Government policies in Singapore are constantly evolving to stay relevant to Singaporeans’ changing demographics and needs. This includes modifications to the Housing and Development Board (HDB) system over the past few decades to make it more equitable for homeowners, and the introduction of CPF LIFE to replace the Retirement Sum Scheme as life expectancy increases.
When policies are updated, Singaporean seniors are often given the opportunity to transition to the new systems. A recent example is the introduction of CareShield Life, which replaced the old ElderShield plan. CareShield Life was launched on 1 October 2020 for all Singapore Citizens and Permanent Residents born in 1980 or later. Those who turn 30 are automatically covered. making it compulsory for individuals aged 44 or younger (as of 2024) with no opt-out option.
As of 6 November 2021, all Singapore Citizens and Permanent Residents born in 1979 or earlier can choose to join CareShield Life if they are not severely disabled. This is independent of their ElderShield status, whether they were insured under ElderShield or had opted out.
Do note that it’s an option for them to decide whether they want to 1) transit from ElderShield to CareShield Life, 2) remain in ElderShield or 3) not be enrolled in either plan. However, for those who do not have any long-term care insurance, we strongly advise you to consider enrolling into CareShield Life.
For those with elderly parents and grandparents, it may be financially prudent to convert from the old ElderShield to CareShield Life. This new scheme could provide better coverage and financial security in the long term.
Lifetime Payouts with CareShield Life
The most significant difference is that CareShield Life offers payouts for life, while ElderShield’s payouts are capped at 60 or 72 months. Lifetime payouts are crucial as they eliminate the risk of a severely disabled person outliving the payout duration, ensuring that financial support continues for as long as the policyholder lives.
For our elderly parents and grandparents, this difference is particularly important. According to the Ministry of Health, 1 in 2 healthy Singaporeans aged 65 could develop severe disability in their lifetime and may require long-term care. Severe disability can result from sudden disabling events (such as strokes or spinal cord injuries), the worsening of chronic conditions (like diabetes), or the progression of illnesses associated with ageing (such as dementia).
At the same time, Singaporeans live longer than ever, with about 1 in 3 Singaporeans aged 65 expected to live beyond 90. This combination of high longevity and the risk of severe disability makes lifetime payouts from CareShield Life especially valuable. Given the quality of healthcare in Singapore, many seniors could live to an advanced age despite severe disabilities.
Considering the risk of severe disability and the increasing lifespan of Singaporeans, CareShield Life’s lifetime payouts offer a significant advantage over ElderShield. For those with elderly parents and grandparents, converting to CareShield Life ensures that long-term care support is secured for the duration of their lives.
Higher Monthly Payout With CareShield Life
The older ElderShield provides a monthly payout of $300 (ElderShield 300) or $400 (ElderShield 400). While having some income is better than nothing, we don’t think it’s close to being sufficient to care for an elderly parent or grandparent with severe disability.
For CareShield Life, payouts are slightly higher, starting at $600 a month in 2020. The good thing about CareShield Life payouts is that they are an approximate increment of 2% per annum that only becomes fixed once a claim is made. This means that for elderly individuals who are not severely disabled, the monthly payout would become higher should they need to make a claim in the future.
Participation Incentive For Singapore Seniors Who Join CareShield Life
As a disability insurance scheme, the premiums for CareShield Life are obviously going to be more expensive compared to ElderShield as monthly payouts are higher and also for life.
To encourage Singaporeans to switch from ElderShield to CareShield Life, the government introduced the Participation Incentive for Singapore Citizens born in 1979 or earlier who join CareShield Life by 31 Dec 2024.
For those who are part of the Merdeka Generation (MG) and Pioneer Generations (PG), participation incentive are higher. In total, they will receive $3,000 in Participation Incentives over a 10-year period, or $300 a year. This will help them reduce the cost of their premiums.
Source: MOH
If you enroll your parents or grandparents in by December 31, 2024, they can benefit from the Participation Incentives. For anyone over the age of 59 joining CareShield Life, premiums will be paid for a total of 10 years.
How Much Does It Cost To Convert From ElderShield To CareShield Life?
For anyone over the age of 59, you can check the premiums that you need to pay on the CareShield Life website. Use your Singpass to log in and click on the application to join CareShield Life.
You would see your personal details and whether you are currently under ElderShield. In our example, we are under ElderShield 300.
Complete the health declaration truthfully. It’s an offence to knowingly make a false declaration.
You will see the relevant annual CareShield Life premium. In our case, it’s $683.14 a year in 2024. This will increase slightly in 2025. As a senior, we will be paying the premiums for a period of 10 years. This can be fully paid for by MediSave.
You can view the premium breakdown as well.
In our case, premiums would have been $1,071.05 per annum. It’s reduced because of premium subsidies of 10%. Refer to the table below for subsidies for Singapore citizens and PRs.
We also enjoy participation and additional participation incentives totalling $300 per annum. In total, we receive $387.91 in subsidies.
We can procced to apply for CareShield Life online.
The post Why It Makes Financial Sense For Your Elderly Parents To Convert From ElderShield To CareShield Life appeared first on DollarsAndSense.sg.
