SINGAPORE - CareShield Life will be more than an insurance scheme and become an integral part of Singapore's social safety net, said Health Minister Gan Kim Yong as he kicked off a debate on the new long-term disability insurance.
From 2020, severely disabled Singapore residents will also be able to tap Medisave for their long-term care needs, and be supported by the new ElderFund.
“The three enhancements taken together – CareShield Life, use of Medisave for long-term care, and ElderFund – will provide all Singaporeans with better protection and assurance for their long-term care needs, for life,” said Mr Gan in Parliament on Tuesday (July 10).
CareShield Life will be compulsory for people aged 30 to 40 in 2020 and provides lifetime payouts with higher premiums. It replaces the existing ElderShield scheme for those born in 1980 or later.
Mr Gan said the Government will set up an insurance fund, administered by the Central Provident Fund Board, which will be ringfenced for CareShield Life.
All premiums collected and any returns from investments will remain entirely within the fund and used solely for the benefit of policyholders, and will be audited annually to ensure that all the monies are accounted for, he said.
The Government will also set up an independent council to provide advice on the administration of the scheme.
The council will also regularly review CareShield Life and recommend premiums and payout adjustments to the Government, in accordance with an actuarially sound adjustment framework.
Mr Gan said the Health Ministry intends to introduce a Bill next year to set up the fund and independent council, and to effect the scheme by 2020 for future cohorts.
During the debate, he also addressed doubts about projections by the Health Ministry that one in two Singaporeans who are healthy at age 65 could become severely disabled at some point in their lifetime and require long-term care.
"Some are surprised by our 'one-in-two' statistic, and ask why is it that we do not see half of our elderly in severe disability," he said. "This is mainly because they do not all become severely disabled at the same time. They occur over a period of time, through their lifespan after 65."
He added that insurance allows each cohort of Singaporeans to pool its risks together to support the long-term care needs of that cohort in a more efficient manner.
A pre-funded insurance scheme like CareShield Life, in which each cohort pays for its own needs by putting aside funding while those in the cohort are still working, minimises inter-generational transfers and avoids passing the burden to future generations.
Mr Gan said his ministry will reach out to Singaporeans over the next few years to explain how the three schemes will work and help them.