In 2020, the Ministry of Health (MOH) will be implementing a new disability
insurance scheme known as CareShield Life. This will replace the existing
ElderShield for those under 40 by 2020. Eldershield provides basic long-term
care insurance for those with severe disability. Currently, Singapore residents that turn 40 with Medisave accounts are automatically enrolled in ElderShield to cover for severe disability coverage but they are given the option to opt-out. Coming 2020, CareShield Life will be compulsory for all Singapore residents aged 40 and under while those that are older can opt to come onto the new CareShield Life scheme.
Let’s try to understand more about CareShield Life in 5 questions.
1. How is Eldershield different from CareShield Life and what happens to those on Eldershield?
One of the key difference is ElderShield is managed by three private insurers
Aviva Limited, Great Eastern Life Assurance Company Limited, and NTUC Income Insurance Co-operative appointed by MOH while CareShield Life is implemented and managed by the government. Secondly, ElderShield is an opt-out scheme for Singapore residents when they become 40 whereas CareShield Life is compulsory for Singapore residents between 30 and 40 years old in 2020. Subsequently, for the younger cohort, CareShield Life will be obligatory once they turn 30. For Singapore residents that are already on ElderShield, they will not be affected by the new scheme. However, they are given the option to join or switch over to the new scheme from 2021 if they are not claiming from ElderShield or suffering from disabilities.
2. How much premiums do I have to pay for the CareShield Life?
Singapore residents under the CareShield Life will be required to pay for premiums until the age of 67. Subsequently, we will continue to enjoy the coverage by CareShield Life without paying additional premiums. Unlike ElderShield, premiums are not fixed under the new scheme. Males and females that are 40 years old in 2020 when the new scheme is launch, they will be required to pay annual premiums of $300 and $360 respectively. For the first 5 years, the payout and premiums will increase by 2% per annum.
3. How will the payout & duration be like?
Currently ElderShield have 2 schemes – ElderShield 300 and ElderShield 400.
For ElderShield 300, the monthly cash payout is $300 for a maximum of 5 years
whereas the monthly cash payout for ElderShield 400 is $400 for a maximum of 6 years. Under the new scheme, anyone with severe disability from 2020 will receive $600 per month for as long as they are disabled. The payouts will increase annually until we stop paying premiums under 2 conditions – upon claim or when we turn 67. For those that enter the scheme at 30, the monthly payout is estimated to be $1,200 by the time they are 67 based on the 2% annual increment depicted by MOH.
4. Will I be included in CareShield Life if I have pre-existing disabilities?
Currently, those with pre-existing disabilities are unable to subscribe to ElderShield. Under the new scheme, CareShield Life’s universal coverage allows everyone including those with pre-existing disabilities to come onboard. However, for the existing cohort onboard the ElderShield and suffers from disability will not be able to join CareShield Life and they will be assisted by other Government Schemes.
5. What if I cannot afford the premiums?
In order to ensure that CareShield Life is affordable, the Government will provide several premium support measures to subsidise those in need when the scheme is launched. This would be assessed based on the monthly per capita household income (PCHI). According to the information by MOH, Singapore residents with PCHI below $2,600 will be entitled to 20 – 30% of premium subsidy. To kickstart the new scheme, the Government will provide 5 years of transitional subsidy from 2020 onwards. This will begin with $70 subsidy in 2020, $60 in 2021, $50 in 2022, $40 in 2023 and $30 in 2024. After which, normal premiums will commence.
At the end of the day, CareShield Life is designed by the Government to benefit the public and ensure the disadvantaged in Singapore is taken care of as well. While the new scheme will be able to provide us with basic long-term care cover, we might need additional coverage depending on our needs. Proper financial planning would help us to determine whether the $600 monthly payout is sufficient or if we require additional private disability insurance.
