Starter Guide to Financial Planning
How Will The Change In The Health Insurance Policies Affect Me?
If you have been reading the news, you might already know what changes are bound to happen. Nevertheless, we will shed some light on this topic prior to getting to the intention of this article.
In March 2017, it was announced that there would no longer be a full rider coverage. A full rider coverage is an extension on top of your health insurance alias Shield plans, that will pay for your hospital bills in full.
In other words, you will still have to pay for part of your hospital bill in the future. This change might not affect everyone; it will depend on when you bought your policy. If you do not know whether you will be affected, it is better to clarify with your respective insurance agents. It is better to be aware of your own future.
Why the change?
Overconsumption
Yes, that is the major reason. With the increase of hospital bills, it means that the insurance companies have to be the ones that have to absorb the cost of it. Insurance claims are too high till a point that the insurance companies are suffering a certain kind of losses.
The insurance company could jolly well increase the premiums on consumers but not everyone is able to afford it. Eventually, consumers will lose interest, stop paying premiums and not buy health insurance anymore. That is a scenario that does not end well for everyone.
Give you another analogy. A Makcik store sells Nasi Lemak every day. She then realizes that the Nasi Lemak is incurring losses rather than profits. Hence, she decided to stop selling Nasi Lemak.
Now replace the Makcik with an insurance company and the Nasi Lemak with a Shield plan. The insurance company is in a difficult situation; they simply cannot stop supplying health insurance. Lives will be a stake.
As a result, changes had to be made and implemented.
What is the change?
At this point, you know that you will have to pay some part of your bill. The question should be, how much of the bill will I be paying?
As of now, you have to pay at least 5% of your bill. It is capped at $3,000 a year. In other words, you need to have $3,000 in your emergency funds just for hospitalization purposes.
But, it will differ with each insurer and there has not been any finalization from all of them just yet. Therefore, heads up for any kind of updates regarding your health insurance from your insurer.
So what is the impact on me?
Lets put an example with numbers to illustrate how much you will be paying. Better yet, we will display the before and after the change has been implemented.
As displayed above, you can see that previously, by buying a rider, you are able to fully claim the hospital bill from the insurer. For new customers and some of the current policyholders, you will have to pay at least pay 5% of the bill when you are enrolled with the new rider.
From the looks of it, the days of walking out of the hospital without forking out a single dime will soon be over.
Emergency Fund for Hospital bills
Even if the bills are capped at $3,000 per year, it does not mean that it’s a sigh of relief. It just puts more importance on having an emergency fund.
If the cap is at $3,000, it is only wise you have at least $3,000 worth of emergency funds just for hospital bills.
One of the major reasons for an emergency fund is to be prepared for a rainy day. In particular, when you get retrenched or involuntarily unemployed. But since there is a change in health insurance, this has come to equal importance with the reason for an emergency fund.
There are certain things you can negotiate. But when it comes to life or death, it is something that is non-negotiable.
The Effect
Number one, you have to save more for your emergency fund. That means sacrificing some part of your income.
Number two; you will save on your premiums. Since insurers are asking you to be involved in co-paying for your bills, thus they will charge you a lower premium.
If you can see the bigger picture, you save on premiums equals being able to put more aside for your emergency fund. If you ever heard the term “Give and take”, this is one good example.
Hope that this article was useful. Do share it with your family and friends. Till next time.
Disclaimer:
I am a financial adviser but I am not your financial adviser. Therefore, what is posted on this website, are my opinions and NOT to be taken as financial advice. Information provided might be relevant at this period of time but may be irrelevant due to alterations to rules, regulations or policies. The information provided is true to the best of my knowledge, but there maybe omissions, errors or mistakes.
