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The Finance of Healthcare (Part 1): PhilHealth

PhilHealth Logo

Last week, I was hospitalised due to a lung infection. Hospitalisation is one of the things that scare me the most because of its impact on my health and finances. Not only was I worried about getting treated and recovering, I was worried about the income lost with every day that I spent in the hospital. Aside from that, I was also worried about the costs of hospitalisation.

In this series of articles, I will be talking about the financial aspect of healthcare. I already mentioned the two ways through which health problems impact our finances: 1) cost of healthcare and 2) lost income. In Part 1, I will be talking about the cost of healthcare and how PhilHealth covers this, protecting us from the financial burden of hospitalisation.

About PhilHealth

PhilHealth, or the Philippine Health Insurance Corporation, is a government-owned and controlled corporation that administers the National Health Insurance Program, the government’s universal healthcare insurance program. Its mandate is to provide socialised healthcare for all Filipinos, including the employed, self-employed, indigents, overseas workers, and retirees.

Changing categories

For financial consultants/insurance agents like me, healthcare is a considerable cost. Unlike employees, most of the people in our industry are considered “self-employed” individuals. This means that we have to pay for our own PhilHealth premiums. I was in the middle of transitioning from the “Employed” to the “Individually Paying” category when I got sick. Luckily, this is something that can now be done online at http://www.philhealth.gov.ph/services. By electronically registering as an “Individually Paying” member, I was able to generate a new member data record form and a PhilHealth Identification Card.

If you have recently resigned from your employment for whatever reason (to start your own business, to become a freelancer, to pursue further studies) and you want to continue your PhilHealth coverage, or if you have never been employed and want to be covered by PhilHealth, you may apply to become a PhilHealth member through their website.

Premium

After registering, the next step is to pay for your premium. For Individually Paying members, the premium computation for the first year is simple. If the average monthly salary for the last 12 months prior to changing categories is 25,000 and below, the quarterly premium is 300. If this is above 25,000, the quarterly premium is 600.

You can pay your premiums at any PhilHealth branch or you can pay through any of their accredited collecting agents. Many banks are authorised to collect premiums on behalf of PhilHealth, including major banks such as BPI, BDO, Metrobank, PNB, and RCBC. You can also pay at some LBC branches. For a full list of collecting agents, check http://www.philhealth.gov.ph/partners/collecting/

Benefits

What are the benefits of being a PhilHealth member? PhilHealth members get a considerable reduction in hospitalisation costs. Even if you don’t have a private health maintenance organisation (HMO), the savings that you will achieve with a PhilHealth membership are considerable. Additionally, private HMOs require that you first be a PhilHealth membership before they can accept your application for coverage.

I enumerate below some of the inpatient benefits up to the maximum ceiling per category:

  • Up to 1,100 per day for room and board (maximum of 45 days per hospitalisation)
  • Up to 40,000 in dugs and medicine per single period of confinement
  • Up to 30,000 in laboratory and X-ray fees
  • Up to 8,000 in doctor’s (specialists) fees

For some illnesses, PhilHealth pays benefits on a case rate (lump sum) basis. For example, for the treatment of moderate-risk pneumonia, PhilHealth will pay the healthcare provider 15,000 in lump sum, with the balance shouldered by the member or the private HMO. This means there is no need to compute how much of each hospitalisation cost category will be subsidised by PhilHealth.

For a comprehensive list of benefits, visit http://www.philhealth.gov.ph/members/individually_paying/coverage.html.

I cannot emphasise enough how important it is to get a PhilHealth membership. For those who are employed, this is already a mandatory salary deduction but for those of us who are self-employed, this is only voluntary. But I think the savings are worth the effort. Had I paid 600 of my quarterly dues on time, I would have save 15,000 from my medical bill of around 33,000. That’s a lot! Sayang. Hindsight is always 20/20, but then again better late than never. Today, I paid my quarterly dues. Just in case.

In Part 2, I will be talking about some of the health maintenance organisations or HMOs that I have been looking into, those private health insurance companies that supplement the benefits provided by PhilHealth.

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Rappler.com also discusses credit ratings upgrade

I’m glad that mainstream media has picked up the topic of credit ratings upgrade and discussed its impact on individual Filipinos. I have previously written about this topic last week and I was delighted to see Rappler.com’s infographic on what a credit ratings upgrade means for Filipinos.

I have included the infographic in this blog post. All credit goes to Rappler.com.

Credit Rating Upgrade: What it Means for Filipinos

Rappler.com picks up the topic of credit ratings upgrade and discusses its impact on Filipinos.

Plastic or No Plastic (Or, How Not To Allow Credit Cards To Rule Your Life)

Truth be told and coming from experience, I’ll be quite biased here. If you don’t need one, don’t get a credit card. Seriously. It can potentially ruin your financial life. I’m not kidding. If you can pay cash anyway, use cash.

But for the sake of journalistic fairness, I’d like to present to you the potential benefits and the possible drawbacks of owning a piece of swipe-able plastic.

Why should I get a credit card 101

Credit cards are potentially a good thing, if you pay your balance in full and on time. If you can’t commit to that, please proceed to the next section.

There are a lot of benefits that you can derive from owning a credit card. However, this comes with the proviso that you have to use it correctly – by paying your amount due in full and on time, all the time. A credit card can help you manage your finances better by allowing you to consolidate all your bills and pay them all at the same time. The problem with paying utility bills is that they all have their own due dates. A lot of credit card products have auto-debit facilities that allow you to settle your utility bills at the same due date as your credit card.

Some credit card products allow you to earn miles with a partner airline company. This is good for people who love traveling or who are constantly traveling because of business needs. At the same time, with the advent of online booking and e-ticketing, it’s more convenient nowadays to book and buy your ticket online rather than reserving and paying with a travel agent. But you would need a credit card for this. Credit cards also allow you access to online shopping and acquire products at a potentially lower price online compared to buying it in a physical store.

Other specialty cards allow you to get special rebates on your purchases which I think is a good thing because it helps save you money on essentials such as gas, groceries, utilities, medicine, etc.

Many credit cards offer reward points that allow you get products as a reward from a rewards catalog. Now this is something that I wouldn’t wish on anyone. It provides you an incentive to use your credit card as often as you can to get points. You’re piling debt on yourself just to get that reward item. Why not just buy it if you really need it?

Why should I not get a credit card

Remember that the credit card industry is a business which thrives if more people have more debt, so it is in their best interests to keep you indebted. The promos that they create aim at the end goal of you taking in more debt that you can handle, at which point, they will offer you the “courtesy” of converting your balance. They make more money on this by charging interest on your converted balance. You’re already paying interest on interest.

Credit cards can also paint you an unrealistic picture of financial health. Some credit cardholders regard their credit limit as an extension of their bank accounts when actual use of it eats up on the amount of money you actually have. This unrealistic picture may lead you into making poorly thought out financial decisions which may put you further in debt.

A lot of people have fallen into a bad cycle of credit that they just can’t pull themselves out of. If you feel like you’re in one, seek expert advice. But even before you get yourself into the possibility of that situation, ask yourself first these two questions: 1. Do I really need it? 2. Will I be able to use it within my means?

Let’s Talk About Credit Cards

The unofficial start of the Christmas season is when people us the word “stickers” and “planners” in the same sentence. At this point in time, registers are also going “swipe!” rather than “ka-ching!” It’s the time of the year when plastics rule.

Let’s talk about these ubiquitous rectangular plastic cards whose convenience everyone (especially the banks) is raving about. Is it really that convenient?

The Concept Behind The Credit Card

A credit card basically is a physical proof of what you would call a line of credit. Lines of credits are debt facilities extended to entities, either individuals or corporations, that allow them to “borrow” money from the bank within a certain credit limit, interest-free, as long as you re-pay it within the term of the line of credit. The term is usually very short, the most common term being a 30-day or one-month period.

A good example of the use of a line of credit in a business setting is when a company delivers goods to its customer on November 2 and the customer says that he cannot pay until November 20. The problem is that you have an account payable to your supplier that falls due on November 15. The business can draw the amount needed from the line of credit and use it to pay the their supplier and then wait until their customer pays so that they can repay the money borrowed without having to pay for interest.

Personal Credit Cards

The concept have been applied to personal finance and retail banking groups now offer a whole gamut of credit card products to individuals. The concept remains the same, however, the impact is different.

Credit cards come in all colors, credit limits and card networks. The most popular ones are Visa and Mastercard, with almost every bank offering card products under both card networks. Think of it this way, Visa and Mastercard are like mobile networks Globe and Smart while card-issuing companies are like mobile phone brands Nokia, Samsung, Motorola, etc. Each credit card has its own features but it uses either the Visa or the Mastercard network to facilitate payments.

You also have a hierarchy of card types like Classic/Blue, Gold, Platinum and Titanium, the main difference being the size of the credit limit and the amount of membership fees and the privileges and other fringe benefits that come with it.

Getting your first credit card

Straight out of college and into the workforce, I wanted to already have a credit card and start swiping. Young people had and still have a notion that credit cards are an endless source of cash. Nobody really explained that “credit” means debt. But when I attempted to apply for one after opening a savings account with my bank, my application was conditionally accepted, the conditioning being I open another account with the bank with 10,000.00 which will be locked in as a guarantee against the credit card. Of course I didn’t accept the condition.

Later on, I would receive my first ever credit card in the mail from another bank with which I had a (bigger) savings account. And I realized that in order for your application for a credit card to be approved, you need to establish a banking relationship with the issuing bank first. Since then, I have received five credit cards from three different banks. That’s because credit card companies share a database of credit users where they fish for potential new clients. Be flattered if you receive a call from them because they think that you’re good business. That might also be a good time to re-assess your spending habits. That’s just my opinion of course.

In the next blogs, we’ll discuss the benefits and drawbacks of owning a credit card. We’ll also explore the market to see what kind of credit card products are out there. If you have questions, you know the drill!

New Month, New Theme

First off, it’s August and I’ve decided to change WordPress themes.  I hope August finds you in a better financial situation. I believe July has been very tight for a lot of people for some reason. But if my horoscope is right, I think August is bringing in many people luck on the financial side. It must be because of the roundness of August’s number (8). Or it could be explained by more practical means. Either way, this new month will hopefully be a fresh start for everyone.

Surely, it will be a new start for this as we start exploring beyond the usual savings accounts and start investing. I hope you will enjoy The Manila Finance Guy’s August offerings.

Questions? Article Suggestions?

If you have questions or if you want to suggest a topic to discuss, you may contact me at manilafinanceguy@gmail.com.