Thursday 5 July 2018

Government to strengthen long-term care financing for all Singaporeans through CareShield Life, MediSave cash withdrawals and new ElderFund assistance scheme for the lower-income who are severely disabled

Severely disabled can withdraw up to S$200 a month from Medisave from 2020
By Salma Khalik, Senior Health Correspondent, The Straits Times, 4 Jul 2018

People who are severely disabled will be allowed to dip into their Medisave accounts for cash from 2020 - provided they or their spouse have at least $5,000 in their accounts.

This is the first time members can withdraw cash from Medisave since it was set up in 1984 as part of Central Provident Fund contributions to defray hospital bills.

The bigger the sum in their accounts, the more the members will be able to withdraw. Those with $5,000 in their Medisave accounts - a floor that covers three in four people aged 65 years and older - will be able to take out $50 a month.

On the other hand, those with $20,000 or more in their Medisave accounts will be allowed to withdraw $200 a month. This covers about half the people aged 65 or older, who are more likely to suffer from severe disabilities.

Separately, a fund is being set up to help needy disabled people.

Explaining the rationale to allow cash withdrawals from Medisave, Health Minister Gan Kim Yong said: "When a Singaporean is facing severe disability and, at the same time, facing financial difficulties, I feel that we can afford to be more flexible."

He said this change will not result in higher Medisave contributions. Those deemed severely disabled will be able to dip into their accounts from the age of 30.

Potentially half the population would be able to draw on this facility in their lifetime.

Mr Gan also revealed that a new safety net called ElderFund will provide needy disabled people up to $250 a month from 2020.

In the same year, a long-term disability insurance called CareShield Life will kick in and be made compulsory for people aged 40 years and younger. It will pay those who are severely disabled at least $600 a month for life.

Another two million people, aged 41 years and older when CareShield Life is launched in 2020, will be encouraged to join the scheme that is optional for them.

These Singaporeans will be offered a $500 to $2,500 incentive to offset their premiums over 10 years.

If they join the scheme within two years, those with chronic ailments and mild or moderate disabilities will be allowed into the fold despite their health conditions. There will be stricter underwriting for those who join later.

Asked if this is fair to healthy people joining the scheme as it could potentially push up premiums, Mr Gan said that "the Government will do its part", and details will be announced later.

People from two-thirds of households can get 20 per cent to 30 per cent premium subsidies. Those who cannot pay their premiums after some years can get additional support.

Those aged 42 to 51 years in 2021 who are on ElderShield400 will be automatically enrolled in CareShield Life. They have until December 2023 to opt out with no penalty.

ElderShield400, offered by three insurance companies, provides $400 a month for up to six years for people who are severely disabled.

Those on the scheme who seek to upgrade to CareShield Life will need to pay higher premiums for 10 years or up to the age of 67, whichever is longer.

Those who are on the older ElderShield300 or who do not have ElderShield coverage may also join CareShield Life if they pay an additional "catch-up premium" over 10 years to bring them to the level of those on ElderShield400.

Mr Chaly Mah, who chaired the ElderShield Review Committee, said that these new measures "will provide better protection and assurance for all Singaporeans".

Cash from Medisave helps meet diverse care needs: Health Minister Gan Kim Yong
Withdrawals give severely disabled flexibility but will not require higher contributions
By Linette Lai, Health Correspondent, The Straits Times, 4 Jul 2018

Madam Quek Pong, 86, has dementia and needs help with even the simplest of daily activities, such as bathing herself or getting out of bed.

She gets $300 a month from ElderShield, which helps her family pay for necessities such as her special diet and her live-in helper. But the rest of her expenses - about $900 a month - are paid for by her nine children.

From 2020, severely disabled Singaporeans such as Madam Quek and permanent residents with similar conditions can draw up to $200 in cash from their Medisave accounts every month to pay for such necessities.

It is the first time the Government has allowed cash withdrawals from Medisave since the scheme was set up in 1984.

The move is to give people greater flexibility when making their care arrangements, which is important when "the needs are quite diverse", Health Minister Gan Kim Yong said yesterday when he announced the scheme.

"Some of them may have an informal care arrangement and need some financial support to make sure this is affordable," Mr Gan said. "So, by giving them cash, it will give them greater flexibility."

He added that it will not result in higher Medisave contributions.

Severely disabled people aged 30 and older can withdraw the cash from either their own or their spouse's Medisave accounts.

The maximum amount they can draw every month ranges from $50 to $200, and depends on their Medisave balance.

For example, a person with at least $20,000 in his Medisave account would be able to draw $200 every month. If this amount drops to $15,000, he would be able to draw only $150 a month.

Should the account have less than $5,000, then no cash can be taken out of Medisave.

This is to ensure that the account holder still has money to pay for other healthcare needs, such as hospital bills or MediShield Life premiums.

For now, the Health Ministry plans to let only spouses tap each other's Medisave funds in this manner, Mr Gan said.

The ministry, however, may allow people to tap their parents' or children's Medisave funds on a case-by-case basis.

"Primarily, we still want to make sure that... each generation's Medisave is sufficient for their own use, rather than to have an inter-generational subsidy," he said. "But we will be flexible."

The ministry said that nearly half the Singapore residents aged 65 and older have at least $20,000 in their Medisave accounts, while about a quarter have $5,000 or less. It added that the median Medisave balance for this age group is $19,000.

Madam Sarah Liew, one of Madam Quek's children, said the move showed foresight.

"It is all right for us because my mother has so many children," she said. "But in future, people won't have so many children. It is better to be prepared and self-sufficient."

Ms Janice Chia, who is managing director of Ageing Asia, welcomed the move to allow Medisave withdrawals in cash for the severely disabled.

However, she added that the Government could consider a similar move for people who have mild or moderate disabilities, and still require a caregiver for one or two daily living activities.

"Perhaps we can consider a tiered-level payout depending on how much the person is able to live independently," she said.

She added that this extra sum could potentially help people access rehabilitation services that could reduce the chances of severe disability.

Medisave cash withdrawals: 3 factors considered
By Linette Lai, Health Correspondent, The Straits Times, 5 Jul 2018

The Ministry of Health (MOH) considered three factors before deciding on the amounts which severely disabled people should be able to withdraw in cash from their Medisave accounts, said a ministry spokesman yesterday.

These included the basic costs of long-term care for this group and the need to balance withdrawal amounts with Medisave adequacy.

Other sources of long-term care funding - such as government subsidies and social safety nets, personal savings, as well as family and community support - were also taken into account.

On Tuesday, MOH announced that from 2020, severely disabled people aged 30 and older can draw up to $200 in cash from their Medisave accounts every month. This is to give them more flexibility in paying for the care they need, which can cost several thousand dollars a month and include items like adult diapers and special foods. The maximum amount that a person can draw every month ranges from $50 to $200, depending onhis or her Medisave balance. They can also tap their spouse's account for their needs.

But some experts in ageing and disability have said that this move may have a limited impact over time, due to the decreasing Medisave balance and other demands for the funds.

"Those who are born with or acquire severe disabilities during their working years are less likely to be employed and have the opportunity to build up their Medisave account," pointed out Dr Marissa Lee Medjeral-Mills, executive director of the Disabled People's Association.

Nearly half of Singapore residents aged 65 and older have at least $20,000 in their Medisave accounts, while about a quarter have $5,000 or less.

The median Medisave balance for this age group is $19,000. A severely disabled person who starts off with this amount and draws the maximum allowance of $150 every month would see the amount reduced to less than $15,000 in about two years and three months - assuming that no other funds are added to the account or deducted for other payments. This will put him in the next tier where he can withdraw only $100 a month.

But Mr Alfred Chia, chief executive of SingCapital, said people who tap this scheme also need to factor in other expenditures such as the payment of premiums for national insurance plan MediShield Life.


Older Singaporeans will get incentives ranging from $500 to $2,500 to join CareShield Life
By Salma Khalik, Senior Health Correspondent, The Straits Times, 4 Jul 2018

Older Singaporeans will be offered incentives ranging from $500 to $2,500 to join CareShield Life, which provides far better cover than ElderShield, which most people over age 40 are on.

This will help offset premiums that could exceed $1,000 a year for 10 years, before subsidies.

Should disability strike, they will be paid at least $600 a month - for as long as they remain disabled - by the government-run long-term care insurance.

According to the Ministry of Health, half the people who are healthy at the age of 65 can expect to become severely disabled later in life.

Of those who do, three in 10 are expected to live with their disability for more than a decade.

CareShield Life will be compulsory for all Singaporeans and permanent residents aged 40 years and younger when the scheme is launched in 2020. Premiums can be paid using Medisave.

Older people are also encouraged to avail themselves of this cover, when it is opened to them a year later, in 2021.

Singaporeans for whom it is optional will get $500 to $2,500 as participation incentive if they join it within two years of its launch. Since the top-up premiums rise with age, greater incentives will be offered to older citizens.

On top of that, the Government will pay 20 per cent to 30 per cent of the top-up premiums for people with per capita household incomes of $2,600 or less, and who live in homes valued at $13,000 or less.

Today, of the two million people aged 40 years and older, two in three are covered by ElderShield, a long-term care insurance offered by three insurers.

Of this cohort, 26 per cent are on the older ElderShield300, which pays $300 a month for up to five years, and 38 per cent are on ElderShield400, which pays $400 for up to six years.

Those who decide to upgrade to CareShield Life - which provides payouts for life - will need to pay top-up premiums to enjoy the expanded coverage.

Although CareShield Life premiums are paid until the age of 67, those in their mid-50s and older who upgrade will be given 10 years to pay the additional premiums.

People aged 39 to 48 now who are on ElderShield400 in 2021 will automatically be switched to CareShield Life. They have till end 2023 to opt out with no penalty.

Older people and those not on ElderShield have to opt in if they want CareShield Life coverage.

There is no age barrier to joining the scheme, though there is no incentive after the first two years, and premiums will be higher for older members.

Health Minister Gan Kim Yong said it might not make sense for everyone to join, especially if they are among the 35 per cent who have bought supplements to ElderShield schemes that offer higher or longer payouts.

This is because people's needs and circumstances differ.

He said that for some, "the incentives and subsidies will be meaningful and helpful", but older people "may find it very difficult to participate".

"It is important for them to take into account their own financial resources and their care needs," he said.

"Some of them may already have their own arrangements on their long-term care needs, and CareShield Life may not be an appropriate option."

Dr Chia Shi Lu, head of the Government Parliamentary Committee for Health, said many older people have told him that they would like to join CareShield Life in spite of the higher premiums.

"Given the many incentives, subsidies and premium support, it would still be affordable for many in the older group," he said.

New ElderFund scheme to help severely disabled low-income Singaporeans
By Linette Lai, Health Correspondent, The Straits Times, 4 Jul 2018

The Health Ministry is setting up a new fund to help lower-income Singaporeans who are severely disabled.

Called ElderFund, it will be available from 2020, and give those who qualify up to $250 a month for their long-term care needs.

The money could, for example, help pay for the cost of home care or daycare services as well as necessities such as adult diapers.

They will receive the money for as long as they are severely disabled, which means they need help with at least three of six basic daily activities.

These are feeding themselves, getting dressed, using the toilet, bathing, moving from room to room, and getting from the bed to a chair or vice versa.

The discretionary scheme for Singaporeans aged 30 and older is a social safety net to help the lower-income with severe disabilities.

This group includes those who may not be able to join CareShield Life because of their disabilities.

It also includes people with low Medisave balances or who do not have enough savings for their long-term care needs.

The new scheme will be administered by the Agency for Integrated Care, which coordinates eldercare efforts here. More details on how to apply for it will be available closer to 2020.

The ministry said citizens who still need help after tapping ElderFund can also turn to the existing Medifund or ComCare schemes.

It estimates that one in two healthy Singaporeans could become severely disabled in his or her lifetime. Three in 10 of those in this group are expected to remain severely disabled for at least 10 years.

A new option for severely disabled
The Straits Times, 5 Jul 2018

Medisave, which was set up in 1984 as a component of the Central Provident Fund (CPF) contributions to help defray hospital bills, is part of the infrastructure of self-provision for housing and retirement needs represented by the CPF. Like the overarching CPF scheme, Medisave has become such a fixture of financial self-protection that it is difficult to imagine life in Singapore without it. However, schemes must evolve with the times and the changing needs of the population if they are to remain relevant to the nation. In that spirit, members will, for the first time, be allowed to withdraw cash from their Medisave account. People who are severely disabled can do so from 2020, provided they or their spouse have at least $5,000 in their accounts. It is a promising development, but there could be some concern over sustainability. Is it wise to allow members to deplete their Medisave balances by drawing them down? Is Medisave now being opened to a wider range of uses, much as the reasons for withdrawals from the CPF scheme have widened? Is this safe?

However, to have kept Medisave where it was would have been problematic as well because it would have made life more difficult for those facing both severe disability and financial difficulties. In the event, the move represents measured flexibility in the administration of Medisave while preserving the fundamental principle of taking personal responsibility for healthcare needs.

It is reassuring that the scheme will be complemented by a new safety net called ElderFund, which will provide needy disabled people with up to $250 a month from 2020. A long-term disability insurance scheme, CareShield Life, will also become operative that year and be made compulsory for people aged 40 years and below. Taken together, these schemes would combine personal responsibility with pooled insurance and targeted state intervention to provide a comprehensive safety net for the severely disabled.

This tiered approach is better than one that depends exclusively on either individual financial capability or universal state protection. The first approach would leave many vulnerable people out, while the second would negate the element of personal responsibility that makes healthcare schemes viable. The first approach to healthcare, seen in many developing countries, has obvious shortcomings, but so does the second one, practised in the developed world. There, healthcare costs - fuelled by a mentality of free ridership and easy access to expensive medical technology - have made universal free healthcare a social burden. Singapore must persevere with a model which, although not perfect, has worked to the benefit of the population. The individual, helped by the family, must remain the first line of defence. It is when that front is under threat that society and the state must enter the ring.

Over-40s urged to weigh trade-offs before opting in
By Linette Lai, Health Correspondent, The Straits Times, 5 Jul 2018

Older Singaporeans who have the option of joining CareShield Life should consider their age, health status and financial situation before doing so, insurance experts say.

For example, people with chronic diseases might want to join CareShield Life if they feel they are at higher risk of becoming severely disabled in the future.

But those who already have additional disability insurance coverage might find that doing so is not worth their while.

On Tuesday, the Health Ministry announced that CareShield Life - the new national disability insurance scheme - will be optional for people aged over 40 when it launches in 2020, although they will get monetary incentives if they sign up.

The scheme, which will be compulsory for people aged 40 and younger, will provide better coverage than the existing ElderShield.

People over 40 will need to weigh the trade-offs between higher premiums and better benefits, said Mr Chi Cheng Hock, a member of the Singapore Actuarial Society.

He pointed out that the estimated premium increases for someone who wishes to join CareShield Life could be "substantial".

"Each individual has to weigh the additional financial obligation against the better benefits they will receive when severely disabled," he said.

According to the Health Ministry, a 54-year-old woman on ElderShield 400 in 2021 would pay an annual premium of $218 a year up to age 65.

If she were to move to CareShield Life, her premiums would start at $800 in the first year before subsidies and incentives, and increase over time until age 67.

However, these are only estimates and the complete premium tables are not yet available.

Mr Alfred Chia, who is chief executive of financial advisory firm SingCapital, said people should check the subsidies they are entitled to and opt in if they can afford it.

"If one has difficulty affording the premiums, imagine if the unexpected strikes - it will be even more financially disastrous," he said.

Dr Joelle Fong, who is an assistant professor of economics and public policy at the Lee Kuan Yew School of Public Policy, pointed out that those with chronic health conditions could benefit most from taking up CareShield Life.

"They are at higher risk of transiting into severe disability, and may otherwise not be able to obtain coverage from private insurers with strict underwriting criteria," she said.

Meanwhile, those with existing ElderShield supplements should review these before making the switch, suggested Mr Christopher Tan, chief executive of Providend. Such supplementary plans typically provide better benefits than the basic ElderShield.

Mr Tan added: "If these benefits are, in your opinion, already sufficient to meet your needs, then there is no need to switch to CareShield Life."

Government refutes text message claims that it is profiting from ElderShield, CareShield Life
By Isabelle Liew, The Straits Times, 3 Jul 2018

The Government has refuted claims made in a text message being circulated on messaging platforms that the ElderShield and CareShield Life health insurance schemes were introduced to reap profits from Singaporeans.

The text message also suggested that because the risk of severe disability is very low, it is unlikely that policyholders will make a claim.

The Government said on its website that it will not profit from CareShield Life. The premiums collected and returns from investments will stay within the fund so that policyholders can benefit through higher payouts or premium rebates.

By 2020, CareShield Life - a national long-term care insurance scheme - will be compulsory for people aged between 30 and 40. After that, Singaporeans will join automatically at the age of 30. CareShield Life offers lifetime cash payouts for those who are severely disabled. Payouts will start at $600 per month in 2020 and increase over time.

"Today, premiums collected under ElderShield are more than the claims paid out, as most policyholders are relatively young," the website said. "However, these premiums collected do not become government surpluses. Rather, they are meant for future claims - when policyholders become older and more of them make claims for severe disabilities."

It also said that as the population ages, half of Singaporeans who are healthy at the age of 65 could go on to become severely disabled.

From 2013 to last year, the annual claims paid out rose by 12 per cent more than the annual premiums collected, which went up by 3 per cent.

"Coupled with shrinking family sizes, it will be challenging to rely solely on personal and family savings to pay for one's long-term care needs," the website said. "While the expected median duration for severely disabled individuals to remain in disability is around four years, three in 10 severely disabled individuals are expected to remain in disability for 10 years or more."

Government subsidies will make CareShield Life more affordable, and premiums can be fully paid by Medisave. If a person cannot pay the premiums, they will not lose coverage.

CareShield Life a good move, but subsidies are rather skewed
By Salma Khalik, Senior Health Correspondent, The Straits Times, 7 Jul 2018

You are in your 60s and want to be covered by CareShield Life?

You should expect to pay at least $10,000 for this - and that's if you are already on ElderShield400 and have been paying premiums since the age of 40.

The actual premiums, which can be paid over at least a 10-year period, are yet to be announced.

But early indications suggest that many of those in their 60s, who are already covered by ElderShield, should brace themselves for five-figure top-ups. Those with no coverage will have to pay far more.

CareShield Life is a new government-run long-term care insurance scheme that will be launched in 2020 and will be compulsory for people who are 40 years old or younger, then. It will be opened to older cohorts in 2021 and they are being encouraged to join the scheme.

Currently, people are automatically enrolled in ElderShield400 on their 40th birthday, but may choose to opt out. This scheme is run by three insurance companies.

The main difference between the two schemes is that CareShield Life pays at least $600 a month for life to people who are severely disabled, while ElderShield400 pays $400 a month for up to six years.

An older scheme called ElderShield300 pays $300 a month for up to five years. More than half a million people are on this.

One reason the Government decided to offer CareShield Life was on account of constant complaints that the existing schemes offer too little for too short a period.

Those on ElderShield will be able to upgrade to CareShield Life by topping up the premiums they have been paying to ElderShield. All premiums can be paid for with Medisave monies and how much more people have to pay will be announced later.

The Ministry of Health (MOH) said premiums for CareShield Life are actuarially calculated. This is why women will be asked to pay more, as they live longer and more are expected to become disabled.

The scheme is not-for-profit. Should actual payouts be lower than projected, the money would be reimbursed, either as premium discounts, higher payouts or even a cash refund.

So far so good.

But it will be decades before we know if the actuarial calculations are accurate.

Will paybacks by then benefit the early cohorts, some of whom might already have died? Or will they benefit only future cohorts?

Furthermore, the calculations used are not based on existing data, but on projections. They assume:

• half the people who are healthy at the age of 65 will become severely disabled in their lifetime;

• half of them will live for more than four years with severe disability; and

• three in 10 will live with severe disability for at least 10 years.

Premiums that need to be paid were based on these assumptions and the MOH should share how it arrived at them.

People are more health conscious now and may stay fitter in their later years. Those on ElderShield need more information to decide whether it makes sense for them to switch to CareShield Life.

After all, ElderShield, which was launched in 2002, has collected $2.7 billion in premiums but paid out only $114 million in claims by the end of 2016.

Of course, most people on the scheme are still relatively young, so not too much should be read into this gap.

But it does show that, after 16 years, we still don't have robust data on how prone people are to getting severely disabled.

ElderShield400 pays $400 a month for up to six years. But the MOH projection is that half of those who become severely disabled die within four years.

For this group of ElderShield400 policyholders who become disabled, it means that the maximum added benefit from CareShield Life is an extra $200 a month for 48 months, or $9,600 in all.

But the MOH has also projected that three in 20 people who are healthy at the age of 65 would live with severe disability for 10 years or more. For this group, the CareShield Life payout would come in really handy.

Is the additional five-figure premium worth paying for these added benefits?

This is something individuals have to decide for themselves.

Given the structure of the scheme, it will be more worthwhile for younger people to join in. This is why the MOH will auto-include people who are now aged 39 to 48, who are on ElderShield400, since the majority would likely opt in.

But the older the person is, the less attractive the scheme becomes, since the top-up sum he will need to pay increases with the age of joining.

Similarly, people who have bought supplements to ElderShield for higher and/or longer payouts cannot have the premiums they have already paid ported over to CareShield Life.

Older people must consider two additional points. One is the incentive of $500 to $2,500 that the Government will give to people born before 1979, to encourage them to join the scheme within the first two years that it is opened to them. Those born before 1960 get the maximum $2,500.

Then, people who come from middle-to lower-income households - that's two in three households - will get additional help.

Between 20 per cent and 30 per cent of their top-up premium from ElderShield400 to CareShield Life will be paid for by the Government. There will be more help should they run out of money before they finish paying the premiums.

Although the younger people get lower incentives to join, the help they get would be significant should they be entitled to premium subsidies. This is because the premium subsidies they get include the premium for ElderShield that they would otherwise have to pay in full until the age of 65.

For them, the Government will pay up to $52.50 of the $175 premium for men who had joined ElderShield400 at the age of 40 - until they reach the age of 65. Those who do not opt to upgrade to CareShield Life will not enjoy this subsidy.

But CareShield Life is less attractive for those who do not qualify for the subsidy. Seniors coming from households with low per capita income will not get any subsidy if they live in a residence with an annual value of $21,000.

The MOH may want to reconsider this, as some of these seniors may not want to move out of homes they have lived in for decades, but may not be cash-rich. At the same time, long-term care can be a big drain on their finances.

Look at it another way. People with low household per capita income living in residences valued at $13,001 to $21,000 get 10 percentage points less in subsidy.

Perhaps those in residences valued at above $21,000 could be given subsidies that are 15 percentage points less - in other words, subsidies of 5 per cent to 15 per cent depending on their household income. It's a point worth considering.

The MOH also plans to provide subsidies for the unpaid portion of ElderShield premiums for those aged 42 to 64 who join the scheme in 2021. Should it consider providing even higher subsidies for cohorts that have paid their ElderShield premiums in full?

Another point is that the 26 per cent of people aged 40 years and older who are on ElderShield300 will not get any help upgrading to ElderShield400 - a necessary condition before they can upgrade further to CareShield Life.

In contrast, those on ElderShield400 will get a subsidy for the ElderShield portion of their premium. Is this fair?

A major reason many did not upgrade from ElderShield300 to ElderShield400 could be that they found it expensive. Not to help them upgrade, again, seems hard on them.

The wealthy can probably do without CareShield Life, since the $600 a month payout might not mean much to them. Those for whom it would be of great benefit should be given the help they need to get onto the scheme.

Being on CareShield Life would give them peace of mind, and let them benefit from all the help schemes that the Government has been putting in place to allow seniors, even those with severe disability, to continue living in the community for the rest of their lives.

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