Every month, a significant portion of your income goes into your MediSave account. This money is not to be touched except to pay for healthcare needs.
Does this mean you have enough financial security to tide you through any health issues you might face?
Unfortunately, it does not. Not even close.
Why you cannot rely on MediSave and MediShield Life for your healthcare needs
MediSave and MediShield Life are designed to offer very basic healthcare coverage. Unfortunately, this coverage is so bare-bones that you might be left with hefty out-of-pocket costs if you do not have any other form of insurance.
There are strict limits as to what you can use your MediSave funds to pay for. This means that those relying completely on MediSave cannot consider using private healthcare providers, or staying in anything more than a B2 ward in a public hospital.
MediShield Life, our national health insurance, is likewise extremely basic and subject to strict caps on claim amounts. MediShield Life also does not cover a long list of exclusions including ambulance rides, overseas medical treatment and purchase of kidney dialysis machines.
In addition, neither MediSave nor MediShield Life offers any protection against lost income if you are not able to work while seeking treatment.
How much income do you need during recovery?
Considering the fact that you could be out of the workforce for years after being diagnosed with a serious illness, it is advisable to ensure you have some form of financial protection, such as that offered by critical illness insurance.
To know how much income you need while recovering, you’ll want to add up all your monthly expenses, as well as those of your dependents. If you have a family, it is easy to see how the economic burden can really add up.
Let’s say you spend $1,000 a month on your personal expenses and an additional $4,000 to support your family and repay your home loan. You, therefore, need an income of at least $5,000 a month.
Multiply this by a period of 5 years, which is a reasonable estimate of the amount of time a critical illness patient might be out of the workforce, and you’ll have an estimate of how much you might potentially need during recovery. In this case, you would need $300,000 to keep you and your family afloat.
Note that this sum does not include any out-of-pocket expenses you might have to incur for your medical treatment.
None of the above costs are covered by MediSave or MediShield Life. So, it is wise to find other ways to cover them, such as through insurance.
Rising Cost of Healthcare
In the last few decades, the rising cost of healthcare has been a key concern of people in Singapore.
Singapore has a high rate of medical inflation, so healthcare costs are likely to continue rising significantly over the years.
This means that, unless the MediSave and MediShield Life limits are revised regularly, the proportion of your medical bill that they can cover will shrink over the years.
It is thus important that you be adequately insured in order to ensure financial stability should you face a health crisis. With enough insurance protection, you will be able to concentrate on your recovery safe in the knowledge that your medical bills and household expenses are being taken care of.
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