CMFAS HI Own Notes
CMFAS exam for Health Insurance...
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
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: generic term that describes mix of patients treated in a 2
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
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
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.
Main sources: 1. Individual: proposal form 2. Group: Group Fact-Find form (for small groups of 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 24 months vii. Claims for continuation of benefits paid via previous employer’s TMIS plan, claims for transferability benefits payable from new employer’s 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 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
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 ( 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
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 insured’s 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
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.
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
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 claimant’s 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
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 employee’s 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
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 insurer’s 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
1. 2. 3.
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 (who’s moneys left to minor by a dead relative is held by Public Trustee’s 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
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 owner’s 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
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. Insurer’s 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
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
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 company’s 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 Agent’s Statement Medical Examinations/Tests Attending Physician Statements (APS) Supplementary Questionnaires Establish client’s 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 Physician’s 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
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. Representative’s Declaration 1. Identifying Needs a. Emergency fund: guard against breadwinner’s 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 Client’s 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.
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 client’s 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