ElderShield Reform 2007

19 Jun 2007

Come September, ElderShield will be significantly reformed in four ways.

First, a third insurer, Aviva Limited, will enter the market and compete with the two incumbents, Great Eastern Life Assurance Company and NTUC Income Insurance Co-operative, for this business.  This will provide Singaporeans with more choice.  This greater competition should improve services and keep premiums competitive.

Second, ElderShield benefits will be substantially enhanced to meet the increasing and varied needs of Singaporeans.  Higher benefits will need to be funded with higher premiums.  To ensure that ElderShield remains affordable to lower income Singaporeans, while meeting the needs of higher-income Singaporeans who want and can afford better coverage, ElderShield will be restructured to comprise two tiers: (a) basic ElderShield, and (b) ElderShield Supplements.

All Singaporeans turning age 40 from September 2007 will be offered, on an opt-out basis, a new basic ElderShield which pays $400 per month in cash, for up to 6 years (for a maximum potential payout of $28,800).  This represents a significant 60% improvement over the current basic ElderShield payout of $18,000 ($300 per month for up to 5 years).   Medisave can be used to pay in full the premiums for basic ElderShield.

Subscribers to basic ElderShield who prefer and can afford higher coverage, can buy ElderShield Supplements from any of the 3 ElderShield insurers.   Medisave can also be used to pay part or all of the premiums for the ElderShield Supplements, but subject to a maximum withdrawal limit of $600 per insured per year.  At this withdrawal limit, the bulk of Singaporeans below age 50 will be able to top up their basic ElderShield with an ElderShield Supplement for a total potential payout of $1,000 per month for up to 10 years (for a maximum potential payout of $120,000).

Third, the premiums for the new basic ElderShield have been determined through an open competitive tender.  Aviva has proposed the most competitive premium bid (refer to Annex A), and the other two insurers have agreed to match these premium rates.  At $164 (male) and $204 (female) per year for 40-year-old policyholders, the increases in premium as compared to the current basic ElderShield (of $142 for male and $182 for female) are about $2 per month.  For the substantial improvement in payouts, the increase in premium represents good value for money.

Fourth, the insurers are free to design and promote their ElderShield Supplements in accordance with their perceived market needs, but subject to a minimal set of guidelines set by the Ministry of Health (MOH).  Examples of Supplements include higher payouts, longer benefit period, or lessened definition of claim eligibility.  As with the MediShield Reform 2005, MOH expects insurers to offer a variety of insurance products at different pricing levels to meet the diverse needs of Singaporeans and for Singaporeans to choose.

Background Information

ElderShield was launched in 2002 as a long-term care insurance scheme to help Singaporeans pay for their long-term step-down care should they become severely disabled. 

Drawing on the five years of experience and taking into account feedback from various public consultation exercises, MOH has finalised the reformed ElderShield framework.  We have made changes to the scheme to better meet the growing needs of Singaporeans in long-term disability care.

Impact on Singaporeans

(a) Existing ElderShield Policyholders

Existing ElderShield policyholders can:

a. Choose to remain with their insurer on their current basic ElderShield scheme ($300 monthly payout for up to 5 years); or

b. Choose to remain with their insurer but upgrade to the new basic ElderShield scheme ($400 monthly payout for up to 6 years) with the new premiums and some adjustment premium .  Each policyholder will be notified by his respective insurer on the amount he needs to top up if he wishes to upgrade; or

c. Choose to top up with an ElderShield Supplement offered by their insurer or the other two insurers.

Existing policyholders will receive notification letters from their insurers roughly one month before their policy renewal dates.  The first group of existing policyholders who joined in September 2002 will receive their notification letters before September 2007.

(b) New 40-year-old Potential Policyholders

All CPF members who turn age 40 from September 2007 will be covered under the new basic ElderShield scheme, unless they opt out or have pre-existing disabilities.  If they obtain coverage in this manner, there will be no medical underwriting, i.e. no need for medical check-ups.

The new policyholders will be assigned randomly to the 3 insurers.  As Aviva has submitted the most competitive premium bid, half of the new business will be assigned to Aviva, to facilitate its building-up of economies of scale.  The other half will be distributed equally to Great Eastern Life and NTUC Income.

The first batch of CPF members turning age 40 in September 2007 will receive their letters of auto-coverage from their allocated ElderShield insurers sometime in July 2007.  

(c) Singaporeans/PRs who opted out of ElderShield

For individuals who had previously opted out of ElderShield, they can apply for ElderShield but will be subject to medical underwriting. They can approach any of the 3 ElderShield insurers to apply.  Subscribers to ElderShield Supplements must first subscribe to basic ElderShield.

Annex A

Schedule of ElderShield Premiums for New Basic ElderShield: Benefit Level of $400 per month up to a maximum of 6 years