The world of medical insurance can be a bit confusing for many people. I find that one area that stands out though, is understanding the difference between “as charged” and “per disability” insurance. Which is right for you / your company? Both have their pros and cons, but I feel a bit of an explanation will help clear things up a bit here.
“As Charged” Policies
I feel one of the most beneficial types of programs out there are “as charged” policies. These offer a number of benefits. For instance, you will find that this type of policy will actually pay out for the entire amount, subject to an annual limit, charged by a medical service provider. To illustrate this point, let’s look at a scenario.
If a patient was hospitalized once in 2010 and the hospital was to charge them SGD20,000 for medical treatment and surgical fees for an illness, an “as charged” policy would pay the full amount provided it remains under the annual limit of the medical insurance plan. This ensures that those covered by these policies are not stuck paying the “gap” charges that can sometimes occur in situations where benefits are sub-limited or are subject to a "surgical schedule", discussed further in this blog.
As charged policies are excellent options for many people, but I would like to be clear on one point. They are more expensive than a “per disability” insurance policy. What are “per disability” policies?
“Per Disability” Policies
I feel that “per disability” policies are certainly worthwhile investments, but they differ considerably from other options on the market. In a per disability situation, the policy is less expensive than with an as charged policy. However, it is also far more limited in scope.
With such a policy, patients are limited in terms of how much they will pay out per different types of surgeries, as well as how many surgeries a patient can have during a certain timeframe. The low surgery limit and limited surgical schedule found with these types of policies can limit their usefulness at times, but the fact does remain that they can be used to save money.
For instance, if there were a surgical sublimit of SGD7,000 from the insurance plan, and 100% is payable of this limit under the "surgical schedule" then the patient in the above scenario would be paying a minimum of SGD13,000 out of their own pocket, or would have to purchase "major medical" insurance to make up the difference. The surgical schedule is a list of ailments detailed in the insurance policy which further sub-limits the surgical limit. If the surgical schedule indicates a lower payout percentage (quite possible if it the ailment is a minor ailment), the SGD7,000 payout would be further reduced.
In the end, both offer benefits, but both have detractions as well. I suggest comparing both to your particular situation to determine which is the right choice for you. Also, on corporate plans, it is important to describe the plans and limits of the plans in detail to employees, as, in the case described for "per disability" above, the insurance provided may only be a partial indemnity.