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CareShield Life:

The Complete Guide [2020]

Health Minister Gan Kim Yong calls CareShield Life scheme the MOST difficult healthcare scheme to explain to public.

And understandably so.

It’s more complicated than it’s predecessor, ElderShield.

And it’s structured in a way that would upset Singaporeans at first glance. (compulsory…higher premiums…longer payment term…)

So in this guide, I’ll reveal everything you need to know about the new long-term care insurance scheme, CareShield Life, and help you understand how this change will affect you.

Let’s dive right in!

What is The CareShield Life Insurance Scheme In A Few Sentences?

CareShield Life is a long term care and disability insurance scheme for Singaporeans and Permanent Residents. It supports you at old age by providing a stream of income upon severe disability.

Unlike the existing Eldershield scheme, which is issued by private insurers, CareShield Life is administered directly by the Ministry of Health Singapore.

Premiums for CareShield Life are also fully payable by Medisave.

Am I Automatically Enrolled into CareShield Life Scheme?

 

Yes, you will enroll and receive long-term care coverage automatically as soon as you turn 30 years old.

Let’s see how the new CareShield Life scheme will affect you:

Born between 1990 ~ 1980

You will receive a welcome letter from the Ministry of Health and be enrolled into the new long-term care insurance scheme – CareShield Life.

Born in 1979 ~ 1970

You are an existing Eldershield policyholder.

But the Government will still sign you up for the CareShield Life scheme. This is to “make it more convenient to join the scheme” (in the exact words of MOH).

So if you don’t want it and wish to stick with the existing ElderShield insurance policy, opt out by 31 Dec 2023 and receive a full refund of the premiums paid.

Born 1969 or earlier

Since you are already a Eldershield policyholder for a long time time, you won’t be required to join the new CareShield Life insurance.

However, you can switch over if you wish, starting from mid 2021.

Born 1991 or later

Relax! Your time will come to join the CareShield Life scheme and receive long-term care coverage. You will receive the enrollment letter when you reach 30 years old.

Since We Can’t Opt Out, Learn Why CareShield Life is Not That Bad After All

Like MediShield Life, we can’t opt out.

Maybe that’s why it has the word “Life” in it.

So instead of lamenting over the change, in this section we’ll focus on why the new CareShield Life disability insurance scheme may actually be beneficial for us…

1. Severe disability is On The Rise

 

According to the Ministry of Health, “As our population ages, 50% of healthy Singaporeans aged 65 are expected to become severely disabled by the end of their lives”

Let that sink in for a moment….

50% is a lot of people who needs long-term care.

The odds is like a flip of a coin.

And since MOH says “healthy Singaporeans”, does that mean “less healthy” Singaporeans will have a higher chance of becoming severely disabled?

Maybe…

But 50%… Are you sure?

MOH actually did some calculations and explained how they arrived at the figure.

Check out the video below:

But if a person becomes severely disabled at old age, how long can he or she lives?

Here’s what I found…

“3 in 10 Singaporeans will live a decade or more after they become severely disabled” – TODAYonline

And with healthcare advancement, we can expect the life expectancy of Singaporeans including severely disabled persons to increase.

2. Long-Term Care is Expensive

 

Aviva did a study in 2018 and found that the average amount needed for long-term care is $2,324 per month.

That’s actually a lot considering the fact that most claims are made during the silver years, when there’s no longer income coming in.

And here’s the kicker…

It’s $2,324 per month in today’s dollar, before accounting for inflation!

Then how much would it be after factoring inflation?

Let’s calculate this with an example…

Jessica is 40 years old (starting age) and will need long-term care when she’s 75 years old (claim age).

We’ll use 3.15% as the inflation rate.

The final amount after adjusting for inflation is…

$6,881.12 per month!

And long-term care will only become more expensive.

In comparison, the monthly payout from CareShield Life ($600) is so tiny.

3. Able to Depend on Oneself

Now that you’ve seen how much long-term care actually cost.

Imagine this scenario…

Critical illness strikes and unfortunately we become severely disabled.

All our savings are wiped out for medical use, as we need it for treatment and long-term care.

Now, how are we going to afford the ongoing expenses?

Perhaps we can seek social assistance for basic financial support.

Or we can turn to our children and family members for help.

But with CareShield Life, at least we can get some additional income coming in to help with the monthly costs.

There’s this old saying…

4. One Year to Recoup Premiums

Let’s go back to Jessica’s example to estimate the premiums vs payout.

Instead of 40 years old, say Jessica started paying premiums at age 30, and pays until age 67 (same for everyone).

And let’s also assume that she didn’t receive any premium subsidies from MOH (which we’ll receive when CareShield Life launches)

With a larger premium amount than all of us, how long will she take to recoup her money if she becomes severely disabled?

Let’s find out!

Total premiums paid from age 30 ~ 67: $13,670*

Payout per month: $1,248.41*

Payout per year: $1,248 x 12 = $14,976*

(*Figures are estimated. MOH says that Careshield life payout may increase over time until age 67 starting from $600 monthly benefit. So we assumed a 2% annual increase, which is the same assumption MOH made for their calculations)

With only one year of payout and Jessica is able to recoup 37 years of CareShield Life premium!

Not bad.

But of course, it’ll be even better if we will never need to use the money.

5. Use Medisave, Not Cash

 

Imagine we have to pay CareShield Life in cash.

Perhaps we’ll see Singaporeans coming together at Hong Lim Park to protest…

But no, all future Careshield life premiums are FULLY payable by Medisave.

If fact, Medisave is made for such use cases like long-term care.

Since we can’t withdraw Medisave savings in cash even if we are disabled, why not make use of it to purchase disability insurance?

So if we ever need to use it one day, we can at least get monthly payouts in cash.

 

CareShield Life vs Eldershield

They both serve the same function  Giving support when a person is severely disabled.

But which has a better long-term care coverage?

And if you already have Eldershield, should you switch over?

First, let’s go over the similarities and differences.

The Similarities

 

Both CareShield Life & ElderShield…

-Provides for long-term care

-Covers severe disability

-Has the same claim definition

– Protects us for life

-Are paid using Medisave

While they both look similar and have the same objectives, the foundation that make up both schemes are different.

The Differences

CareShield LifeElderShield
Total Estimated premium$13,670*$5,750*
Total Estimated payout$89,856* (based on 6 yrs)$28,800*
Return on Est.Premium557%400%
Payout DurationLifetime6 years
Payout Amount$600 / month$400 / month
Payout Increment2% / year*0
Premium starts at30 y.o40 y.o
Premium stops at67 y.o65 y.o
Total premium years 37 yrs25 yrs
MandatoryYesNo
SubsidiesYesNo
AdministratorsGovernmentPrivate

*The payout increment for CareShield Life is 2% for the first 5 years and will be adjusted accordingly going forward. This calculation assumes a minimum 2% increment throughout the payment period.

*Premium and Payout calculations are estimates only and may not be reflective of what Singapore citizens and Permanent residents will be paying or getting. For more info, please visit the Central Provident Fund website, www.cpf.com.

Boring… Just tell me which is better!

 

It depends.

We all have different needs, so there’s really no one-size-fits-all answer here.

If you want more control over your long-term care insurance, or a cheaper overall premium regardless of the returns, then it’s probably Eldershield.

Okay… But which is more “worth it”?

Based on the calculations in the comparison table, it’s CareShield Life because you get a higher return on premiums paid.

And for sure, CareShield Life is the more advanced one…

Why?

2 Reasons 

1) It recognizes the fact that inflation devalues our money, and that’s why the payout increases by 2% every year.

This is to ensure that by the time we actually need the money for long-term care, the payout amount will not be too low.

2) It understands that life expectancy and healthcare technology is only going to improve, that’s why it has a lifetime payout duration.

Eldershield on the other hand only pays for 5 to 6 years.

So no matter how long you live, even if you outlive your savings, you’ll be able to make use of cash payouts from CareShield Life to pay for long-term care expenses.

For this reason, CareShield Life offers a better protection compared to the Eldershield.

Wait … I have MediShield Life, Why do I even need Careshield Life?

 

They both serve a different function.

In fact they actually complement each other.

Let’s do a quick recap…

CareShield Life protects you from the ongoing cost of long-term care.

On the other hand, MediShield Life protects you against expensive medical treatments that may wipe out life savings.

Let’s say a person recovers from cancer but is severely disabled.

Both MediShield Life and the Integrated Shield Plan will cover part of the MASSIVE hospitalization bills.

But it will not pay for ongoing expenses related to long-term care.

This is where CareShield Life comes in.

CareShield Life will provide monthly benefit to support patients who need long-term care.

There’s no conflict in coverage between the two schemes.

in fact, they complement each other very well.

CareShield Life Features & Benefit

I’ve added this section to showcase ALL the features of Careshield Life in one place.

There are 14 of them that you need to know.

Let’s start with the 1st one…

1. How to Claim?

A patient will be able to make a successful claim when he or she is severely disabled  unable to perform 3 out of 6 activities of daily living (ADL)

And of course, he or she must be certified by a qualified healthcare worker such as a doctor or nurse.

6 ADLs – Transferring, Mobility, Toileting, Dressing, Washing, and Feeding.
Image source

2. No One Will Ever Lose Coverage

The Government guarantees this.

And will pay the shortfall for anyone who cannot afford premiums even after the Government subsidies.

3. CareShield Life Upgrade/ Enhancements/ Supplement Plan

3 Insurance companies offer CareShield Life supplement plans – Aviva, Great Eastern, and NTUC.

The most important feature of these supplement plans is that they increase your monthly payout without the need of paying premiums in cash. (Able to pay premiums with only Medisave)

But of course if you need better coverage, you can always top up with cash and get higher monthly payout.

4. Covers Pre-Existing Medical Condition

That means people who have high blood pressure, high cholesterol or even diabetes are welcome to join CareShield Life and get long-term care insurance.

5. Covers People Who Are Already Severely Disabled

Applicable only to those with existing disability and is joining Careshield life for the first time.

Simply pay the first premium to join, and receive the monthly benefit in the same calendar year.

6. Mandatory & Auto-enrollment

We will not be able to opt out like the basic Eldershield.

7. Administered by the Singapore Government

CareShield Life will be run by the Ministry of Health Singapore.

8. Enroll into CareShield Life At Age 30

Start paying Careshield life premiums and receive long-term care coverage at age 30.

9. Stop Payment at Age 67

This corresponds to the current re-employment age (And may increase over time). Even if the payment stops, the coverage for severe disability is for lifetime.

10. Lifetime Coverage

Most private insurance policy for long-term care (not related to CareShield Life) only covers up to age 60/ 70.

CareShield Life and it’s supplement plans is one of the few that offers lifetime long-term care insurance.

11. Lifetime Cash Payouts

Insured persons who are severely disabled will be able to receive payout for as long as he or she lives.

12. Payout Starts at $600 And Increases by 2% Per Year

As mentioned in the previous sections, this is to combat inflation. The amount may be revised after 2025 depending on the economic environment.

13. CareShield Life Premiums Fully Payable by Medisave

There is no cash needed for CareShield Life or even for CareShield Life supplement plans (unless you need a higher monthly benefit).

14. Three types of Premium Subsidies/ Incentives for Additional Support

Government subsidy based on Income

up to 30% off.

Transitional Subsidy

$30 ~ $250 off.

Participation Incentive for those born in 1979 or earlier

$500 ~ $4,000 (to offset annual premium).

note: PRs will receive 50% of the Government subsidies.
For more details about full premium, subsidies & Incentives visit the MOH website here

What Are Your Options?

 

At this point you’ve probably already decided if CareShield Life is right for you.

So what are your options?

For those born 1980 or later, Careshield Life is compulsory for you.

But if you are born in 1979 or earlier, you have 4 options:

1) Opt out of ElderShield, without switching to CareShield Life

2) Stay on ElderShield, without switching to CareShield Life.

3) Switch to CareShield Life (and cancel Eldershield)

4) Upgrade Eldershield AND switch to CareShield Life

and maybe number (5)… upgrade Eldershield, switch to Careshield Life AND Upgrade CareShield Life when it releases 😉

But if you choose option 4 or 5 — upgrade ElderShield and switch to CareShield Life, you’ll be able to claim from BOTH plans upon severe disability.

Wait… Why would anyone get option (4) or option (5) even if it’s possible?

Because the payout for the basic scheme is low $600 per month.

So why not make use of Medisave to beef up your long-term care coverage and get Cash payout?

Before you do that, make sure you have sufficient funds in Medisave and it’s suitable for your care needs.

Update: MOH confirmed that option 5 is possible. You’re able to claim from ElderShield Supplement Plan + CareShield Life + CareShield Life Supplement Plan.

Summary

CareShield Life is like Eldershield 2.0 and is clearly more advanced and well-thought out.

Sure there are things that some of us might not like, like having to start 10 years earlier, higher premium amount and more…

But in all fairness, CareShield Life will provide us higher monthly benefit that increases over time.

And if you have seen our calculations above, the return on premium (%) is actually higher than those of Eldershield.

Love it or hate it, CareShield Life is here to stay.

So make sure you understand how it works today.

Is there anything I missed out? Tell me in the comments section below the FAQ.

Frequently Asked Questions

What can I use the monthly payout for?

You will receive the payout in cash and you are allowed to use it in any way you want.

I opted out of Eldershield and was rejected when trying to apply for it again, can I join CareShield Life?

Yes. You’ll be able to join CareShield Life as long as you are not severely disabled after opting out (and subjected to underwriting).

The Government relaxed the underwriting criteria to allow more Singaporeans to have coverage.

And if you are joining for the first time, you’ll get accepted even if you are already severely disabled.

I'm a Singapore citizen who lives overseas and have no intention of coming back. Can I opt out?

Can I pay the entire premium in one lump sum?

No, because the total payout and premium has not been fixed. It can change any time after the first 5 years.

Is the disability assessment free of charge?

Yes, the first disability assessment is free of charge.

Why is the premium higher as I get older?

There are primarily 3 reasons…

 

  1. You are getting a higher payout as you grow older
  2. Inflation
  3. Premium may change depending on the actual amount of claims

How much payout will I get upon claim?

It will depend on when you actually make the claim, and how many years you are into the plan.

In 2020, the monthly benefit will start at $600 and will gradually go up over time.

Can I use someone elses Medisave to pay for CareShield Life?

If you run out of funds in your Medisave account, you may use Medisave savings of your immediate family members (eg. spouse and child).

If you cannot afford your CareShield Life annual premiums even after premium subsidies, and family support, you may be eligible for Additional Premium Support (APS)

These premium subsidies and support measures ensure that CareShield Life premiums remain affordable. No one will lose their CareShield Life coverage because of the inability to afford their premiums.

Can I opt out of CareShield Life?

Unfortunately, no. CareShield Life is mandatory for all Singaporeans and Permernant Residents starting from age 30.

What is my CareShield Life Premiums?

At least 3 months before enrollment into the scheme, you will receive a letter indicating the exact premium to pay and the payout you will be getting upon severe disability.

To estimate how much you will need to pay, please use the MOH premium calculator here to find out.

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1 year of payout from careshield to recoup 37 years of premium image

9 Powerful Reasons to Upgrade Your Eldershield Today!

NO Cash Needed

Use Medisave to upgrade

Get $600 - $1,600

per month in disability allowance.

Lifetime Allowance

For as long as you live.

1 in 2 Will Be Disabled

It's like a flip of a coin. Don't take a gamble on this.

Watch how MOH arrives at this figure here.

Disability is Expensive

It costs an average of $2,150 per month¹

With inflation this amount balloons to a whopping $4,052 per month when you need it.

Not Covered by Shield Plan

Shield plan "shields" us from HUGE hospital bills.

Not long-term care expenses.

Easier to Claim

Easy definition: Cannot perform daily living activities.

Difficult definition: Have to be blind or lose your limbs.

 

Afford the Best Care

Use additional payout for therapies and more advanced technology to help you recover.

Depend On Yourself

Receive allowance to pay for long-term care.

Don't need to burden our spouse and children.

"YES! I'd Like To Upgrade My Eldershield And Claim My Free Bonus (Worth $170)

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