This article was written in collaboration with the Ministry of Health. All views expressed in this article are the independent opinion of DollarsAndSense.sg based on our research. DollarsAndSense.sg is not liable for any financial losses that may arise from any transactions and readers are encouraged to do their own due diligence. You can view our full editorial policy here.
For Singapore Citizens and Permanent Residents (PRs) aged between 30 and 40 in 2020, they may have realised that they have a new insurance policy that covers severe disability.
CareShield Life is a national long-term care insurance scheme that provides Singapore Citizens and PRs with basic financial support should they become severely disabled, especially during old age, and need personal and medical care for a prolonged duration.
Who Is Covered Under CareShield Life?
The introduction of CareShield Life to Singapore Citizens and PRs commences in two phases.
Phase 1: CareShield Life was launched on 1 October 2020 for all Singapore Citizens and Permanent Residents born in 1980 or later. They are automatically covered under CareShield Life from 1 October 2020, or when they turn 30, whichever is later.
Phase 2: Singapore Citizens and Permanent Residents born in 1979 or earlier can choose to join CareShield Life from 6 Nov 2021, if they are not severely disabled, regardless if they were insured under ElderShield or have opted out of ElderShield. Details of the application process will be provided at a later date.
To make joining CareShield Life more convenient, Singapore Citizens and Permanent Residents born in 1970 to 1979 will be auto-enrolled into CareShield Life from 1 Dec 2021, if they are insured under the ElderShield 400 scheme and are not severely disabled at the point of auto-enrolment. However, they can choose to opt out by 31 December 2023 if they do not wish to remain on CareShield Life and wish to revert back to ElderShield 400.
You can read this article about the differences between CareShield Life and ElderShield that we wrote previously.
Why CareShield Life Is Essential In Protecting All Of Us Against Severe Disability?
According to the Ministry of Health (MOH), it’s expected that 1 in 2 healthy Singaporeans aged 65 could become severely disabled in their lifetime and would need long-term care. Also, while the median duration for which severely disabled Singapore residents could remain in disability is around 4 years, 3 in 10 could remain in severe disability for 10 years or more.
In Singapore, severe disability is defined as being unable to perform at least 3 out of 6 activities for daily living (ADLs). These 6 activities are washing, dressing, feeding, toileting, walking or moving around, and transferring.
Individuals who are unable to perform at least 3 out of the 6 ADLs mentioned above, will likely have long-term care needs which can be met in various ways. These include home-based care services, centre-based care services, or nursing homes. All these long-term care services will require financial resources.
What Are The Benefits We Can Expect From CareShield Life?
CareShield Life benefits help guard against the cost of long-term care services by providing a basic lifelong cash payout if one becomes severely disabled (unable to perform at least 3 out of 6 ADLs).
Benefit 1 – Lifetime coverage: CareShield Life coverage continues for life after completion of premium payment the year one turns 67, or 10 years after joining the scheme, whichever is later.
Benefit 2 – Lifetime cash payouts: CareShield Life provides monthly payouts for life, during the entire duration of severe disability.
Benefit 3 – Increasing payout quantum: CareShield Life’s monthly payout quantum starts at $600 in 2020, and will increase annually (at 2% per year from 2020 to 2025) until age 67 or when a successful claim is made, whichever is earlier. This means that once a successful new claim is made, an individual’s monthly payout quantum will remain fixed for the entire duration of severe disability.
To foster a more inclusive society, CareShield Life provides universal coverage for all Singaporean Citizens and PRs who are born in 1980 or later, including those with pre-existing disabilities. This includes those with common chronic conditions such as diabetes and hypertension.
How Much Are CareShield Life Premiums?
To ensure affordability for everyone, CareShield Life payouts are sized to a basic coverage level starting at $600 a month in 2020. For those aged 30 in 2020, 2020 premiums were $206 for males and $253 for females. Singapore Citizens and Permanent Residents (PRs) can also use their MediSave to pay for their CareShield Life premiums and that of their approved dependents (i.e. spouse, children, parents, grandparents and siblings). Payment for CareShield Life premiums are to be paid till age 67, or 10 years after joining the scheme, whichever is later, after which, premium payment will cease, but coverage will continue for life.
In tandem with the annual increase of CareShield Life monthly payouts, premiums will also increase annually. From 2020 to 2025, to provide Singaporeans with greater assurance and certainty, both payouts and premiums will increase by 2% each year. Thereafter, payout and premium adjustments will be recommended by an independent CareShield Life Council in accordance with an actuarially sound adjustment framework. You can go to the MOH website – Check My Premium, to find out how much premiums you have to pay for CareShield Life each year.
The good news for Singaporeans is that there will be permanent premium subsidies for lower-income residents. The subsidy rates below are applicable to Singapore Citizens, while Permanent Residents receive half of the subsidy rates.
In addition to the permanent premium subsidies, Singapore Citizens born in 1980 or later can also enjoy transitional subsidies of between $30 to $250 from 2020 to 2024.
For example, a 30-year-old male (in 2020) who 1) lives in a property with an annual residence value of $13,000 or less and 2) has a monthly per capita household income of $2,400 will receive a premium subsidy of 20%, plus a $70 transitional subsidy. This will lower his CareShield Life premium for 2020 from $206 to $94.80.
To encourage voluntary participation in CareShield Life by Singapore Citizens and PRs born in 1979 or earlier, there will also be one-time participation incentives given out over 10 years to offset premiums payable that year. You must enrol in the scheme within 2 years from the time CareShield Life is made available for voluntary sign-ups to enjoy these incentives:
In addition, those from the Pioneer generation (born 1949 or earlier) and the Merdeka generation (born 1950 to 1959) will also receive an additional participation incentive of $1,500. This means that they will receive total participation incentive of $4,000 if they decide to join CareShield Life.
Lastly, no one will lose coverage because of an inability to pay their premiums. For Singaporeans who are unable to pay their premiums even after family support and premium subsidies, they can be invited to apply for Additional Premium Support.
CareShield Life Provides Basic Coverage For Long-Term Care But This Doesn’t Mean It’s Sufficient For Everyone
One misconception is that having CareShield Life means we no longer need to worry about our long-term care cost. This isn’t true.
The simple fact is that long-term care costs can vary significantly depending on one’s care needs and arrangements. Starting at $600 a month in 2020, CareShield Life provides basic and affordable coverage for all. However, depending on what we expect from long-term care, this may not be enough for everyone. That’s why there are also other Government subsidies and assistance schemes that we can tap on to help with long-term care costs. For example, MediSave Care allows us to make withdrawals of up to a total of $200 from our and/or our spouse’s MediSave Account each month to support our long-term care needs.
Beyond just relying on government subsidies and assistance schemes, we should also plan for other ways to ensure we have sufficient financial support for our long-term care. This includes getting a CareShield Life Supplement Plan offered by private insurers to increase our coverage if need be.