Following the Ministry of Health’s (MOH) announcement of changes to Integrated Shield Plans (ISPs) in Q1 this year, there comes another major overhaul to one of the familiar names to Singaporeans: ElderShield. ElderShield, which provides basic long-term care insurance targeted at disability, will be enhanced by CareShield Life in 2020. Here are five questions that everyone is probably eager to get answered.
1. ElderShield vs CareShield Life: Who will be in charge of the CareShield Life scheme?
The single biggest change from ElderShield to CareShield Life is the administrator of the scheme. While ElderShield is a national insurance scheme that aims to provide basic long-term care insurance coverage, it was administered by private insurers like NTUC Income, Aviva and Great Eastern. When the CareShield Life scheme kicks in from 2020, it will be administered by the Singapore government instead of private insurers.
a. Control of CareShield Life’s underwriting process
With the Singapore government in charge of administering CareShield Life, the underwriting process is one of the areas that the Singapore government will have control over.
During the ElderShield days, anyone that had a pre-existing disability or condition could be rejected when he/she applied for ElderShield. The reason is simple: Anyone that had a pre-existing disability or condition would be more likely to make claims under ElderShield. This would lead to higher costs and lower profit for the private insurers. In other words, this was a pure profit consideration by the private insurers.
With the CareShield Life administration coming under our government, MOH shared that the plan is to “have a lenient underwriting process”. The motivation is to allow as many Singaporeans and PRs to join the CareShield Life scheme. This will allow Singaporeans/PRs with common chronic conditions like diabetes and hypertension to receive coverage.
b. Better management of surplus from CareShield Life
According to Minister of Health Gan Kim Yong, ElderShield insurers had collected more than S$2 billion of premium surplus from 2002 to 2015. This means that the private insurers administering ElderShield were sitting on a profitable insurance product for years. By transferring the administration to the Singapore government, any potential surplus from CareShield Life will be better allocated. Singaporeans/PRs could benefit from potential premium rebates, especially if the claims are much lower than the premiums received.
2. ElderShield vs CareShield Life: What happens if I am already under the ElderShield scheme?
Singaporeans and PRs who are already under the ElderShield scheme will remain status quo. You will continue to receive coverage under ElderShield. You will then have the option of switching over to CareShield Life from 2021 onwards. The only caveat is that you cannot be making any claims (or claimed) under your existing ElderShield. If you have already started claiming under your existing ElderShield, you will continue to receive payouts from your private insurer.
3. ElderShield vs CareShield Life: Will I have to pay more premiums?
a. Premium duration
While the old ElderShield scheme starts collecting premium from age 40, CareShield Life has an earlier start date at age 30. CareShield Life also has a later end date for premium payment at age 67 instead of age 65.
b. Premium amount
There is also a difference in the premium amount between ElderShield and CareShield Life. ElderShield 400 charges an annual premium of S$175 for men and S$218 for women. The annual premium does not adjust. In contrast, CareShield Life charges an annual premium of S$200 and S$250 for men and women respectively. The annual premium for CareShield Life also increases yearly depending on the core inflation rate in Singapore and the government’s long-term returns.
Overall, it means that you will be paying close to 70% more premiums under the new scheme, based on estimates from MOH.
c. Premium subsidies
In order to make CareShield Life more affordable for Singaporeans, the government has committed to three types of subsidies: Transitional, permanent and additional subsidies.
When the CareShield Life scheme officially starts in 2020, the Singapore government will provide a 5-year subsidy for Singaporeans/PRs. Each Singaporean/PR who will be in the CareShield Life scheme will receive S$70 subsidy in 2020. The subsidy amount reduces by S$10 every year and ends in 2024.
The Singapore government has also committed to providing up to 30% permanent subsidies for low-income families. The amount of permanent subsidies will be determined by your monthly per capita household income.
|Monthly Per Capita Household Income||
|$1,100 or less||30% of premiums|
|$1,101 to $1,800||25% of premiums|
|$1,801 to $2,600||20% of premiums|
|$2,600 or above||N.A.|
For those who still cannot afford the reduced CareShield Life premiums, additional subsidies will be provided to enable every Singaporean/PR to receive long-term care protection.
4. ElderShield vs CareShield Life: What is the difference in payout?
ElderShield adopts a simple fixed payout structure. There are two schemes under ElderShield: ElderShield 300 and ElderShield 400. The ElderShield 300 will pay $300 a month for five years if you are assessed as disabled. If you are under the ElderShield 400 plan, you will receive $400 a month for six years if you are assessed as disabled. Beyond the 5-6 years, you will not receive any more payouts from ElderShield.
In contrast to ElderShield, CareShield Life offers lifetime coverage. This means that you will continue to receive monthly payouts for as long as you are alive. The estimated monthly payout that you will receive will also vary. The monthly payout amount will increase by around 2% every year of delayed claims.
For example, if you start making claim from CareShield Life in 2020, you will receive a monthly payout of S$600. If you continue to stay healthy and delay your claim, the monthly payout amount will continue to increase to close to S$1,200.
Payout vs premium comparison
While the premium structure of CareShield Life means that you must pay more for long-term care protection, you are also getting more in return. Here is a breakdown of the estimated payout per premium ratio of ElderShield, CareShield Life and subsidised CareShield Life.
Long-Term Care Insurance
Payout Per Premium Ratio
|ElderShield 400||~ 6 times
(S$28,800 estimated payout vs S$4,600 premium)
|CareShield Life||~ 12 times
(S$144,000 estimated payout vs S$11,300 premium)
|CareShield Life (Subsidised)||~ 18 times
(S$144,000 estimated payout vs S$7,800 premium)
5. ElderShield vs CareShield Life: Is the change beneficial or detrimental for me?
While our focus might be on the increased premium payable, let’s not forget that you will be able to get more protection in return. The change from ElderShield to CareShield Life is one that is much more beneficial for consumers like you and me. After all, the enhanced CareShield Life will provide you with higher basic long-term care coverage. That being said, you might still need to supplement it with private disability insurance considering the rising cost of healthcare in Singapore.
Still have questions about CareShield Life? Get more answers here.