SINGAPORE: A national severe disability insurance scheme, CareShield Life, to be launched in 2020 will be “more than an insurance scheme”, Health Minister Gan Kim Yong said in Parliament on Tuesday (Jul 10).
“It will become an integral part of Singapore’s social safety net. It will provide better protection and assurance for all Singaporeans who join the scheme, through higher payouts for life for those who are severely disabled,” he said.
He was opening a parliamentary debate on the Eldershield Review Committee Report, which was the basis for the design of CareShield Life.
Prime Minister Lee Hsien Loong announced the review of ElderShield at the 2016 National Day Rally to provide better support for Singaporeans who become severely disabled during their old age. The ElderShield Review Committee was appointed in October that year, and submitted its report in May 2018.
CareShield Life will expand the role of insurance, one of three key components of long-term care financing system. The other two are personal and family savings, and Government or community assistance and support.
Mr Gan underscored the need for such long-term care financing through sobering projected figures- 1 in 2 Singaporeans who is healthy at age 65 is expected to be severely disabled at some point in their lifetime and require long-term care.
“Some are surprised by our ‘1-in-2’ statistic, and ask why is it that we do not see half of our elderly in severe disability,” he said, explaining that this is simply because they do not all become severely disabled at the same time.
MINIMISING INTER-GENERATIONAL TRANSFERS
Mr Gan said that each cohort paying for its own needs minimises inter-generational transfers, and avoids passing the burden to future generations and keeps the scheme sustainable.
A pay-as-you-go system, where funds collected in a particular year, often through taxes, and used to pay the claims for that year, would mean that the younger working population would be funding the claims made mostly by seniors, most of whom have stopped working.
“This is not sustainable especially for an ageing population, where the number of seniors is growing at a much faster pace than that of the younger working population,” he said.
There is also uncertainty on the duration a person remains severely disabled, he added. While the median duration of disability is four years, 3 in 10 could remain severely disabled for 10 years or more.
“If we save for 4 years of disability, but remain disabled for 10 years, we would not have saved enough. If we saved for 10 years, but we have been disabled for less, we would have over-saved. Insurance helps this situation through risk-pooling, he said.
Long-term care needs, and how much people save individually for future needs, are difficult to predict with great accuracy, he added.
CARESHIELD LIFE TO HAVE UNIVERSAL COVERAGE, LOWER ENROLMENT AGE
Mr Gan took the House through the features of CareShield Life, which was first unveiled on May 27.
Among the features would be the lower enrolment age of 30, compared to ElderShield's 40, the compulsory nature of the scheme, and the Government administration of the scheme. It will also have universal coverage.
The Government will set up an insurance fund which will be ringfenced for CareShield Life. The fund will be administered by the Central Provident Fund Board.
Beyond CareShield Life, the Government will also allow Medisave cash withdrawals with certain conditions, and set up ElderFund, a new financial assistance scheme for people aged 30 and above, and have severe disability.
"Preparing for our old age needs is often of low priority when we are younger, as we tend to focus more on building our career and bringing up our children, which is understandable. But starting to prepare only when we are old would be very challenging," he said.