The much-awaited CareShield Life is launched today, 1 October 2020. I have been getting some questions about this improved version of the ElderShield plan. And I thought it would be helpful if I could share with you what CareShield Life is, its features, and how you can benefit from it.
If you are turning age 30 to 40 in 2020, this article is for you as you will be the first cohort who will be affected. Come 1 October 2020, all Singaporeans and PRs turning age 30 to 40 will be automatically enrolled in CareShield Life and participation is compulsory.
CareShield Life is the new national long-term care insurance scheme for all Singapore Residents born in 1980 or later, including those with pre-existing disabilities (for those born in 1979 or earlier). It is an improved version of the ElderShield plan. A significant enhancement is that it provides lifelong cash payouts, which in turn gives greater assurance for basic long-term care needs.
Long-term care is the help you will need with daily tasks like feeding, toileting, and moving around when you are severely disabled. Severe disability can unexpectedly happen like a stroke or serious accident. It could also be caused by progressive worsening of chronic conditions such as diabetes or frailty due to old age.
Long-term care insurance provides financial support should one become severely disabled and need personal and medical care for a prolonged duration. Severe disability refers to the inability to perform at least 3 of the 6 Activities of Daily Living (ADL). These 6 ADLs are:
Source: Ministry of Health Singapore
The question on many younger Singaporeans’ minds is “Why to make CareShield Life compulsory?”. And my reply is because the need is real.
Though health issues like stroke, cancer, and heart disease are more prevalent in the advanced years of life, there is no denying that a severe disability can happen to anyone, regardless of age.
According to statistics cited by Health Minister Gan Kim Yong:
Will our retirement fund last us for 10 years or more should we become severely disabled? If that day really comes, would we have enough for food, utilities, housing loan, daily necessities, and medical bills? Getting a trained helper, nurse, or even nursing care services all require money. And the reality is long-term care can be costly and prolonged! The monthly estimated expenditure will increase, yet income would be next to nothing.
Young people often think that severe disability is a remote possibility. I was no different from them at that age. However, increasingly, we hear more about how young people, as a result of accidents or illnesses, suffer from long-term disability. It is challenging – physically, emotionally, and financially – for the person suffering from disability and his or her family.
By having adequate coverage for your needs from your 30s, you will have fewer worries about long-term care financing, whether you suffer from a severe disability during your productive working years or retirement years.
Before we look at the costs involved, let’s understand the features of this new scheme.
According to Aviva’s Long-term Care Study 2018, the average cost of long-term care is S$2,324 per month.
Can you afford an additional $2,324 every month on your long-term care? This amount can potentially wipe out all your savings! This is why it is critical to plan for long-term care financing. I am glad the Government studied the facts and recognized that there is a need to extend compulsory long-term care protection to the younger generation. CareShield Life serves to mitigate some of the costs.
CareShield Life will provide lifetime cash payouts to help cover some of the costs of long-term care in the event of one’s inability to perform 3 out of 6 ADLs. The cash payout starts from $600 per month and will increase at a rate of 2% per annum over time. This is to keep pace with inflation.
Is this sufficient? It is a resounding no!
This amount is clearly insufficient to meet the average cost of long-term care in Singapore. But it does provide some basic financial support for the majority of Singaporeans and PRs. Those who wish to enhance their coverage to get higher monthly payouts can apply for a CareShield Life Supplement offered by private insurers (Aviva, Ntuc Income, Great Eastern).
One noteworthy point about CareShield Life is this – it provides universal coverage for all. This means that those with pre-existing conditions and disabilities will also be covered.
Based on your age in 2020, you can expect to pay between $206 to $366 a year for CareShield Life. Since this is a national scheme, premiums are fully payable by Medisave and the Government will also provide transitional and means-tested subsidies to make premiums affordable. To calculate your premium, you can check out the online premium calculator on the MOH website.
Well, you will be automatically enrolled in CareShield Life. As the first cohort, by now, you would have been notified by the Government of the policy commencement date which is 1 October 2020.
You may be wondering how CareShield Life will affect you and whether you should switch to CareShield Life.
Coming up next, check out my article “How Does CareShield Life Affect Me? Should I Switch to CareShield Life or Stay Put with ElderShield?” to learn more.