Tenders For Eldershield And The Interim Disability Assistance Programme For The Elderly

04 Dec 2001

As announced in August 2001, the Ministry of Health (MOH) would be introducing ElderShield, an affordable severe disability insurance scheme, to provide insurance coverage to elderly Singaporeans who require long-term care. ElderShield would provide them with basic financial protection and help defray out-of-pocket expenses in the event of severe disabilities. At the same time, the Government would also introduce an Interim Disability Assistance Programme for the Elderly (IDAPE) to provide Singaporeans who are not eligible to join ElderShield due to pre-existing disabilities or age limit with basic financial coverage against severe disabilities.

To encourage greater private sector participation in the severe disability insurance market, MOH would be tendering ElderShield out to the private insurers. Through such a competitive bidding process, the Government would be able to get the best value for the premiums that ElderShield members would be paying. Similarly, the administration of IDAPE would also be tendered out to private insurers.

ElderShield Tender

The ElderShield tender documents would specify the details of the ElderShield scheme, and invite insurers to submit quotations of their proposed premiums for the scheme. However, the selection of insurers would not be based solely on the premium quotations submitted. Other selection criteria would include the quality of organisation, quality of proposal, market recognition and track record, etc. Up to 4 insurers could be selected to operate ElderShield.

The key features of the ElderShield tender are:

(a) Premium Rebate

A premium rebate feature would be built into ElderShield. Surpluses generated as a result of actual claims being lower than the expected claims projected in the initial pricing of the premiums would be returned to ElderShield members.

(b) Premium Adjustment

In line with insurance industry practice, the ElderShield premiums would not be provided on a guaranteed basis. Nonetheless, to safeguard the interest of ElderShield members, insurers would only be allowed to adjust the premiums once every 5 years. Premium increase, if necessary, would be capped at 20% of the preceding premium.

(c) Paid-up feature

Since ElderShield premiums are pre-funded, members would have paid more than the cost of their health risk while they are younger. With a paid-up feature, ElderShield members who terminate their policies would be able to use their ?accumulated? reserves to enjoy reduced benefits. For example, a person who joins ElderShield at the age of 40 would be eligible for the reduced benefits of around $100 per month (instead of the usual $300 per month), at the 11th policy year, if he chooses to terminate his policy at the 11th policy year.

(d) Claims Assessment

To ensure consistency in claims assessment, the selected insurers would be required to set up a common panel of medical practitioners to assess ElderShield claims. The panel would assess all ElderShield claims based on a consistent set of guidelines on Activities of Daily Living (ADLs) set by MOH.

(The 6 ADLs are mobility, feeding, transferring, dressing, bathing, and toileting.)

Selected insurers would be required to operate ElderShield, including administering and undertaking the insurance risk of the scheme, for a contract period of 5 years. At the end of the 5 years contract period, the Government would then decide whether to renew their contract, or call for a re-tender to re-select insurers to operate ElderShield for future cohorts of ElderShield members.

This would not affect existing ElderShield members as the insurers selected in this current round of tender would be required to fulfil their obligations and service those insured under them.

IDAPE Tender

Like the ElderShield tender documents, the IDAPE tender documents would specify the details of IDAPE, and invite insurers to submit quotations of their proposed fees to administer the scheme, on behalf of MOH. Unlike ElderShield, the insurance risk of IDAPE would not be tendered out but would be borne by the Government. As such, insurers would only be required to propose the fees required to administer IDAPE.

As IDAPE is an interim scheme, and for economies of scale reason, only 1 insurer would be selected. Again, the selection of insurer to administer IDAPE would not be based solely on the fee quotations submitted. Other selection criteria would include the quality and reliability of the insurer.

There would be no future tenders for IDAPE given that the scheme is an interim one. The selected insurer this time round would be required to administer IDAPE until the scheme has expired.

Tender Notices

The Tender Notices for ElderShield and IDAPE tenders would be published in The Straits Times on 11 December 2001. The 2 tenders are to be treated as separate tenders, and insurers who are interested in bidding for both tenders would need to submit 2 separate quotations.

Once the Tender Notices are published, interested insurers can collect a copy of the Tender Documents for each of the tender from the Ministry of Health at the College of Medicine Building. The tender documents would contain all technical details of the ElderShield scheme and IDAPE, and other necessary information for the purposes of submitting the tenders. Insurers who are submitting a bid should read the tender documents carefully, and make sure that the Tender they submit are in order.

The insurers would have 28 days from the date of the Tender Notices (inclusive) to submit their quotations.