People already on ElderShield can opt to join CareShield Life from 2021

People aged 40 or older who are on ElderShield and want to upgrade to CareShield Life can do so from 2021, but will need to pay more in premiums.
People aged 40 or older who are on ElderShield and want to upgrade to CareShield Life can do so from 2021, but will need to pay more in premiums.PHOTO: THE BUSINESS TIMES

SINGAPORE - 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.

But the new government-run scheme will not be compulsory for them.

Policyholders who do upgrade to CareShield Life, however, will need to pay more in premiums as the payouts from the new, government-run scheme will be at least 50 per cent higher.

The period of payouts will also be lifelong - for as long as they remain severely disabled - instead of just six years that ElderShield offers.

Even those who have opted out of ElderShield could join the new scheme, but they must not already be suffering from severe disability.

More details for the older cohorts, such as how much they have to pay in premiums, will be announced later.

CareShield Life is mandatory for everyone who is between the age of 30 and 40 in 2020, as well as future cohorts who will join at the age of 30 years.

Mr Chaly Mah, who headed the ElderShield Review Committee, said the committee's report recommends that existing cohort should join and that the government offers them "incentives and subsidies" to do so.

 
 
 

The report 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.

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."

Health Minister Gan Kim Yong assured 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 folks, the premiums will be quite significant. The older you are the more challenging 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's launched. And later joiners should also access the same assistance scheme for 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 enrolees, the CareShield Life enrolees, the insurers and the tax payers."

ElderShield has been around since 2002 with people aged 40 years automatically enrolled in the scheme unless they have opted out. Many had opted out in the initial years, but more recently, the opt-out rate has stablised 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 original Eldershield 300 provided $300 a month for up to five years. Following complaints that this was not enough, it was replaced by ElderShield 400 in September 2007, which pays out $400 for up to six years. The bulk of policyholders today are on the latter scheme.

Both schemes are run by private insurers, who also offer supplements that top up the ElderShield payouts or provide payouts for longer periods. But there are severely disabled people who live beyond six years, but who no longer get payouts.

In 2016, the 14-member ElderShield Review Committee was set up to see how the long term care insurance could be improved. After consulting widely for over 18 months, including seeking views from members of the public, the committee made its recommendations for CareShield Life that the Government has accepted.