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CareShield Life:

The Ultimate Guide [2020]

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

I can understand why.

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 CareShield Life and help you understand how this change will affect you.

Let’s dive right in!

What is CareShield Life in a Few Sentences?

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

Unlike Eldershield, CareShield Life is administered by the Government. So like MediShield Life, you pay premiums and receive payout directly from the Government.

And yes, premiums are fully payable by Medisave.

Am I Automatically Enrolled into CareShield Life?

 

Yes, you will enroll automatically as you turn 30 years old.

But since CareShield Life is launching soon, those who are above 30 years old, even if you already have ElderShield, may have a chance to enroll into the new scheme.

Let’s see how the new launch will affect you:

Born between 1990 ~ 1980

When it launches in mid 2020, you’ll receive a welcome letter from the scheme and be enrolled automatically.

Born between 1979 ~ 1970

You already have ElderShield.

But the Government will still sign you up for CareShield Life to “make joining CareShield Life more convenient” (exact words by MOH).

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

Born 1969 or earlier

Since you already have ElderShield for a while, you won’t join CareShield Life automatically.

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 family. Wait until you’re 30 to receive the enrollment letter.

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

Like MediShield Life, we can’t opt out of it.

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

We have it for “Life”

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

1. Severe disability is On The Rise

 

According to the Ministry of Health, “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!

It’s 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 disabled?

😲

Ok but 50%… Are you sure?

Here’s a short video from MOH, explaining how they arrived at the figures:

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

Legit question.

Here’s what I found out

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

And with healthcare advancement, we can expect people with severe disabilities to live even longer.

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.

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?

To calculate this, we need a starting age and a claim age.

Let’s make up 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.

And the final amount after adjusting for inflation is…

$6,881.12 per month!

Not as affordable as we think, right?

Yes, long-term care will only become more expensive.

And in comparison, the payout from CareShield Life looks tiny.

3. Able to Depend on Oneself

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

I want you to imagine a scenario…

Let’s say critical illness strikes and all our savings are wiped out for medical use.

And we need long-term care.

How are we going to afford the expenses and treatment?

Perhaps we can seek social assistance.

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.

There’s this old saying…

4. One Year to Recoup Premiums Paid

Let’s go back to Jessica’s example.

Instead of 40 years old, let’s say she 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 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?

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 payout may increase until age 67 starting from $600 per month. So we assumed a 2% annual increase, which is the same assumption MOH used 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’ll never get to use it!

5. Use Medisave, Not Cash

 

Imagine we have to pay CareShield Life in cash…

I think all of us will come together at Hong Lim Park to protest.

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

If fact, Medisave is made for such use cases.

CareShield Life vs Eldershield

They both serve the same function.

But which has a better 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…

-Covers Severe disability

-Same claim definition

-Lifetime Coverage

-Pay using Medisave

Yeah… that’s about it.

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 yrs
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 you’ll be paying or getting. For more info, please visit www.cpf.com.

Boring… Just tell me which is better!

 

Ready for the answer that will make you roll your eyes?

“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 policies, then perhaps Eldershield.

You can opt out any time you want, and replace it with a private plan if you like to.

Okay… But which is more “worth it”?

Based on the calculations in the comparison table, it’s going to be 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 payout increases by 2% every year.

This is to ensure that by the time we actually need the money, 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

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

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

They both serve a different function.

In fact, I would even say that they actually complements each other!

Let’s recap…

CareShield Life protects you against 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 Integrated Shield Plan, will help to cover part of the MASSIVE hospitalization bills.

And after discharge, CareShield Life will kick in to provide monthly allowance to support the patient.

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

As a matter of fact, they complement each other pretty well.

CareShield Life Features

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

First, the tagline…

“Caring for you, for Life”

With that out of the way… let’s see the entire list of features.

1. How to Claim?

A patient will be able to make a successful claim when he or she is 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.

2. No one will ever lose coverage

The Government guarantees this.

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

3. CareShield Life Upgrade/ Enhancements/ Supplements

There’s no way to upgrade now. But this option will likely be available for us to improve the coverage.

Like MediShield Life and ElderShield, we will need to upgrade with private insurers.

4. Covers pre-existing illnesses

That means people who have high blood pressure, high cholesterol or even diabetes are welcome to join CareShield Life

5. Covers people who are already severely disabled

Applicable only to those who are joining Eldershield or CareShield Life for the first time.

Simply pay the first premium to join and receive monthly payout the same year.

6. Mandatory & Auto-enrollment

We can’t opt out like the basic ElderShield.

7. Administered by the Singapore Government

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

8. Join Scheme at age 30

Start paying premiums and receive coverage at age 30.

9. Stop payment at age 67

This corresponds to the current re-employment age.

10. Lifetime Coverage

Most private insurance that covers 2/3 ADLs stop coverage at age 60/70. CareShield Life is one of the few the offers lifetime coverage.

11. Lifetime Payouts

Patient 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.

This may be revised after 2025 depending on the economic environment

13. Premiums fully payable by Medisave

Yes. No cash needed.

14. Three types of Subsidies/ Incentives

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 premium)

note: PRs will receive 50% of the subsidies.
For more details about premium, subsidies & Incentives visit 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?

Those born 1980 or later, Careshield Life is compulsory for you. I’m sorry, no option.

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

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

2) Stay on ElderShield

3) Switch over to CareShield Life

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 😉

Not sure how that will work out during a claim…

But if you choose option 4 — 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?

I understand the rationale.

The payout for the basic scheme is low.

So why not make use of Medisave to beef up the coverage and get payout in Cash?

Smart move.

But make sure it suits your needs and circumstances before doing that.

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

Summary

CareShield Life is 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 gives us higher payout 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 can 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 already severely disabled.

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 Singaporean who lives overseas and have no intention of coming back. Can I opt out?

Unfortunately, no. But you can make a claim for even if you are overseas.

Can I pay the entire premium in one lump sum?

No, because the total premium is not set in stone. It can change any time after the first 5 years.

Is the disability assessment free of charge?

Yes, it’s free for the first assessment.

Why is premium higher as I get older?

  1. Because the payout increases over time
  2. Premium may change depending on the amount of claims expected
  3. Inflation plays a role too

How much payout will I get upon claim?

This depends on the payout amount at the time of claim. In 2020, it’ll start at $600 per month and 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 still can’t afford premiums after subsidies, the Government will pay the outstanding amount for you.

Can I opt out of CareShield Life?

No. CareShield Life is designed to be mandatory for all Singaporeans and PR at the age of 30.

What is my CareShield Life Premiums?

Please use the MOH premium calculator here to find out.

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