So the government Eldershield Review Committee has submitted its recommendations and we are potentially looking at significant changes to this scheme that will affect all Singaporeans. So what does this mean for all of us?
Before we begin, perhaps some of you will be asking what exactly is Eldershield? In a nutshell, Eldershield is a severe disability insurance policy that caters more towards old-age disabilities. All Singaporeans and PR’s are automatically enrolled in the basic Eldershield scheme with some minimal benefits unless they choose to opt out of it. Premiums for the basic Eldershield can be fully funded from the individual’s Medisave account so no cash out is required unless the individual chooses to upgrade their basic plan.
Now let’s look at the 3 main changes to the Eldershield scheme that is being proposed.
1. Eldershield to be compulsory.
2. Lower Eldershield commencement to age 30.
3. Un-privatize Eldershield and let the government administer the scheme.
According to data released by the Committee, 1 in 2 Singaporeans aged 65 are expected to suffer from elderly disabilities. The median duration of disability is 4 years while 30% of the elderly can expect to suffer with disabilities for more than 10 years.
Due to the high probability of claims from this scheme, we can see why the committee recommends that Eldershield be made compulsory just like the other familiar national healthcare scheme Medishield. Insurance is all about risk-pooling so that everyone can enjoy the benefits of peace of mind knowing that if anything tragic happens they will be taken care of while paying a fraction of what could potentially be required. This is much more important when risk is high and thus it is a good thing to make it compulsory, in my opinion.
The argument for a shift of entry age from the current 40 to 30 is similar to the above. By having citizens join the scheme earlier, it should technically lower the cost for everyone and make it a more sustainable scheme to benefit everyone. One can look at it as a form of forced insurance for everyone so that no one is left behind and become a burden to others.
With regards to the last propose change, I’m still unsure about it. I would guess that one of the rationales for this proposal is the recent release of premiums collected under Eldershield versus total claims, with insurance companies seemingly sitting on huge profits for this scheme. The attempt to move the scheme under the government should indicate that premiums can be lowered depending on claims experience. The main question then is why not move the Medishield scheme under the government as well? Does the government have the expertise for administering this programme and is it not better to let the law of economics determine the prices?
Regardless, we are definitely looking at major changes to the Eldershield scheme but it does appear that these are changes for the better. But the more important question then is whether have you done enough for yourself with regards to Eldershield? The current base payout for Eldershield of $400 per month will unlikely be sufficient for your needs in the event of severe disability. With the government stepping in more significantly should tell us all that it is an important coverage that we all need otherwise the government will not be so involved or concerned by it. Furthermore with the option to use your Medisave funds for this scheme, it gives us all a way to leverage up on money that is stuck and dedicated to your health needs anyway, so why not use it?
This is not an article just to get you to upgrade your Eldershield but to show that the needs are real. If you would like to know more about your options concerning Eldershield, do drop me a message on my contact page and we’ll be in touch shortly!