Those on ElderShield will be able to upgrade from 2021

People aged 40 years and older who are on ElderShield and want to upgrade to CareShield Life will be able to do so from 2021, the year following the launch of the new long-term care insurance.

They will need to pay more in premiums as the payout from the new government-run scheme will be at least 50 per cent higher, and will be for life instead of just six years that ElderShield offers.

Even those who have opted out of ElderShield may choose to join, but they must not already be suffering from severe disability.

How much they will need to pay will be announced later.

However, there will be no obligation for people who are over 40 years old in 2020 to join the scheme, which will be compulsory for those aged 40 and younger.

Mr Chaly Mah, who headed the ElderShield Review Committee, said the report recommends that existing cohorts should join and that the Government offer them "incentives and subsidies" to do so.

It also suggested that for these people, premium top-ups should be paid over five to 10 years, even if doing so means that people will be paying beyond the re-employment age of 67 years.

  • CareShield Life: What you need to know

  • Name: CareShield Life

    When it will start: 2020

    Who it affects: All Singaporeans and permanent residents aged 40 and younger in 2020.

    What they need to do: Pay annual premiums using Medisave from the age of 30 to 67.

    Premiums: $206 for men and $253 for women in 2020. This will go up by 2 per cent a year for the first five years. Future increases will be announced later.

    Subsidies: Subsidy of 20 per cent to 30 per cent for Singaporeans with per capita household income of $2,600 or less. Permanent residents will receive half of the subsidy.

    • Additional premium support for those who are still unable to pay the premiums.

    • Transitional subsidy of up to $250 for Singaporeans in the first five years.

    What it provides: Monthly payouts for people who are severely disabled.

    Amount of payout: $600 a month for claims made in 2020. Like premiums, it will increase by 2 per cent a year for the first five years. It will continue to increase beyond that at a rate to be determined later. The amount of payout a person is entitled to increases annually until the age of 67 years, or until a person makes a claim, whichever is earlier. Length of payout: For as long as the person remains disabled.

    What payout can be used for: Anything.

    Key recommendations from the ElderShield Review Committee:

    • For all residents from the age of 30 years.

    • Lifetime payouts for the severely disabled.

    • Payouts to start at $600 in the first year, increasing over time.

    • Premiums to be adjusted for the higher payouts.

    • Premiums to be paid over a longer period, from age 30 to 67.

    • Premiums to be fully payable with Medisave.

    • Means-tested government subsidies.

    • Simplify the claims procedure.

    • Government to run the scheme.

    • Encourage older people to join.

    • Rename it CareShield Life and raise awareness of the scheme.

It said: "This is a reasonable and effective design to lower the annual premiums payable, so that more Singaporeans in existing cohorts would consider joining the enhanced scheme."

Mr Mah said that even those who have opted out of ElderShield should be allowed to join CareShield Life.

Health Minister Gan Kim Yong gave an assurance that the Government will provide subsidies and incentives to encourage older cohorts to join CareShield Life, which offers better and longer payouts.

He said there will be some underwriting, but there will be no age limit for older people to join the scheme. "But for older folk, the premiums will be quite significant. The older you are, the more challenging (it is) to join the scheme," he said. So, whether it is beneficial for them to participate will depend on their ability to pay and their needs.

Dr Chia Shi-Lu, head of the Government Parliamentary Committee for Health, who will be 50 years old in 2021, said: "I would like to join once it is launched. And later joiners should also access the same assistance scheme as the new joinees."

Dr Jeremy Lim, a partner at consultancy firm Oliver Wyman, said: "I hope the Government works out a mechanism for the existing cohort to move over to CareShield Life that is equitable to the ElderShield enrollees, the CareShield Life enrollees, the insurers and the taxpayers."

ElderShield has been around since 2002, with people aged 40 automatically included unless they opt out. Many opted out in the initial years, but more recently, the opt-out rate has stabilised at around 5 per cent.

There were 1.3 million ElderShield policyholders at the end of last year, and they have contributed $3.3 billion in premiums. About $133 million has been paid out in claims.

The bulk of policyholders are on ElderShield 400, which was introduced in September 2007 to provide better coverage.

The original ElderShield 300 provided $300 a month for up to five years. It was replaced by the new scheme, which pays out $400 for up to six years.

Both schemes are run by private insurers, which also offer supplements to top up the ElderShield payout and/or provide payouts for longer periods.

In 2016, the 14-member ElderShield Review Committee was set up to see how long-term care insurance could be improved.

Salma Khalik

A version of this article appeared in the print edition of The Straits Times on May 28, 2018, with the headline 'Those on ElderShield will be able to upgrade from 2021'. Print Edition | Subscribe