Law passed to keep CareShield Life premiums sustainable; MPs debate affordability, fairness of insurance scheme
Amendments to the law include the reinstatement of a planned underwriting criteria and expanded avenues for the authorities to serve notices to defaulters of CareShield Life premiums.
An elderly woman on a wheelchair. (Photo: iStock)
SINGAPORE: Members of Parliament (MPs) passed a new law on Wednesday (Oct 15) allowing authorities to serve notices to defaulters of CareShield Life premiums, among other moves to keep premiums sustainable and affordable for those enrolled in the national disability insurance scheme.
Tabling the CareShield Life and Long-Term Care (Amendment) Bill for a second reading, Senior Minister of State for Health Koh Poh Koon said that while no one will lose coverage due to an inability to pay premiums, premium recovery is key to ensuring the sustainability of the insurance scheme and fairness to all policyholders.
“Like any other insurance scheme, CareShield Life relies on collective responsibility through risk-pooling within each cohort … As part of this collective responsibility, all policyholders must play their part by meeting their premium obligations,” he told the House.
Launched in 2020, CareShield Life provides monthly payouts for individuals with severe disabilities, defined as the inability to perform at least three out of six daily living activities, such as washing, feeding or dressing.
The national disability insurance scheme is compulsory for those born in 1980 or later, while older cohorts have the option to enrol.
The Bill also sought to reinstate the scheme’s underwriting criterion, which will lower premiums for older optional cohort policyholders.
A total of 14 MPs spoke in support of the Bill, while also raising various concerns about the amendments and other issues related to CareShield Life, such as its affordability and whether the insurance payouts are adequate for those with disabilities.
WHAT THE BILL IS ABOUT
On the need to enhance premium recovery processes, Dr Koh cited how there are individuals “who can afford to, but wilfully decide not to pay their premiums despite repeated reminders”.
Premium defaults affect the scheme’s financial sustainability and in turn, the ability to meet claims. Consequently, such unrecovered premiums are shouldered by other policyholders within their cohorts in the form of higher premiums.
Currently, demand notes, which are formal notices served to defaulters, can be served through channels such as registered mail, but “operational challenges” emerge when policyholders fail to update their addresses or reside overseas, said Dr Koh.
The amendments would allow demand notes to be served via additional ways, such as digital means. This is similar to measures in place for
recovery of MediShield Life premiums, and will streamline premium recovery actions, said Dr Koh.
Another change under the Bill is the reinstatement of an underwriting criteria for older individuals whose participation in CareShield Life is optional.
“Once insurance take-up is optional, underwriting is important. This is to guard against adverse selection, where those who are more likely to claim will be more likely to enrol, driving up claims,” Dr Koh said.
“Therefore, when the scheme was first conceptualised, it was designed such that only optional cohort individuals without any pre-existing disability could enrol in the scheme.”
But to ensure inclusivity, the Ministry of Health (MOH) granted a time-limited concession allowing older individuals to enrol in the scheme, even if they have milder forms of disability.
As of June, about 900,000, or almost half of the older optional cohort, have done so. Sign-up rates have dwindled over the grace period of four years - almost 90 per cent lower than when the scheme was first launched. This suggests that most older individuals who wanted to enrol in CareShield Life have already done so, said Dr Koh.
The Bill hence proposed reinstating the planned underwriting criteria for the optional cohort from Jan 1, 2026, alongside a new definition of “not disabled” as being able to perform all six activities of daily living without assistance.
This means that those from the optional cohort who have mild disabilities will no longer be able to enrol in CareShield Life.
Dr Koh said this change in underwriting criteria will moderate premiums for older policyholders, as the earlier concessions meant that premiums had to be set higher to account for the possibility that those with mild to moderate disabilities might be more likely to join CareShield Life.
For example, the annual premium for a policyholder born in 1952 will be lowered by more than S$100 (US$77.19) in 2026.
The change in underwriting criteria from January also applies to new citizens and permanent residents, meaning those who fulfil the “not disabled” definition will be eligible for CareShield Life.
WHY IT MATTERS
The passing of the law comes less than two months after
changes to the scheme were announced in August.
The scheme had not been reviewed since its launch, and changes were recommended by an independent CareShield Life Council.
From 2026 to 2030, those enrolled in the scheme will see their premiums increase by an average of S$38 and up to S$75 annually.
The annual growth rate of CareShield Life payouts will be doubled from 2 per cent to 4 per cent, with the same eligibility criteria for claims.
“These increased payouts will better cushion against rising long-term care costs, driven by inflation of manpower and technology costs,” Dr Koh said.
With the new growth rate, a policyholder making a claim in 2030 will receive S$806 per month, compared to the S$731 per month under the previous annual growth rate. This is an increase of S$900 annually.
Under the revised scheme, the government has also committed to providing over $570 million in additional support over the next five years to help policyholders cope with the premium adjustments.
Of this sum, S$440 million will be used to moderate the premium increases for all affected policyholders, while the remaining S$130 million will be used to offer more support to low- to middle-income policyholders.
“Without this support, premiums in 2026 would have increased by approximately S$126 on average, with a 4 per cent per annum increase thereafter,” Dr Koh said.
The enhanced payouts and premiums will apply from 2026 to 2030 and will be reviewed after that, MOH previously noted.
