Smoother move to CareShield Life as Government takes over ElderShield from 2021

SINGAPORE — An improved assessment process for claims, and a smoother progression to the new CareShield Life disability insurance scheme await ElderShield policyholders. This is after the Government announced on Monday (Jan 7) that it has reached an agreement with ElderShield insurers to take over the management of the national insurance scheme from 2021.

With the Government in charge, policyholders who choose to move their plans to CareShield Life — which will replace ElderShield from 2020 — will have a “smoother upgrading process”, the Health Ministry (MOH) said in its statement.

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ElderShield policyholders who are not joining CareShield Life will remain covered by their ElderShield policies and benefit from an improved assessment process for claims which will be rolled out for CareShield Life. This includes an enhanced assessment framework that takes into account cognitive impairments.

The MOH said that it will administer the ElderShield scheme on a not-for-profit basis. “In the event that the actual claims experience turns out better than expected, there will continue to be premium rebates for ElderShield policyholders,” it said.

Right now, three private insurers — Aviva, NTUC Income and Great Eastern Life Assurance — serve ElderShield policyholders.

Under the move valued at about S$2.9 billion, the insurers will transfer the liabilities for all ElderShield policies, as well as the corresponding assets backing these liabilities, to the Government.

The MOH said that government-appointed actuarial consultants and audit and legal firms have verified that the valuation and transfer terms are fair and in step with standard industry practice.

ElderShield policyholders do not have to take any action at this stage. From now until the transfer is completed in 2021, the ElderShield insurers will continue to issue new ElderShield policies and serve existing ones.

More information will be given to ElderShield policyholders when the transfer nears, the ministry said, adding that it will work with the insurers to ensure a smooth transition.

Mr Chaly Mah, chairman of the ElderShield Review Committee, said that the group had earlier noted in its report that there is value in ElderShield and CareShield Life policyholders being served by the same administrator, to ensure consistency in policy administration.

“I encourage the private insurers to work with the Government to ensure a smooth transfer,” Mr Mah said.

Dr Jeremy Lim, a partner with the health and life sciences practice in the Asia-Pacific at Oliver Wyman, a global consultancy, said that he expects the move to result in a seamless experience for policyholders.

With both insurance schemes set to come under one administrator and having similar computer systems, it will mean quicker processing for those moving from one to the other, Dr Lim said.

“If there are any differences in premium rates, or if you need to equilibrate or equalise anything (between the schemes), then it’s much easier because it’s the same entity that you’re working with,” he added.

The economies of scale, combined with the not-for-profit focus, could even reduce premiums, as bringing the schemes under a single administrator could lower overhead costs. “If you reduce or collapse the three operators (insurers) into one, the assumption is that with larger numbers and the need for a single IT system… this then reduces overheads, giving you opportunities for lower premiums,” Dr Lim said.

ABOUT ELDERSHIELD AND CARESHIELD LIFE

Last year, the Government announced that the enhanced ElderShield insurance scheme would be renamed CareShield Life from 2020, and this would give higher and lifetime payouts to severely disabled Singapore residents — up from the limit of six years for payouts.

Unlike the existing opt-out ElderShield scheme, enrolment in CareShield Life will be compulsory.

The first cohort to be enrolled are citizens and permanent residents aged between 30 and 40 in 2020, with all subsequent cohorts joining automatically once they reach 30 years old.

Those born before 1980 may opt to join the scheme from 2021.

The enhanced severe disability insurance scheme promises bigger initial cash payouts — S$600 a month instead of the S$400 now — which reflect existing costs of nursing homes, and home and community care. Premiums will rise concurrently by 2 per cent a year for the first five years, with subsequent adjustments determined by an independent CareShield Life Council to be set up in future.

ElderShield began in 2002, doling out S$300 or S$400 a month to policyholders who cannot independently perform at least three out of six activities of daily living — including eating, bathing and dressing. The payouts last five or six years, depending on when policyholders joined the scheme.

With subsidies and instalment plans, the Government intends to encourage existing ElderShield policyholders, as well as those who opted out of ElderShield, to join CareShield Life.