Did you know anything about ElderShield before this week? I didn’t. After all, it didn’t sound like something that would concern me. I’m still a millennial after all. But after the recent announcement about CareShield Life, you now need to pay attention. Yes, even if you were born in the 90’s.
What is CareShield Life?
CareShield Life is the next evolutionary stage of ElderShield, the Government’s severe disability insurance scheme to help with the provision of financial protection for Singaporeans who need long-term care.
The definition of a severely disabled person is someone who cannot perform at least 3 of the 6 Activities of Daily Living (ADL):
- Transferring (from a bed to upright chair or wheelchair, and vice versa)
As you can see, these are common activities that any one of us needs to do and dealing with the challenges that come with being severely disabled.
Severe disability is something that could happen to anyone of us, especially in old age. That’s why the most obvious change is the name “ElderShield” to the more inclusive “CareShield Life”. This is an insurance scheme meant to protect everybody, but particularly as we grow older.
Here are four other reasons CareShield Life is better than ElderShield:
1. CareShield Life gives you a payout for the rest of your life, compared to the ElderShield payout period of 72 months
Imagine you’re unable to move from a bed to a wheelchair, unable to get into a shower stall on your own to wash yourself, and unable to dress yourself each day. You would probably need some long-term care services, such as living in a nursing home, or hiring a caregiver to provide you with long-term, full-time assistance. A monthly payout will go a long way in subsidising your costs.
Under the current ElderShield scheme, you would qualify for a payout of $400 per month, for 72 months.
That’s a total payout of $28,800 over 6 years. Not too bad, considering you paid no more than $6,000 in premiums altogether.
But then, after 6 years, your ElderShield coverage is over.
With CareShield Life, you can now get monthly payouts of at least $600 a month for the rest of your life, for as long as you are severely disabled. The monthly amount you receive is based on when you make your claim. The later you claim, the more you receive per month.
And with Singapore’s life expectancy steadily rising, this is a really good thing.
2. CareShield Life now covers you from the age of 30 years old
CareShield Life is not only extending the payout period, but also the coverage period. You will now be covered from the age of 30 years old, instead of ElderShield, which starts coverage at 40 years of age.
This means that if you are unfortunate enough to be severely disabled at a much younger age, CareShield Life will provide you with monthly payouts for the rest of your life.
From an insurance premium perspective, extending the coverage to start when you are 30 years old means two things. Firstly, while you start paying premiums from the age of 30, the longer period lowers your premiums. Secondly, the payout amount you stand to receive is significantly higher.
3. CareShield Life offers universal coverage
Most insurance companies are unwilling to provide coverage if you have pre-existing disability. ElderShield, which is currently administered by insurance providers Aviva, Great Eastern and NTUC Income, also does not cover those with pre-existing disability.
CareShield Life, on the other hand, has universal coverage. This means that everyone, regardless of pre-existing disability, is covered under CareShield Life.
If you have severe disability, and you are between the age of 30 to 40 years in 2020, you just need to pay a single premium to start benefiting from the CareShield Life lifelong payout. That’s $600 a month for the rest of your life.
Universal coverage also means that no one is excluded because they cannot afford the premiums, especially those from lower-income families who may drop out before they end up needing it.
Plus, since all premiums can be paid fully through Medisave, it should not affect most Singaporeans’ cashflow.
4. CareShield Life is relatively affordable
Depending on your age in 2020, you can expect to pay between $206 to $366 a year for CareShield Life. That’s only about $17 to $30 a month! In comparison, ElderShield premiums are at least $15 to $18 a month for much lower coverage.
And these figures are before government subsidies!
The subsidies you qualify for depends on your Per Capita Household Income and the Annual Value of your home. Lower-income families can get up to 30% in subsidies.
And from 2020 to 2025, all those enrolled in the new CareShield Life scheme will enjoy up to $70 a year in government subsidies, further reducing your premium by as much as 30%.
3 Most Common Questions About CareShield Life
After the CareShield Life announcement was made last week, and even after the indications at Budget 2018 about the upcoming changes, there were a lot of reactions. We answer the 3 most common queries:
Is CareShield Life just a way of getting the young to pay for the elderly?
No. Each cohort pays for itself, and there is no transference of cost from one generation to another. That means if you’re born in 1989, you won’t be paying for someone else that was born in 1969.
All the ElderShield premiums collected will continue to go back to supporting the ElderShield policyholders’ future claims. All new CareShield Life premiums collected will go to covering CareShield Life policyholders’ future claims.
The only reason for those currently on ElderShield to want to switch to CareShield Life is to enjoy lifelong payouts. But this would probably mean that they will need to pay a higher monthly premium. Nonetheless government subsidies will continue to be provided for those unable to afford their premiums.
There will be an option for those who are not severely disabled to join CareShield Life scheme, but it will likely be on a case by case basis. The option will be made available in 2021.
CareShield Life will begin by enrolling those aged between 30 and 40 in 2020, and then include everyone who turns 30 in each subsequent year. The premiums paid are intended to cover future lifelong payouts.
Why is it compulsory, and why do the premiums increase as we age?
Don’t Singaporeans just hate the word “compulsory”? But the fears are somewhat justified. After all, it sounds like we’re being forced to write a blank cheque for some arbitrary amount.
But when you understand what CareShield Life represents – a lifelong monthly payout that every Singaporean is entitled to – you understand why it has to be compulsory and why the premiums need to increase over time.
Making it compulsory actually allows the Government to reduce the price of CareShield Life’s monthly premiums, since it provides a stable source of funds from which to provide a lifelong payout.
And steadily increasing the premiums as you age allows CareShield Life to also provide higher payout amounts the later you make the claim. This also helps to overcome future inflation. For example, if someone were to make a claim in 2020, they would get $600 a month for the rest of their lives. But if the same person were to make a claim in 2050, they could look forward to getting an estimated $1,000 a month for the rest of their lives.
What’s the difference between CareShield Life and MediShield Life?
This Shield, that Shield, this Life, that Life, so confusing!
Perhaps we should start by pointing out how they’re similar. Unlike most insurance policies which can only cover you up to a certain age, CareShield Life and MediShield Life are meant to provide you with lifelong coverage and payouts. They provide universal coverage so that no one is excluded, even if you have pre-existing conditions.
As for the difference between MediShield Life and CareShield Life, the hint is in the name. MediShield Life subsidises large medical bills, while CareShield Life essentially subsidises the cost of care for those with severe disability. For CareShield Life, you actually get the payout amount in cash, so you can decide how the money should be spent to subsidise your cost of care.
CareShield Life is an important part of ensuring that every Singaporean is provided with the most basic of protection in the event of a severe disability. Even though it is compulsory, it should be tempered with the fact that everyone can be covered as a result.
Besides just understanding how the new CareShield Life scheme works, it is important to be aware and plan for the costs of long-term care should anything happen to you. We will go into that as well some of the services that are available in a separate article, so stay tuned!
What is your opinion of the new CareShield Life? Share your thoughts with us.