in restructured hospital, you must be prepared to set aside $72,000 in a lifetime. If you are treated in a subsidised ward B2, your lifetime cost is $27,000.

For the majority of people, it is better to be insured under Medishield, as it covers the cost of treatment in a subsidised B2 ward. You can save a lot of money in insurance premiums, which can add to your retirement savings.

Most people are likely to be hospitalised not more than 2 times before age 65. At the time of hospitalisation, the can still decide on being warded in B2 or be upgraded to a higher ward. If they are upgraded, they can pay the difference from their savings.

If you buy a Private Shield plan, about 30% of the premium is taken away to pay the marketing and administrative expenses (i.e. $15,000 under plan A). You pay this cost without any increase in benefit.

The above figures are based on the current cost and ignore the time value of money. If inflation and investment yield is taken into account, the difference will be much more than $30,000.

Tip: Enjoy the government subsidy under B2 ward. Insure for Basic Medishield and pay a lower premium. Save $30,000 over a lifetime.