Cos we always hear... you can die in Singapore but cannot afford to fall sick...
And the question is... is this true?
Let's not look at the small illnesses that require hospitalization. Those run into the thousands and I think... most of the people in the frugal community, or the people who want to retire early, a couple of thousands is still somewhat "affordable".
Meaning, our portfolio can handle a few thousand dollars' expense to save our life.
So let's look at what happens when an expense of $200,000 hits.
I think most of us are insured by ISP (Integrated Shield Plan)... so we are looking at $1,000-$3,000 deductible and 10% co-payment...
This means that the out of pocket amount would be $20,900 to $22,700.
This is a reasonably high amount, but again, I think for most of the people looking into financial independence, a sum of $20k+ is a small sum to pay out of the portfolio to save our life.
Based on this... I take it that for now... FOR NOW... our healthcare costs are still fairly affordable.
Even for a dual income family who earns $6,000 a month, IF they are adequately insured, with some financial aid, they should be able to recover from such a situation within a year or two.
Now, I'm not saying healthcare costs are cheap. They are a real concern to many people.
What I'm saying is that with adequate insurance, and proper financial planning, unexpected medical expenses won't lead to financial ruin.
There's a lot of people who don't have insurance and don't have savings.
Now THAT, is a big problem.
I know that I am frugal and naturally like to save money. When I look at some other folks and how they spend, and how they don't save, YOLO... and yet these are also the people who say that they can't afford to fall ill... it makes me wonder, if they realize that it is the very same spending habits that's causing them to feel financially insecure.
I do think that there is a lot of fear mongering amongst the insurance industry, they paint a dire picture that healthcare costs are increasing and that we need to get a lot of insurance coverage.
I agree with them, healthcare costs ARE increasing, and it is important to get sufficient medical coverage.
Both for hospitalization and for critical illness or early critical illness.
IF I end up with a heavy medical bill, it will likely be a critical illness. So maybe I'll end up with $20k-$50k hospital bill after the hospitalization plan. With a critical illness or early critical illness plan, I can get some insurance payout to cover the hospitalization bill.
On top of that, I have my medisave and my own portfolio to cover the expense.
So it's really not as bad as many people think it is.
Looking into the future... definitely medical costs will increase, for this, I tend not to look too far into the future. I think about maybe 5 years ahead. Cos 10-30 years ahead is hard to predict anything, cos policies may change, medical breakthroughs may occur, etc...
So I ask myself, for the next 5 years, am I able to handle a big medical expense?
If yes, then I'm ok with that.
If no, then I'll think about what more I need to do to feel more secure.
Do I need more insurance? Do I need more savings? Do I need more returns?
For me, I believe that a good hospitalization plan and a CI/ECI plan would cover me sufficiently.
But that's for me, different people require different things to feel secure.
Besides that, something that I'm thinking of doing is to invest in medical care. In this way, theoretically, when medical costs increase, then my investments will increase as well and the returns should be somewhat close to the increase in healthcare costs... SHOULD...
So to wrap up, for me, I believe in a good healthcare plan, sufficient CI/ECI coverage so that the payout can pay off the remaining expense after the hospitalization plan has kicked in, and possibly investing in healthcare assets so that the returns may track increases in healthcare costs.
Besides that, I think that healthcare costs are over-hyped to scare people into buying insurance or to vote for a particular party.
Cos with proper financial planning, I think that healthcare costs are still manageable. Not cheap, but still manageable.
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