CareShield Life to replace ElderShield: Claims to premiums statistics?

ST PHOTO: CAROLINE CHIAST PHOTO: CAROLINE CHIA

Will the claims to premiums ratio for CareShield Life be like ElderShield? 

I refer to the article “New mandatory CareShield Life replaces ElderShield in 2020, will offer wider coverage for severely disabled” (Straits Times, May 27).

It states that “Called CareShield Life, the government-run scheme will be compulsory, automatically getting everyone who is between the ages of 30 and 40 in 2020 to start paying premiums. Future cohorts will join at the age of 30.

For them, the scheme replaces the optional ElderShield, offered by private insurers. CareShield’s scope of coverage is also wider.

Premiums start at $206 a year for men and $253 a year for women at the age of 30. They will make 38 payments till the age of 67.

Should disability strike and a policyholder require care, he will receive a payout of at least $600 a month, for as long as care is needed.”

As to “In contrast, the ElderShield scheme pays $400 a month for up to six years, but with lower premiums paid over a shorter period” – with three rather long articles today in the same newspaper giving analysis and commentary on the new CareShield Life – why is there no mention of the claims to premiums statistics for ElderShield?

In this connection, why are there also no statistics on the claims to premiums ratio of the ElderShield scheme, from its inception?

$2.6b in premiums, $100m in claims

In this regard, according to the article “Gan Kim Yong: $2.6 billion collected in premiums for ElderShield insurance and around $100 million paid out in claims since 2002” (theonlinecitizen, Feb 18, 2017)

– “from 2002 to end-2015, about $2.6 billion have been collected in premiums for ElderShield insurance and around $100 million have been paid out in claims, adding that about $130 million in premium rebates have been given to policyholders so far, the first tranche in 2007 and another in 2012.”

What is the accumulated interest (investment returns) on the excess premiums over the last 15 years? Will it increase the total excess premiums accumulated to over $3 billion?

When will annual claims exceed premiums?

Also, when do we project that the current trend of premiums exceeding claims every year to end?

Claims ratio for last year?

For example, what was the claims to premiums ratio for say the last year?

Not spending a single cent?

When will the Government start to allocate some of the Budget into ElderShield or CareShield Life, as it does not cost the Government any money now, or possibly in the future too, as long as from a cashflow perspective – the cash inflows exceed the outflows annually?

By the way, now that the scheme is made mandatory from the lower age of 30 and a longer premium payment period to age 67 – will the claims to premiums ratio become even lower?

“People over 40 years old in 2020 have the option of sticking with ElderShield or switching to the new scheme in 2021 by topping up their premiums.

There will be permanent premium subsidies of 20 per cent to 30 per cent for people who qualify, and additional support for those who still cannot afford the premiums.

People who are disabled at the age of 30 will make one premium payment to join, and can start collecting payouts immediately.

To pay for this, premiums will increase over the years. How much each will increase by will be decided by a council that will be appointed.”

With regard to “This will go up by 2 per cent a year for the first five years. Future increases will be announced later” – as the insured gets older – the projected payout period may become shorter. So, why are the premiums increasing at 2 per cent (confirmed for the first 5 years) – which is the same as the payout increase of 2 per cent?

Moreover, does “Payouts will increase to adjust for the higher cost of long-term care in future, so long as the person is still paying premiums. So the payout amount in the year they turn 67 will be the payout they receive in future” mean that the payout will not increase annually anymore from age 67?

“Subsidies: 20 per cent to 30 per cent for Singaporeans with per capita family income of $2,600 or less. Permanent residents receive half the subsidy.

Additional premium support for those who still cannot pay the premiums.

Transitional subsidy of up to $250 for Singaporeans in the first five years.”

According to the article “Analysis: A good scheme that engenders social cohesion, but a couple of puzzling points” (Straits Times, May 27) – “But two points have me puzzled.

Giving subsidies to help the poor is good. But why a transitional subsidy for the first five years? If this is given to every cohort to ease them into the scheme, fine. But it is not.

It is only for the first five years of the scheme.

The MOH said it’s because 30-year-olds may not have put aside the necessary money. Why would they need to?

The other puzzle is why women have to pay premiums that are 23 per cent higher than men.

Yes, women do live longer. They may even suffer from more disability years, though the local data for this is not robust.

But the scheme has been touted as embodying social inclusiveness and collective responsibility.

That being so, shouldn’t both genders pay the same premiums?

The committee’s argument that this is how insurance companies do it is not compelling. Those companies are profit-making entities.”

Leong Sze Hian

 

About the Author

Leong
Leong Sze Hian has served as president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), invited to speak more than 200 times in over 30 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of Indonesia and Brunei. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.