It’s probably not news anymore that our healthcare needs will continue to increase in the near future. Especially when it’s estimated that nearly half of Singapore’s population will be at least 65 years old by 2050. Government spending on healthcare is expected to go up but we should start thinking and preparing better for our healthcare needs too.
Many people might be familiar with the concept of health insurance and Government schemes, such as MediSave and MediShield Life, to help prepare for our healthcare needs. What you might not be aware of is that there is a need to also prepare for Long-Term Care (LTC), the personal and medical care you will need if you become disabled due to age or adverse health conditions.
How real is this need? Well, an estimated 1 in 2 healthy Singaporeans aged 65 could become severely disabled before they die. Being severely disabled means we may need help with eating, going to the toilet or walking around, which places a burden on our families or caregivers. Given the uncertainty of long-term care costs and the duration of severe disability should this happen to us, working out how much to save for long-term care can be difficult.
Launch of CareShield Life from 1 October 2020
To help with the growing needs of long-term care, the Government recently announced CareShield Life, which is a long-term care insurance scheme that will come into effect on 1 October 2020. It will be compulsory for Singapore Citizens and Permanent Residents aged 30 to 40 (born between 1980 to 1990). Those born after 1990 will also be covered when they turn 30.
What if you’re aged 41 and above this year? Well, you can opt to participate by joining the scheme from end-2021 if you’re not severely disabled. Automated participation will begin for those aged 41 to 50 from end-2021, with the choice to opt out by 31 December 2023.
In a nutshell, you will be covered for life as long as your premiums are fully paid when you turn 67, or 10 years after you join the scheme. Monthly cash payouts will be made to you for as long as you remain severely disabled. The amount, which starts at $600 per month, will increase over time.
If you need help to pay your premiums, there’s MediSave to the rescue. Your family members can help to pay with their MediSave or top up yours with cash. Still need help? Go for means-testing to qualify for subsidies from the government.
Now, how EXACTLY are we benefiting from CareShield Life? We obviously can’t cover every type of person under the hot Singaporean sun, but here are examples of 2 different personas who joined the scheme at age 30 in 2020 and how they benefit from it:
- Making a successful claim at age 30 in 2020
Tom becomes severely disabled the same year he joins CareShield Life when he turns 30 in 2020. He stops making premium payments after paying for just one. He will receive $600* per month for as long as his condition remains the same.
- Making a successful claim at age 67 in 2057
Sally becomes severely disabled when she turns 67 in 2057. This is the age when premium payment ends. She will receive $1,200* per month for as long as his condition remains the same.
*In both cases, the payout is estimated, depending on adjustments. Payouts will continue to increase at 2% a year after 2025.
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