By now, those who are born between 1980 to 1990 (aged 30 to 40 in 2020) would have received letters from the Ministry of Health (MOH) informing them of their impending entry into CareShield Life on 1 October 2020, and the amount of premiums they are required to pay for the year.
CareShield Life is a compulsory national long-term care insurance scheme for Singaporeans in 1980 or later and is an optional replacement to ElderShield, which was administered by appointed private insurers.
When details of the scheme were first shared, there was unhappiness over the differentiated premiums for men and women. Now that the actual premiums due have been sent to individuals, some among us would be feeling the pinch more than others.
This article aims to help you better understand how much in premiums you’ll be paying over the course of your lifetime, as well as see how much in subsidies you’ll receive to help offset the costs.
How Much Are CareShield Life Premiums And Payouts Today – And How Much Will They Be In Future?
MOH has stated that CareShield Life premiums will increase by 2% each year until 2025, after which an independent panel will advise on future premium adjustments, guided by actual claims experience and accumulated insurance pool sizes.
You only need to pay the premiums for CareShield Life premiums till age 67, or until you receive payouts.
Regardless of the cohort, the payout rate starts at $600 a month in 2020 and increases by 2% each year. If you were to become severely disabled and become eligible to receive payouts, your monthly payout will be the prevailing payout rate that year and remain fixed for life (or cease when you recover).
Illustration Of Approximate Lifetime Cost Of CareShield Life Premiums
For those aged 30 in 2020, premiums start at $206 for men and $253 for women. Assuming the premiums go up consistently at 2% each year, here’s how much the cohort of 30-year-olds in 2020 will pay in CareShield Life premiums in their lifetime:
In total, this cohort of males would pay an estimated total of $11,560 in premiums, while females would pay about $14,197. You can find out exactly how much your CareShield Life premiums are using the calculator on CareShield Life’s website.
Currently, premiums must be paid from your MediSave account as there is no direct cash option. If your MediSave funds are low, you can voluntarily top up your MediSave account or your family members (spouse, children, parents, siblings, or grandchildren) can help you pay for your premiums using their MediSave funds as well.
Amount Of CareShield Life Transitional And Permanent Subsidies Available
As we can see, the cost of CareShield Life premiums over time does add up to a significant amount that could have been kept in our MediSave accounts (and earning significant risk-free interest of 4% per annum) for healthcare purposes.
There are the permanent, means-tested premium subsidies available to help defray the cost of CareShield Life premiums, especially for lower-income Singaporeans and Permanent Residents.
Below are the subsidy rates for Singapore Citizens, while Permanent Residents will receive half the applicable subsidy rates.
As you can see, those whose place of residence’s Annual Value (AV) exceeds $21,000, or monthly per capita household’s income exceeds $2,800, will not be eligible for CareShield Life premium subsidies. Furthermore, those who own multiple properties will also not be eligible for any premium subsidies.
To ease the shock of suddenly needing to pay hundreds of dollars in annual premiums, those aged 26 to 40 at the launch of CareShield Life will receive transitional subsidies of between $30 to $250 over a 5-year period:
Source: MOH’s CareShield Life Website
Furthermore, to encourage voluntary participation in CareShield Life by Singaporeans and Permanent Residents born in 1979 or earlier, there will be one-time participation incentives given out over 10 years to offset premiums payable that year.
You must enroll in the scheme within two years from the time CareShield Life is made available for voluntary sign-ups to enjoy these incentives:
Source: MOH’s CareShield Life Website
On top of the above amounts, Pioneer Generation and Merdeka Generation members receive an additional $1,500 in participation incentives. Given the significant indicative premiums for seniors in this age group, this is much needed and might not actually be enough compared to indicative premiums.
For example, according to the CareShield Life premium calculator, the youngest possible Pioneer Generation Singaporean woman (born in 1949) would be paying $2,582 (or $1,903, assuming maximum subsidies and participation incentives) a year.
Similarly, According to the CareShield Life premium calculator, annual premiums for the youngest possible Merdeka Generation member (born in 1959) cost $1,776 per year (or $1,134 assuming maximum subsidies and participation incentives).
Pioneer Generation and Merdeka Generation members would be 59 or older at the time of entry, so they will need to pay CareShield Life premiums for 10 years, unless they become severely disabled and qualify for payouts.
Just like MediShield Life, Singaporeans and Permanent Residents who have financial difficulties and cannot afford premiums after subsidies and have limited family support who can help pay for them will be invited to apply for Additional Premium Support (APS).
This invitation will be triggered based on insufficient MediSave savings and the government not being able to deduct your MediShield Life/CareShield Life premiums. Once you receive the invitation, you can complete the APS application form and be assessed for APS eligibility. You can visit the MediShield Life website or call 1800-222-3399 for more information and assistance on APS.
The government has given the assurance that no one will lose coverage because of not being able to afford premiums.
Paying For Your CareShield Life Premiums
CareShield Life premiums are payable annually, and it will be automatically deducted from your MediSave Account within 1 month from your policy anniversary.
You can use the CareShield Life Premium Checker to check how much exactly are your premiums. If you have insufficient funds in your MediSave Account, you can make a top-up via CPF e-Cashier, under “Contribute to My MediSave”.
You are allowed to designate a family member (spouse, parents, children, siblings, or grandparents) to help pay for your CareShield Life premiums using their MediSave funds, but as of writing, the Change Premium Payer e-Service still under development and is scheduled to be rolled-out by end-2020.
Risk-Pooling During Good Times, For Lifelong Support During Bad Times
CareShield Life ensures Singaporeans pay into the system during good times, in order to provide sustainable payouts to those who need it the most, without burdening future generations of taxpayers.
The non-profit nature of CareShield Life and wide risk pool due to compulsory enrolment should translate to good value for members over time, though payout and premium adjustments will be necessary to calibrate the system.
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