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A group of elderly Chinese ladies sitting and relaxing on a bench in a park in Serangoon Gardens with soft early morning light (Photo by Justin Adam Lee from Shutterstock.com).

Government to take over optional ElderShield from 2021 after compulsory CareShield kicks in

The administration of the ElderShield scheme will be taken over by the Government in 2021 as the Ministry of Health (MOH) reached agreement with the ElderShield insurers.

In a press release on Monday (7 January), the ministry stated that the move will allow ElderShield policyholders to upgrade to CareShield Life more smoothly, and benefit from improvements to the claims assessment process that will be implemented for CareShield Life.

ElderShield, introduced in 2002, is an optional basic insurance scheme targeted at “severe disability”, which is defined as the inability of an individual to perform three or more Activities of Daily Living (ADLs) independently. The scheme provides cash payouts of $300 or $400 per month for up to 6 years.

According to the ministry, there are currently 1.3 million ElderShield policyholders served by three private insurers. The three existing private insurers that provide the policy are; Aviva Limited, Great Eastern Life Assurance Company Limited, and NTUC Income Insurance Co-operative Limited.

Government administration of the ElderShield scheme will commence in 2021, together with the launch of CareShield Life for existing cohorts. It noted that holders of ElderShield Supplements will not be affected and will continue to be served by their existing ElderShield Supplement insurers until the transfer is completed in 2021.

With Government administration, the ministry noted that the ElderShield policyholders who choose to upgrade to CareShield Life for better coverage will benefit from a smoother upgrading process.

ElderShield policyholders not upgrading to CareShield Life will remain covered by their existing ElderShield policies.

The Government stated 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.

The ministry stated that the ElderShield insurers will transfer to the Government the liabilities and corresponding assets backing these liabilities for all policies under the ElderShield scheme. The valuation comes up to approximately $2.9b. Actuarial consultants and audit and legal firms, appointed by the Government, have verified that the valuation and transfer terms are fair and in accordance to standard industry practice.

Earlier in May last year, MOH announced that the new CareShield Life will be implemented in 2020. Those aged 30 to 40 in 2020 will be the first to join the scheme, which will be made compulsory.

Under the new CareShield Life, the severely disabled will receive a higher cash payouts of at least $600 per month for life. But it comes with a price – in the form of higher mandatory premiums, which will be paid from a younger age.