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CMFAS Health Insurance

Chapter 1: Overview of Healthcare Environment in SG


Healthcare
Philosophy

3 Levels of
Healthcare

Healthcare
Services for
the Elderly

5 Fundamental objectives:
1. Nurture a healthy nation
2. Promote personal responsibility
3. Promote good and affordable basic medical services:
3M framework, unique to Singapore, Medisave, MediShield,
ElderShield, MediFund.
4. Rely on competition and promote transparency
5. Government intervention
Primary Healthcare
Provided by network of outpatient polyclinics, General
Practitioners and dental clinics, Specialist Outpatient Clinics
Provision of basic medical treatment, preventive healthcare
and health education.
MOH started Primary Care Partnership Scheme (PCPS) for
affordable healthcare for needy elderly and disabled.
Then renamed as Community Health Assist Scheme (CHAS)
for middle low income
Students Healthcare
Student Health Services (SHS) : annual health screening,
immunization, education, promotion programmes
School Dental Service (SDS)
Institutional Healthcare
Provided by public sector hospitals, private hospitals and
nursing homes
Complementary Medicine (e.g. TCM)
Overseen by TCM Practitioners Board
Voluntary Welfare Organization (VWOs)
Voluntary set up and governed by elected volunteer board
Non-profit making
Includes geriatric day hospitals, community-based hospitals,
chronic illness hospitals, nursing homes, rehabilitation
centres
Inter-Ministerial Committee on Healthcare for the elderly (IMC)
Place policies and strategies for adequate provision of
healthcare
Two pronged approaches:
o Promotion of health and prevention of diseases
o Appropriate and cost effective healthcare to achieve
maximum functional capability (institutionalization of
elderly should be last resort)
Subsidies for step-down care
Healthcare service provided by government for elderly who
need step-down care after being discharged from hospitals
Government provides financial assistance based on means
1

Healthcare
Financing

Governmen
t
Subvention

testing to ensure that subsidy goes to those who need it.


Fundamental principle: Individual savings - Medisave
Supplementary roles: Government subsidies and
Catastrophic insurance Medishield,
Medifund, ElderShield
Multiple layers of protection:
1. Tax-based subsidies
a. Government subsidies across primary, acute,
rehabilitative and nursing
b. Universal access but no 100% subsidy to avoid over
consumption
2. Compulsory healthcare savings
a. Individual medical savings account for employees
(Medisave)
3. Risk-pooling via insurance schemes
a. State-run, low cost catastrophic health insurance
scheme MediShield
b. Private health insurance for additional coverage
Medisave approved integrated shield plans
c. Severe disability insurance ElderShield
4. Ultimate safety net for needy
a. Endowment fund set up Medifund
b. Interest income generated goes towards assisting
most needy
Means testing: method to calculate subsidies that a patient will
receive from government; focus limited resources for needy
Singaporeans
1. Means testing in Public Hospitals
a. Ward classes (B2, C classes)
b. Not applicable for services such as day surgery, A&E,
Specialist outpatient, polyclinic visits, unless it is a
follow-up after B2 or C hospitalization
c. Based on monthly income over last available 12
months (for employed) or annual value of residence
(for unemployed)
d. PR pays higher medical bills with lesser subsidy
versus Singaporeans
e. Hospital extract income info from CPF board system
within last 2 years, or via IRAS
2. Means testing for other public/community services
a. Polyclinics provide 50% subsidies for services. Drugs
are also highly subsidied
b. For VWOs which provide healthcare services such as
renal dialysis, methal rehab, nursing homes, MOH
funds 50% of operating expenditure and 90% of
capital expenditure.

Casemix

Casemix: generic term that describes mix of patients treated in a


2

hospital.

Compariso
n between
Means
Testing and
Casemix

Governmen
t
Healthcare
Bodies and
Professiona
l Boards

Used by government
1. To manage input and output of healthcare resources in
effective way
2. As a costing mechanism to determine amount of
subsidies to be given to public hospitals for acute
patient care and day surgery.
3. Government pays all public hospitals same rate for
each Diagnosis Related Group (DRG), i.e. funding is on
a per DRG basis and is proportional to resources
needed to treat the patient
Three common features:
1. Clinical meaning (patients same class, similar clinical
conditions)
2. Similar resource use (patients same class, cost same
to treat)
3. Optimal number of classes

Means Testing
Financing mechanism
Investigative process to
determine if eligible to
receive hospital expense
subsidy from govern
Objective to give more
assistance and divert
resources to lower socioeconomic segments
Use gross income or
ownership of assets to
evaluate eligibility
Appropriate
funding/subsidies will be
allocated to patients
accordingly

Casemix
Cost allocation mechanism
Describes a mix of patients
within a healthcare setting
Refers to a set of interrelated patient attribute,
including severity of illness,
risk of death, treatment
variety, stage of disease
Administration usually uses
concept of different patients
treated require different
resources which result in
differences in the rationale
of providing healthcare
Appropriate
funding/subsidies will be
allocated to hospitals and
healthcare centres

1. MOH:
plans, formulates health policies (work with Singapore
Medical Association, Singapore Medical Council,
Specialists Accreditation Board, SG Nursing Board, SG
Dental Council, SG Pharmacy Board, TCM Board, HAS)
promotes healthy living and preventive health
3

programmes
long-term planning of healthcare manpower,
infrastructure and services (with MOH)
works closely with MEWR in maintenance of environment
hygiene
2. Singapore Medical Council
Statutory board under Medical Registration Act
Administer compulsory continuing medical education

(CME) Programme

3. Specialists Accreditation Board


Established under Medical Registration Act
Only accredited doctors can enter names into Registrar of
Specialists maintained by SMC
4. Singapore Nursing Board
Empowered by Nurses and Midwives Act
5. Singapore Dental Council
Self-regulatory body under Dental Registration Act
6. Singapore Pharmacy Board
Maintains register of pharmacists
7. TCM Practitioners Board
Statutory board under MOH, under TCM Practitioners Act
Approve, reject applications for registration, accredit
courses and regulate registered persons.

Chapter 2: Medical Expense Insurance


3
Categories
of Health
Insurance
Medical
Expense
Insurance ,
aka
Hospital
and
Surgical
(H&S)
Insurance

Key
Features

1. Reimbursement for cost of medical treatment or nursing care


2. Periodic income upon disability or hospitalization
3. Fixed cash amount upon disability or suffering from a major
illness
1. Provides inpatient and some outpatient benefits
2. Provides cover for common expenses or complex surgical
procedures like heart by-pass surgery, organ transplant, kidney
dialysis, cancer chemotherapy
3. Examples: MediShield, private Integrated Shield Plans, managed
healthcare schemes
4. Basic coverage:
Inpatient Expenses:
o Daily room and board charges, ICU, short stay ward,
hospital expenses, surgeon fees, anesthetist fees,
implants and prosthesis, inpatient psychiatric
treatment*, congenital anomalies*, inpatient
pregnancy complications* *waiting period may apply
before benefit is payable.
Outpatient Expenses:
o Pre-hospitalisation diagnostic and lab tests, pre and
post-hospitalisation specialist consultation charges;
emergency accidental treatment charges
Catastrophic Outpatient Expenses:
o Outpatient kidney, cancer treatment charges
Some extend to cover: organ transplant (recipient: kidney,
lung, heart, liver or cornea; donor: kidney or liver), specific
disease, miscarriage, emergency medical evacuation, private
nursing home care, final expenses benefit
1. Stand-alone or Rider
Rider: attached to a permanent Life Insurance policy (not
common in SG)
2. Choice of Plans
3. Family Coverage
Unlike other types of Health insurance, medical expense
insurance policies allow policy owner to include immediate
family members.
4. Reimbursement of Expenses
5. Expense Participation
3 types:
i. Deductibles: Flat dollar amount paid by policy owner
Per annum deductible (most common): for a variety
of covered sickness or injuries within a policy year
Per disability/per year deductible: for same sickness
or injury within same policy year
Per disability (or per claim) deductible: more
restrictive, have to bear deductible each time he
makes a claim regardless whether claim is made
5

within same year.


ii. Co-insurance: Pay a specified percentage (e.g. 10%) of
the total covered medical expenses which is in excess of
deductible (reduce over consumption)
iii. Pro-ration factor: benefit payable takes into account the
differences in government subsidies applicable (lower
premium for lower plan)
6. Benefit Limits (max amount claimable)
3 types:
i. Lifetime limit: often set very high e.g. 1million. Once
reach, the policy terminates
ii. Annual limit: max amt of reimbursable costs payable
over a year
iii. Event limit: max amt payable wrt one disability
7. Covered Charges
8. Geographical limit
9. Waiting Period: to prevent claims shortly after joining and
cancelling their membership
10.Age limits: most issue for 15 days old to max 75 years old
11.Premiums (Insurers need to give advance notice before
effecting premium increase)
12.Renewability: insurer cannot terminate policy owing poor
claims experience so long as policy owner pays his premium to
keep policy in force. Some are cancellable at option of insurer
with notice period
13.Exclusions and Limitations:
Reasons:
i. Avoid possibility of policy owner receiving
reimbursement twice for same charges
ii. Make premium more affordable
iii. Define clearly necessary medical care and treatment
iv. Avoid policy owner selecting against insurer
Common Exclusions:
i. Pre-existing conditions present (e.g. 12 months) prior to
inception of insurance
ii. Congenital anomalies
iii. Cosmetic surgery, dental, vision care
iv. Pregnancy, childbirth
v. Mental disorder, drug alcohol addiction
vi. AIDs
vii. Flying, aerial activity
viii. Hazardous sports
ix. Illness from war, strike, riot
x. Self-inflected injuries or injuries from criminal unlawful
act
xi. Purchase of hospital-type equipment, e.g. wheelchair
xii. Treatment of obesity
Limitations (Coordination of Benefits):
i. Ensure total claims made will always be equal to total
actual medical expenses incurred.

Underwritin
g

Main sources:
1. Individual: proposal form
2. Group: Group Fact-Find form (for small groups of <10, may
require employees to complete health declaration form)

Healthcare
Subsidy
level
Termination
of Cover

Appendix 2C

Coverage terminates when


1. death of insured person
2. date enters into full-time National Service (exclude reservist,
training)
3. end of policy period which insured person attains max age
covered
4. date policy terminates
5. date of expiry of last premium payment
6. total amount of claims made reaches lifetime limit
7. date of cessation of the insured person as employee (not
applicable to individual policies)

Chapter 3: Group Medical Expense Insurance


Characteris
tics of
Group
insurance

Medical
Insurance
Requireme
nt for
Foreign
Worker
Individual
and Group
medical
expense
Insurance

1. Master Contract (kept by employer policy owner,


employees are insured persons)
2. Minimal Underwriting Requirements (complete health
declaration foam and rely on re-existing condition exclusion)
3. Experience-rating (based on past claims experiences of the
group)
4. Cost-effectiveness (Premium is unit related (unlike individual
which is age related)
5. Plan Continuation (renewable yearly)
6. Eligibility Requirement (e.g. full-time employees, age specs,
SG/PR, probation period)
7.
1. MOM requires employer purchase minimum medical
insurance coverage for foreign workers and domestic
workers during their stay in SG (inpatient care and day
surgery for S Pass, WP)
2. Minimum benefit amount S$15,000 for all new applications
of businesses, addition of new members
1. Compulsory and Voluntary Plans
a. Advantages of compulsory plan
i. Provides ease of admin since no payroll
deductions to monitor
ii. Comes at lower costs and greater pooling effect
of risks
iii. Helps employer retain greater control of benefit
structures and provisions
7

b. Advantages of Voluntary plans


i. To Employer: employees assume part of the
cost, geerates interest and appreciation from
participating employees
ii. To Employee: gives employees come control
over the plan, obtain cover at lower premium
rate than buying individually
2. Areas of differences between individual and group
a. Eligibility
b. Contract owner
c. Choice of plan
d. Underwriting
e. Termination of Cover
f. Premium
Portable
and
Transferabl
e Medical
Benefits for
employees

1. Government revised tax policy to allow employers


implementing any of the three portable medical benefit
options to enjoy higher tax deduction for medical expenses
of up to 2% of total employees remuneration:
a. Portable Medical Benefits Scheme (PMBS)
i. Employer makes additional monthly
contributions to employees respective
Medisave accounts
ii. Employer enjoy 2% tax deduction (if scheme
covers >20% of local employees, monthly
contribution at least 15 of grow monthly salary
subject to minimum $16 per calendar month,)
b. Transferable Medical Insurance Scheme (TMIS)
i. Private hospitalization insurance arrangement,
outside CPF Medisave framework
ii. Max period of cover from termination of service
with employer
iii. Continuation of coverage and transferability
iv. Qualification: Employer must have >11
employees, Take up group Medical Expense
Insurance plan, insure >50% local employees
with minimum 11 employees, pay 100% of
premium for coverage, not give employees
option to be insured.
v. Transferable if the new employer has TMIS
plans and <12 months.
vi. Employees eligible: < statutory retirement age,
SG/PR, work full time, contact >24 months
vii. Claims for continuation of benefits paid via
previous employers TMIS plan, claims for
transferability benefits payable from new
employers TMIS plan
viii. Verification of eligibility of employee: Issue
Transferable Medical Insurance Cert (TMIC)
upon termination of employment
8

ix. Additional premium to employers, which is


partially offset by additional tax deduction
c. Provision of Integrated Shield Plan (i.e. MediShield or
Medisave-approved private integrated plan).
i. Similar to PMBS, Employer enjoy 2% tax
deduction up to 2% of total employees
remuneration, (if scheme covers >20% of local
employees, pay Shield plan premiums on behalf
of employees directly to insurer or reimburse
premiums into respective employees
Medisave)
Additional tax deduction excludes Riders on Shield plans that
cover deductibles and copayments, as Government does not want
to incentivize employers to take up riders resulting in overconsumption of healthcare services.

Chapter 4: Disability Income Insurance


Disability
Income
Insurance

Also known as Income Protection Insurance or Income Replacement


Insurance
Policy continues to pay out until he returns to work, dies or policy
ends.
Different from Total and Permanent Disability (TPD) Benefit offered
in Life Insurance

Compariso
n between
DI and TPD

Disability Income Insurance


Can be purchased as standalone policy or rider
Max sum assured is up to
specified % of salary
Escalation benefit available
Partial disability benefit
available
Choice of deferred/elimination
period is available

Usually only available to


working adults with earned
income/salary
Payable on monthly basis for
up to fix number of years or
until insured reaches a certain
age.

Total
Disability

Total and Permanent Disability


Benefit
Incorporated into Life Insurance
policies
Sum not pegged to salary
No Escalation benefit
No Partial Disability Benefit
No deferred period as specified
(usually 6 mths waiting period
requirement as proof of
disability)
Usually no restriction on nonworking people, e.g. children
housewives is bundled with
death benefit under life policy
Payable in installment or one
lump sum

1. Own occupation disability:


Inability to perform the material duties of his own
occupation
E.g. pianist lost her fingers meet TD
2. Modified own occupation disability
Inability to perform any gainful occupation or similar
occupation for which he is reasonably suited by
reason of education, training or experience
If find a job similar to previous job after recovery, does
not meet TD
3. Any occupation disability
Inability to perform any occupation
E.g. pianist lost fingers, found another job as teacher
does not meet TD
4. Severe disability
Unable to perform at least 3 of 6 of the Activities of
10

Daily Living (ADLs) washing, dressing, feeding,


toileting, mobility, and transferring.
Partial
disability

Recurrent
disability
(Linked
Claims)
Benefit
Period
Deferred/
Elimination
Period

Benefits
offered

Recover from total disability to certain extent, inability to perform


all duties of his own occupation, but ability to work in another other
occupation which pays a salary 75% or less of his Pre-disability
Earnings
Suffers relapse within specified time (usually 180days) from same
cause, usually insurers will waive the deferred/elimination period
and benefit payments will re-commence immediately
Maximum period for which disability benefits are payable to the
insured in respect of one episode of disability. Shorter the benefit
term, the lower the premium
Under Disability Income Insurance policy, benefits only payable
only after the insured has been disabled for a specified period
known as deferred, elimination or pre-benefit period.
Eliminates costly claims for disabilities which are only for
short-term.
Period may be 45, 90 , 180 days
Shorter the deferred period, the higher the premium.
1. Eligibility Criteria for payment of disability income insurance
benefits
Policy in force
Working when disabled
Still disabled after deferred/elimination period
Meet definition of total or partial disability as indicated
in policy
Not reached the expiry age
Not resided outside Singapore for more than a certain
period of time (<6 mths)
Not have other sources of income (e.g. work, injury
compensation insurance, which totaled up is more
than the benefits due to him)
2. Types of Benefits offered
Total Disability Benefit
Partial Disability Benefit Rehabilitation Benefit
=

( Predisability Earnings Present Earnings)


x total
Predisability Earnings

disability benefits
Rehabilitation Expense Benefit: encourage disabled to
participate in rehabilitation programs
Escalation Benefit: useful for insurers to hedge against
inflation, useful for long-term disabilities
Waiver of Premium Benefit:
Death Benefit
A limit is put in place to prevent insured being better off

Limitation

11

of Disability
Benefit
clause

Features of
a Disability
Income
Insurance
Policy

Underwritin
g

financially by claiming.
Restrict monthly benefit payable so that total benefit shall
not exceed insureds pre-disability earnings.
Benefits payable will be reduced depend on payments from
other insurances against disability, including work injury
compensation insurance, and any continuing salary ,
commission or other incomes derived from insureds
occupation or business in which he was engaged
immediately prior to his disability

Can be issued stand alone


Regular monthly income
Premiums waived during benefit period
Benefits may be level or increase at given rate
Choice of deferred/elimination period
Choice of benefit period
Choice of escalation benfit
Payment of partial disability benefits if person returns to
work earning lower income
Provision of rehabilitation expense benefit
Provision of death benefit
Possible discontinuation of disability benefit if insured stays
outside Singapore for a specified period
Termination of cover if insured is not engaged in any fulltime occupation for a continuous period when he is not
suffering from disability
Usually guaranteed renewable and non-cancellable
No surrender value
No assignment is allowed
Policy cannot be written as third party policy
Benefits received non-taxable policy lapses if premium not
paid within 30 days grace period.
1. Underwriting Requirements
a. Individual (Salaried Employee) proposal form,
computerized payslip, certified letter from company,
notice of assessment, CPF, questionnaire if annual
benefit is more than certain amount, medical tests
based on age and amount of disability benefit
proposed.
b. Self-employed Person proposal form, notice of
assessment, audited companys account for last 3
years, questionnaire, medical tests
2. Underwriting considerations
a. Occupation
Some occupations have higher risk of disability
from accidents or sickness
Easier to return to work with some degree of
incapacity in some occupations
12

Rating structure: Class I (indoor, deskbound)


Class II (office based with significant travelling)
Class III (light skilled manual work, e.g.
deliverymen), Class IV (semi-skilled or unskilled
manual work, e.g. bus drivers), Decline (very
heavy manual work, e.g. oil riggers, prof divers)
Housewives are not insurable as they have no
regular income to assess benefits
b. Benefit Amount
c. Benefit Period
d. Deferred/elimination period
Cessation
of benefits
Exclusions

Termination
of cover

Group
disability
income
insurance

Disability
Income

1. Benefits ceased:
a. when insured is fit to return to work
b. when death occurs
c. when benefit period has expired
Most Disability Income Insurance usually do not pay disability
benefit or waive premiums if disability is directly or indirectly due
to the following:
self-inflicted injury
indulgence in alcohol or drug
invasion, riot, strike, war
illness sustained when in service of armed forces
Pregnancy complications
Participation of aerial activity or hazardous sports
Sexually transmitted diseases
Pre-existing conditions.
Policy will terminates upon the following events:
Policy reached expiry date
Premiums due not paid within grace period
Insured dies
Insured reaches expiry age as stated in the policy schedule
Insured resides outside Singapore for more than a specified
days within one policy year, without seeking insurers prior
written approval for continuation of cover
Insured not employed in full time occupation for continuous
period of time
1. Coverage Provided
2. Group Long-term care insurance (not popular)
3. General Underwriting considerations:
a. Nature of companys business
b. Age of individual employee
c. Exact nature of work of each employee
d. Salary of each employee
e. Benefit period applied
f. Benefit amount applied
g. Claims experience of the group under previous Group
Disability Income Insurance policy
1. Claims Procedure for Disability Income Policy
a. Insured notify insurer within specified time (e.g. 60
13

claims

days)
b. Claim form, claimants statement, clinical abstract
form, doctors statement, NRIC, evidences of earnings,
letter from company, copies of MC, Lab Test results,
policy report, and incident report.
2. Foreign Residency During Claims Period
a. Insurer notified of change of residence within 30 days
of change
b. Insurer approved new country of residence
c. Insurer determined evidence to be submitted is of
similar standard
d. Insurer determined that the expertise and facilities for
care, treatment and rehabilitation of the insured is of
similar standard
e. Insurer reserves the right to require independent
examination

Chapter 5: Long Term Care Insurance


Long-Term
Care (LTC)
Insurance

Benefits
offered
under LTC

Other
benefits
covered
under LTC

Features of
LTC

Designed to meet costs of care to a persons who is


physically impaired to an extent no longer able to function
independently, need others to help him perform basic ALDs
(Activities of Daily Living, such as feeding, bathing, dressing,
using the toilet, moving around)
Payable on daily monthly basis
Daily benefits: cover costs of nursing home care services
o service-based: expense incurred
o disability based
Monthly benefit: 50% if unable to perform 2 out of 6 ADLs.
100% if > 4 out of 6 ADLs
Eligibility Criteria for payment
o Meets definition of inability to perform ADLs or have
advanced dementia
o Meets Deferred Period Requirement
o Does not cover pre-existing conditions
Death benefits
Hospital Room and Board Benefit
Surgical Procedure Benefit
Financial Assistance with Adaptation Benefit
Extended Care Benefit
Rehabilitation Benefit
May be offered on a stand-alone, or attached to Whole Life
insurance
Minimum entry age with maximum in range of 70-75 yrs
next birthday
Usually issued on guaranteed renewable basis
No cash or paid-up value
Non-participating, does not share in divisible surplus of
insurer
14

Exclusions

Underwritin
g
considerati
ons
Claimant

Premium ar level based on entry age level


Expires or terminates if premiums remain unpaid after grace
period
If insured recovers from disability, payments stop.
Pre-existing conditions
Self-inflicted
Mental disorders
Alcoholism and drug abuse
AIDs
War, participation in riot
Proposal form
Medical info

Claimant required to inform insurer as soon as practicable


Produce satisfactory proof of insureds inability to perform
ADLs

Chapter 6: Other Types of Health Insurance


Critical
Illness
Insurance

1. Designed to provide a lump sum benefit when diagnosed to


be suffering from critical illness or is undergoing a surgical
procedure covered under the policy
2. Can be sold as stand-alone or optional rider to Whole Life,
Endowment, Term insurance, or Investment-linked policy to
provide additional sum assured
3. May cover a maximum of 30 out of 37 critical illness
4. Common eligibility criteria:
a. Policy must be in force
b. Life insured has not reach expiry age of cover
c. Critical illness must be one that is covered
d. Meets definition of critical illness
e. Diagnosis meets the conditions set down by the
insurer
f. Meets the waiting period requirement (up to 90 days
from date of issue or date of any reinstatement)
g. Meets the survival period requirement (usually
3odays)
5. Features:
a. Pays a lump sum upon diagnosis
b. Generally only one critical illness claim is allowed
c. Specific waiting period (30-90days)
d. Some insurers may impose limit on total amount
($1,000,000), to minimize risk of moral hazard.
e. Premium is usually level and non-guaranteed
f. Premium not fixed and based on age band (renewable
yearly)
g. No restriction on how benefit payable is to be used
h. Can be packed to Life, Endowment, or Investmentlinked policy
15

Underwritin
g

i. Can be issued stand-alone


j. Critical illness rider does not acquire any cash value
k. Provides 24 hrs a day, worldwide coverage unless
otherwise stated
l. Assignment may or may not be allowed
m. Max (e.g. 55 years) and min (1 year) restriction
n. Min (e.g. $10,000) and max (e.g. $1million) sum
assured restriction
o. Cover may expire max age of 65 years or whole life
cover
6. Types of Critical Illness Covers:
a. Acceleration Benefit
Must be packaged with basic policy (e.g. whole
life, endowment, investment-linked)
Total amount paid is equal to basic sum assured
Rider sum assured must not exceed basic policy
Prepayment of a portion (e.g. 50%) and Balance
paid when he dies or suffers from TPD (one
lump sum or yearly instalments)
If dies or suffers TPD without contracting critical
illness, full sum will be paid to him
Can only make the claim only once (not for
another critical illness)
Advise to attach a Critical illness waiver of
premium should they opt for less than 100%
acceleration, to prevent the need for servicing
the premium for remaining sum assured during
policy term.
b. Additional Benefit
Need not be packaged, can be stand-alone or rider
As stand-alone: pays upon diagnosis and policy terminates;
Total amount paid is equal to basic sum assured
As rider: pays an amount in addition to sum assured of the
basic policy, but if no critical illness before death/TPD, only
pays the amount of death/TPD; Total amount paid is equal to
sum of the rider; Rider sum assured can be up to a certain
number of times of basic sum, subject to guideline.
Term of rider can be shorter but no longer than the basic
policy.
Advise to attach a Critical illness waiver of premium rider
c. Severity-based critical illness plan
Benefit is claimable at various stages of the illness with %
payout up to the total sum assured
d. Multiple pay critical illness plan
Allow more than one critical illness claim
1. Underwriting Requirements
a. Proposal form, medical tests, similar to life policies,
except that the non-medical limit is lower
2. Underwriting considerations:
16

a. Only standard and sub-standard risks with up to


medium rating can be considered for critical illness
insurance
Nomination
of
Beneficiarie
s

1. Two options of nominations:


b. Trust Nomination: insured loses all rights to the
ownership of the policy. To revoke trust nomination,
the insured needs the written consent of all the
nominees.
c. Revocable nomination: Insured is free of change, add
or remove nominees without their consent.

Exclusions

1. Common exclusions:
a. Pre-existing
b. Self-inflicted
c. Willful misuse of drugs alcohol
d. Congenital anomalies or inherited disorders
e. AIDs
f. Aerial injury
g. War, civil, nuclear risks

Termination
of Cover

1. Valid critical illness claim has been made


2. Basic life policy to which packaged/attached matures or
expires
3. Policy lapses owing to non-payment of premiums
4. Policy surrendered for cash value or converted into an
Extended Term Insurance policy
5. Life insured dies
6. Life insured reaches expiry age of critical illness rider

Claims

1. Supporting documents
a. Claimant statement
b. Attending physicians report
c. Proof of critical illness
2. Insurer will require
a. Written notice of claim submitted within 60 days of
diagnosis
b. Submission of claimants form within 15 days from
date that the insurer sent it out
c. All proof submitted within 60 days from date of
diagnosis

Hospital
cash
(income)
insurance

1. Designed to pay daily cash benefit directly to insured if


hospitalized as a result of injury or illness; fixed amount (e.g.
$100) for specified no of days (e.g. 180 days)
2. Conditions before a claim can be admitted:
a. Waiting Period (injury: no waiting period; illness:
specified period after policy has effected e.g. 30days)
b. Hospital Confinement (minimum duration: 6-24hrs)
c. Per lifetime limits (total no of days claimed no
17

3.

4.

5.

6.

exceeded per lifetime limit)


d. Expiry Age (insured not reach expiry age)
e. Cause (injury or illness not fall under one of the
exclusions)
Features of Hospital Cash insurance:
a. Can be stand-alone or as rider
b. Per day hospitalization benefit
c. Cap to max amount payable on a single life expressed
as max days
d. Benefit is fixed amount throughout
e. Benefit payment is not affected by payments from
other Health insurance policies, plans or schemes, i.e.
paid on top of benefits received
f. Expired at age of 65-70
g. Premium may be level or increased once reaches a
new age-band
h. Guaranteed renewable yearly basis
i. Worldwide coverage
j. No cash value
k. No assignment allow
l. No claim discount - % of premium discount at
renewal
Types of Hospital Cash Insurance:
a. Stand-alone
i. benefits more attractive: daily hospital income,
double payment if stays in ICU, triple pay if due
to accident or overseas, get-well benefit,
rehabilitation income, free accidental death
benefit
ii. Premium increases when crosses next age-band
b. Riders
i. Attached to life policy (whole life, endowment,
critical illness), cannot be longer than the basic
policy
Underwriting:
a. Usually not written, due to small premium
b. Pre-existing medical conditions are permanently
excluded under policy
Exclusions:
a. Pre-existing medical condition (known, received
treatment/advice)
b. Pre-existing physical defect (declared)
c. Self-infliected
d. AIDs/HIV
e. Mental disorder
f. Illegal unlawful act
g. Pregnancy
h. Routine medical examination not related to health
impairment
i. Cosmetic/plastic surgery
j. War, nuclear, riot
k. Hazardous sports
18

7. Termination of cover:
a. Premium not paid at end of grace period
b. Insured reaches expiry age
c. Per life-time limit eached
d. Basic policy lapses or matures
e. Insured dies
8. Claims:
a. Claim form
b. Hospital discharge summary bills
Medical
Expense
Benefit
under
Travel
Insurance

1. Travel insurance comes in a package that covers medical


benefits:
a. Medical expenses
b. Hospital confinement allowance
c. Emergency medical evacuation
d. Repatriation
2. Medical Expenses:
a. Reimburse most of the overseas medical and
treatment expenses
b. Follow up medical expenses in Singapore within
specified period (e.g. 31 days) after return
c. Expenses incurred for treatment by TCM physician,
physiotherapist, up to a limit (e.g. $750)
d. Subject to overall limit of indemnity (e.g. $2million)
e. Age limit to child and elderly
f. Reimbursement for reasonable additional
accommodation by insured (and travel companion) up
to a limit (e.g. $25,000)
g. Reimbursement of hospital visit by one relative to visit
and stay with him until medically fit to return home,
up to a limit (e.g. $10,000)
3. Hospital confinement allowance:
a. Daily cash payment (fix amount, fix period, upper
limit)
4. Emergency Medical Evacuation:
a. Contracts specialist company to provide emergency
medical evacuation (24 hr helpline)
b. Max benefit limit for lower coverage plan
5. Repatriation:
a. Expenses incurred in repatriation of body
b. Max benefit limit for lower coverage plan
6. Exclusions:
a. Same as above for Hospital cash insurance

Group
Dental care
Insurance

1. Dental Care Insurance is usually only offered on group basis


without any underwriting, as a rider attached to Group
Hospital and Surgical Insurance policy
2. Flexibility:
a. Can visit any dentists
b. Pre-existing dental conditions covered as well
3. Exclusions:
a. Dental procedures not specified in Schedule of
19

Allowances
b. Hospital charges
c. Caused by war, revolution
d. Medicine given
e. Purely cosmetic treatment
f. Self-inflicted
g. Replacement of broken, lost, stolen dentures
4. Limitation Clause
a. Work Injury Compensation Insurance policy
b. Government / public programme of dental benefits
c. Group/individual insurance policy
5. Termination of cover:
a. Date of termination of employees active full-time
employment
b. Date of termination of policy
c. Date of expiration of last premium paid
d. Date employee enters full time military service
e. Date employee reaches specified age (e.g. 65 yrs)
6. Claims:
a. Claim form
b. Original receipts and itemised bills
Chapter 7: Managed Healthcare
Managed
Healthcar
e

1. Refers to an overall strategy for containing medical care costs,


while assuring that people receive appropriate medical care
2. Managed Healthcare Organization (MHCO) limits number of
physicians in a provider network, MHCO then negotiate
physicians fees thereby reducing cost for providing medical
services to its members
3. Three Components are managed:
a. Accessibility
i. Network of healthcare providers
ii. Primary Care Physician (PCP)
b. Costs (4 payment methods used by MHCO)
i. Capitation (most common):
MHCO pre-pays providers a flat amount for
medical care monthly, regardless how
often member receives medical attention
ii. Discounted Fee For Service:
MHCO pays physicians a certain
percentage of normal fees, thereby
achieve discount on physician fees
iii. Salary
Used in Staff Model HMO (health
maintenance organisation), HMO
compensates physicians with
predetermined salary, performance based
bonuses and incentive payments
iv. Fee Schedule
MHCO place caps or limits on dollar
amounts reimbursed for covered medical
20

Common
Types of
MHC
Plans

procedures and services


Result in smaller reimbursement fees for
physicians who charge higher than
average fees
c. Quality of care
i. Ensure quality of care not compromised with
cost-containment effort, MHCO only contracts
with those that possess requisite skills, training
and licenses
1. Three common types of MHC plans
a. Health Maintenance Organisation (HMO)
i. Most restrictive as member has least choice in
selecting his healthcare provider
ii. Four basic types of HMO:
Staff Model HMO
a. PCP refer patients to contracted
specialist
Group Model HMO
a. HMO negotiates services with group
practice
b. Group practice responsible for
obtaining physicians, compensating
physicians, providing facilities,
arranging to provide hospital
services
c. Same cost management potential as
Staff Model
Network Model HMO
a. Contracts medical care services
instead of employing physicians
b. Does not have tight control over
utilisation management as Staff and
Group Model.
Independent Practitioners Association (IPA)
Model
a. Like Network model, IPA model may
belong to one or more PPO
networks, or may contract with more
one HMO
b. IPA physicians actively continue to
develop their private practices
c. Does not have tight control over
utilisation management as Staff and
Group Model.
b. Preferred Provider Organisation (PPO)
i. Similar to HMOs provider network
ii. Unlike HMOs, members do not have a PCP
gatekeeper and not restricted to use only
provider network for their care.
iii. To encourage, PPO offers benefits to members
21

c. Point
i.
ii.
iii.

Choice of
Providers
versus
Cost
Control

Managed
Healthcar
e
Insurance

such as lower or no deductible, lower or no copayment


of Service (POS)
Combination of HMO and PPO
Similar to HMOs provider network
Allows member to use provider not in the
network, but just pay higher co-payments or
deductibles

1. In order of decreasing cost control but increases degree of


choice of providers
a. Staff model
b. Group model
c. Network model
d. IPC
e. POS PPO
f. Traditional Medical Expense Insurance
1. Benefits offered:
a. Primary Care
b. Specialist Care
c. Hospital Care
d. Emergency Care
e. Preventive Care
2. Elements of co-insurance and deductible
3. Exclusives (standard list) General exclusions imposed on
Medical Expense Insurance policies are also applicable to MHC
insurance plans

Chapter 8: Healthcare financing


CPF
Schemes

1. Medisave
a. National savings scheme, earning annual interest rate
of 4%
b. Medisave Minimum Sum (MMS): sets aside enough to
meet future healthcare expenses (~$40,500)
c. Medisave Contribution Ceiling (MCC): in excess of max
balance (~$45,500) will be transferred to Special
Account; can be used to pay MediShield premiums
d. Limits and conditions on
i. Inpatient Expenses,
ii. Day Surgery and surgical operations,
iii. Psychiatric treatment,
iv. Stay in community, hospice, day hospital,
v. Approved outpatient treatments,
vi. Chronic Disease management programme
(include outpatient)
vii. Maternity Charges
viii. Buying Medical Insurance (e.g. MediShield,
Integrated Shield Plan, ElderShield, ElderShield
Supplements)
e. Proceduce to use Medisave to pay hospitalisation bills
22

Integrated
Shield
plans

i. Sign Medisave Authorisation Form to authorise


CPF Board
ii. With medical insurance, produce letter of
guarantee or hospitalisation identity card to
admission staff
iii. Medisave Payment: receive two statements (CPF,
and hospital after discharge)
f. Restrictions on use of Medisave:
i. Ceiling not sufficient to cover medical expenses
from major illnesses such as cancer
ii. Max withdrawal limits imposed not sufficient to
cover full hospital bill
iii. Covers limited outpatient treatments
iv. Pays only if person is hospitalised for more than
8 hrs
v. Covers only a maximum of 3 surgical operations
2. MediShield
a. Low cost (Critical Illness) Medical Expense Insurance
scheme
i. Reimbursement basis, subject to limits,
deductible, co-insurance, pro-ration factors
b. Government put in place measures to maximize
population coverage
i. Facilitate automatic coverage wherever possible
ii. Auto-cover arrangement encourages
participation, lowers admin and enforcement
costs of running compulsory scheme
iii. Regular public messaging to raise awareness of
benefits
c. MediShield Reform (MediShield Plus, IncomeShield M
Plans and IncomeShield Plans)
i. Maximum coverage age increased to 90 years
old
ii. Coverage extended to include inpatient
congenital and neonatal treatment for newly
diagnosed
iii. Coverage extended to include inpatient
psychiatric treatment, short stay ward in
emergency department
iv. Policy year limit and lifetime limit increased
1. Private Medical Insurance Schemes with Premiums paid from
Medisave
a. CPF board approved some private insurance schemes
to provide additional benefits and coverage for people
wish to opt of Class A and B1; to cover beyond age 90
years (of CPF Medishield Scheme), no cap on lifetime
limit, as-charged basis, applicable for private or public
hospital stay.
b. Rationale:
i. Return to the original purpose of catastrophic
23

ElderShiel
d

insurance where large bills were covered


adequately
Done by increasing in claim limits and
deductibles
ii. Remove cherry picking and keep premiums
affordable while retaining competitive market
Done by enlarging pool of policyholders to
max economies of scale
And restructuring private medical
insurance scheme (PMIS) as Integrated
Shield plans (IPs) for extensive industry
consultation between insurers and
regulator, maintain min
deductibles/coinsurance for IPs so as being
focused on catastrophic expenses
1. Severe disability insurance scheme paid from CPF Medisave
2. Provide long-term care protection to elderly to defray out-ofpocket expenses
3. Currently run by 3 insurers, Aviva, Great Eastern Life
Assurance, NTUC
4. Automatically covered once 40years old unless opt out
5. Eligibility criteria:
a. Meets waiting period (e.g. 90days) from policy
commencement date (not applicable if due to accident)
b. Unable to perform at least 3 ADLs
c. Meets deferment period (e.g. 90 days) starting from
claim date
6. How to claim?
a. Claim form
b. Appointment with insurers assessor
7. How Eldershield benefits paid?
a. Paid monthly, premium waived
b. Does not claim more than 60 months in total
8. Other key features:
a. Guaranteed renewability on annual basis
b. Provides 24 hr worldwide coverage
c. Minimum (40) to maximum (69) years old
d. 75 days grace period allowed for payment of overdue
premiums
e. Reinstatement allowed within 180 days from expiry of
grace period
f. No surrender value
g. 60 days free-look period (for cancellation)
9. Exclusions:
a. Intentionally self-inflected
b. War, alcohol, drug
c. Pre-existing disabilities
10.Termination:
a. Expiry of grace period
b. Death of insured
c. Date at which last benefit payment has been received
24

Interim
Disability
Assistanc
e
Programm
e for the
Elderly
(IDAPE)
Medifund

Eldercare
Fund

Mediguar
d

1.
2.
3.

4.

d. Date which written notice from insured to cancel policy


is received by insurer
Social scheme to help group of people not eligible to join
ElderShield scheme due to age or health reasons.
Administered by NTUC Income
Those making claims are subject to means testing
administered by Citizens consultative committees and
recipient of payment need to pay nominal fee of $10 (or $40 if
done at home) for each assessment in the event of a claim
Pay-out limited to only 72 months (same as ElderShield)

1. Endowment fund
2. Government uses interest earned from fund to help poor pay
medical bills
3. Applied through Medical Social Workers (MSWs) at Medifund
approved institutions or any Community Development
Councils (CDCs)
4. Cases will be submitted to respective Hospital Medifund
Committee (HMC)
5. Extended to help HIV treatment
1. Endowment fund
2. Using budget surplus to sustain financing for eldercare
3. Run by Voluntary Welfae Organisations (VWOs)
4. Help secure future affordability of nursing home care for
households of low income
1. Joint scheme between Public Trustees Office and AIA
2. To enable any minor (whos moneys left to minor by a dead
relative is held by Public Trustees Office) to pay for cost of
medical

Chapter 9: Common Policy Provisions


Seven (7)
Sections of
a HI policy
contract

1. Policy
Schedule
2. Insuring
Clause and
Definition

1.
2.
3.
4.
5.
6.
7.

Policy Schedule
Insuring Clause and Definitions
General Conditions
Benefit Provisions
Exclusions
Claim Conditions
Endorsements
Details of policy owner, insured person, insurance coverage

Insuring clause:
o operative clause
o Serves to describe the general scope of coverage,
provide any defintions required, set forth the
conditions under which benefits are payable
Definitions:
o Dependant
o Insured/Insured Person
o Accident
o Hospital

25

Any One Disability


Covered Charges
Day of Hospital Confinement
Registered Medical Practitioner/Physician
Medically Necessary Service, Supply of Day of Hospital
Confinement
o Period of Hospital Confinement
o Pre-existing Condition
o Usual, Customary and Reasonable
o Waiting Period
o Illness
o Pre-hospitalisation Benefits
o Per Policy Year limit
o Lifetime Limit
o Deductible and Co-insurance
o Pro-ration Factor
Entire Contract Clause, aka The Policy Contract Clause
Effective Date of Cover
Premium Warranty Clause
Free-look Period
Actively at Work
Termination of Cover
CoverAbroad
Renewal (5 types: cancellable, optionally renewable,
conditionally renewable, guaranteed renewable, nonrenewable)
Mis-statement of age or gender
Grace period
Reinstatement
Incontestability
Change of Occupation
Coordination of Benefits
Cancellation
Change of Plan
Currency
Last Payer Status (in MediShield, Private Integrated Shield
plans)
Policy owners Protection Scheme (Supervised by MAS,
administered by Singapore Deposit Insurance Corporation,
SDIC)
Must be clear and concise, enough to cover virtually any
claim situation that can conceivably arise
Circumstances which insurer will not pay
Sickness contracted within waiting period, pre-existing
conditions and some catogories of surgical procedures,
treatments (e.g. aesthetic, routine examinations, prosthesis,
test of infertility, AIDS, suicide), confinement (e.g. hospice
care), transportation, are not covered,
Notification of Claim condition
o
o
o
o
o

3. General
Conditions

4. Benefit
Provisions
5.
Exclusions

6. Claim

26

conditions

7.
Endorseme
nts

Submission of Claim
Physical Examination Provision
Mediation/Arbitration and Legal Actions provisions
Separate document that modifies policy, e.g. policy wording,
benefits, exclusions

Chapter 10: Health Insurance Pricing


7 Key
Factors
used in
Premium
Computatio
n
Parameters
for
premium
rating

1. Morbidity experience (Actual number of sickness, injury,


health cases occurring in a given group of people)
2. Investment income
3. Operating expenses
4. Medical inflation
5. Scope of benefits covered
6. Insurers profit
7. Modes of premium payment
1. Age
2. Gender
3. Physical Condition
4. Occupation
5. Persistency (No of policies renewed each year)
6. Claims Experience
7. Group participation level

Chapter 11 : Health Insurance Underwriting


Underwritin
g

Underwritin
g Factors
that affect
risk

Types of
Underwritin
g Methods

Group

1. Process by which an insurer determines whether or not to


accept an application and on what terms that it will offer
coverage to proposed insured.
2. Ensure that premiums charged correspond closely with the
risk that each proposer represents
1. Medical Factors
a. Medical history
b. Current physical condition
2. Non-medical Factors
a. Financial
b. Occupation
c. Age
d. Avocations/life-style risks
e. Habits
1. Full Medical
a. Advantage: Proposed insured has better certainty
what is covered at the point of joining than when he
needs to make a claim
2. Moratorium
a. Advantage: Only need to provide basic info, but any
pre-existing conditions will be excluded. If satisfy
moratorium criteria (2-5years) for pre-existing
condition, treatment will be automatically covered.
1. Factors to determine eligibility
a. Reason for existence
27

Underwritin
g

Sources of
Underwritin
g
Information
How an
Insurance
Rep help in
Underwritin
g Process?
Final
Underwritin
g Decision

1.
2.
3.
4.
5.
1.
2.
3.
4.
1.
2.

b. Group stability
c. Group size
d. Insured companys nature of business
e. Employee classes
f. Level of participation
g. Age and gender within the group
h. Expected persistency
i. Past claims experience
j. Medical inflation
k. Medical utilization rate and trend
Primary source: Proposal form
Agents Statement
Medical Examinations/Tests
Attending Physician Statements (APS)
Supplementary Questionnaires
Establish clients motivation and needs to purchase policy
Go through questions in the proposal form (truthfully and
best knowledge)
Gather as much info as possible
Decide on behalf of underwriter if whether there is a need of
Attending Physicians Statement
Standard Risks policy issued based on premium stated in
rate book
Sub-standard risks policy cover has to be modified,
postpone or decline
a. Modification:
i. Specific exclusions
ii. Extra premiums
iii. Modification of Benefits Offered

Chapter 12 : Notice MAS 120 Disclosure and advisory process requirements for
accident and health insurance products
Mandatory
Requireme
nts

NonMandatory
Requireme
nts

1. Disclosure requirements for Accident and Health policies


2. Disclosure requirements for Life policies that contain
Accident and Health benefits
3. Additional Disclosure Requirements for Direct Insurers
4. Requirements on Provision of Advice Relating to Accident
and Health policies
5. Requirements on Provision of Advice Relating to Life policies
that contain Accident and Health benefits
6. Offences relating to this Part (Fine $25,000 for 1,2; $12,500
for 4,5)
1. Best practices in information disclosure

Chapter 14 : Needs Analysis


Needs selling
vs Product

1. Needs selling is more desirable than Product selling


because:
28

selling

Fact Finding

Identifying
and
quantifying
needs

Service Orientation
Not Pressuring to Buy
Long-Term Relationships
1. Basic Sections of Fact-Find Form:
a. Important Notice to Prospective Client
i. Enables prospective client to know which
insurance intermediary that you are
representing
ii. Highlights to prospective client the
importance of completing the Fact-Find form
b. Application Type
c. Personal Information
d. Employment Details
e. Details of Spouse and Dependants
f. Existing health insurance policies
g. Personal priorities
h. Health condition
i. Replacement of policy
j. Representatives Declaration
1. Identifying Needs
a. Emergency fund: guard against breadwinners loss
of job/income
b. Employment Status and Occupation
c. Life stage: married, with children, pre-retirement,
retirement
d. Dependants
e. Existing insurance policies
i. Medical expense insurance
ii. Critical illness insurance
iii. Personal accident insurance
iv. Long Term Care Insurance
v. Managed healthcare insurance
vi. Hospital Cash insurance
vii. Life Insurance Policy and Work Injury
Compensation Insurance
f. Financial Position
g. Prospective Clients Priorities
h. Need for Health Insurance
2. Quantifying Needs
a. Disability Income Protection Needs (Maintenance
costs)
i. Three methods to quantify
1. % of Monthly income existing benefit
2. Total monthly expenses existing
benefit
3. Lump sum benefit
b. Medical Costs
i. Most common conditions for a person to be
hospitalised
ii. Cost of treatment for any one particular
illness
c. Hospital Cash Insurance
29

i. Total monthly expenses existing benefit


d. Critical Illness Insurance
Product
Recommenda
tion
Presenting
the
recommendat
ion

1. Product Suitability
2. Affordability
1.
2.
3.
4.
5.
6.
7.

Client review

1.
2.
3.
4.

State purpose of product (need that is met by product)


Give description of nature of product
Brief client on benefits and limitation of product
Give detailed explanation on the options within the
product
Give a summary of reasons why product is recommended
Explain the benefit illustration and highlight the
guaranteed and non-guaranteed benefits
Disclose any distribution costs, charges, and expenses
under policy
Change in clients personal circumstances
External developments (e.g. CPF ruling)
Original products purchased not adequate to cover needs
New product launches that can better service the needs

30