Health insurance can sometimes feel overwhelming, especially with all the terms and conditions involved. One of the most important yet misunderstood aspects is health insurance excess. If you’re living in Singapore and managing your Integrated Shield Plan (IP) or private health insurance, understanding excess can help you control your medical costs effectively.

Learn more: Health Insurance In Singapore

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What Is Health Insurance Excess?

Health insurance excess refers to the amount you must pay out of pocket before your insurance starts covering the rest of your medical bills. Think of it as a cost-sharing mechanism that helps keep premiums lower while ensuring policyholders contribute to their healthcare expenses.

In Singapore, most health insurance plans, including Integrated Shield Plans (IPs), have excess in the form of deductibles and co-insurance.

• Deductible: A fixed amount you need to pay per policy year before your insurer starts covering claims. For example, if your deductible is S$3,500, you must pay this amount before your policy kicks in.
• Co-insurance: After paying the deductible, you’ll still need to pay a percentage (usually 5-10%) of the remaining bill.

Why Do Insurers Use Excess?

Insurance providers include excess for several reasons:

• To keep premiums affordable – Policies without excess would have significantly higher premiums. By having policyholders pay a small portion of their bills, insurers can manage their costs better.
• To prevent unnecessary claims – When people have to pay a part of their medical expenses, they are less likely to make unnecessary claims or choose expensive treatments they don’t need.
• To encourage responsible healthcare spending – Having excess ensures that policyholders consider costs when seeking medical treatment.

Without excess, insurers would have to charge higher premiums to cover the increased risk of people claiming even for minor health issues.

How Does Excess Work in Singapore’s Health Insurance?

In Singapore, excess applies mainly through:

Integrated Shield Plans (IPs)

Most Singaporeans and Permanent Residents have MediShield Life, a basic health insurance plan that covers large hospital bills. Many people buy Integrated Shield Plans (IPs) from private insurers to get higher coverage.

• MediShield Life has a fixed deductible of S$1,500 – S$3,000, depending on the ward type. Source: CPFB
• IPs come with higher deductibles (S$3,500 or more) for private hospital coverage.

Some insurers offer riders to cover deductibles and co-insurance, reducing out-of-pocket expenses. However, after 2018, these riders require policyholders to pay at least 5% of the bill to prevent overuse of medical services. Source: SingLife

Should You Choose a Policy With Higher or Lower Excess?

Higher Excess (Lower Premiums)

• You pay more out-of-pocket when making a claim.
• Your monthly or yearly premiums are significantly lower.
• Suitable if you are healthy and don’t expect frequent hospital visits.

Lower Excess (Higher Premiums)

• You pay less out-of-pocket when making a claim.
• Your monthly or yearly premiums are higher.
• Suitable if you want more predictable healthcare costs and frequent medical care.

For example, a private hospital IP with a higher deductible could save you over S$500 annually on premiums but would require you to cover more of the bill in case of hospitalization. Source: Singsaver