CPF Insurance Schemes – What are the differences between Medishield Life and Eldershield?
While Singapore is not a welfare state, there are some measures put in place to ensure that Singaporeans will have some safety net when it comes to medical expenses. One of the most important schemes that come to mind is Medishield Life.
As a financial planner, I often meet people who are confused about why they might need additional private insurance plans to supplement their Medishield Life plans. On top of this, some are also unclear about the Eldershield plan as well.
Read on to find out more about each of them and what you can do to ensure you get the coverage you need.
Medishield Life VS Eldershield – Key differences
1. Purpose
Medishield Life: MediShield Life is a basic healthcare insurance that helps to pay for large hospital bills and selected outpatient treatments such as dialysis and chemotherapy. It provides some financial help for those who stays in Class B2/C wards and certain medical treatments in the public hospitals. All Singaporeans and PRs are automatically enrolled.
Integrated Plans (“IP”): IP provide additional coverage and increased claim limits, so you have the option to receive treatment at higher class wards and/or private hospitals, and still be covered for the higher cost.
Eldershield plan: ElderShield, on the other hand, is a severe disability insurance scheme which provides basic financial help to severely-disabled elderly who need long-term care. ElderShield will pay the insured a monthly cash payout of $300 or $400 if the insured becomes severely disabled – referring to one not being able to perform 3 out of the 6 “activities of daily living”. These include washing, dressing, feeding, toileting, mobility and transferring.
All Singaporeans and PRs with Medisave accounts are automatically covered when they turn 40 years old, unless you choose to opt out.
The main confusion comes when clients compare these 2 CPF-linked plans to IP. Medishield Life and Eldershield act as base plans, so the purpose of a private medical insurance plan is to provide a more comprehensive coverage in the event of hospitalisation, in terms of staying in a private hospital and the option to be covered for co-insurance and deductibles.
Some are also unsure why they would need an Eldershield supplement if they already have an integrated shield plan. The answer is that a private Eldershield supplement plan is for policyholders who wish to obtain higher severe disability insurance coverage, thus increasing the monthly payout amount or prolong the period of payment.
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2. Entry age
One can buy a private medical insurance plan starting from age next birthday 1 while for a private Eldershield plan, the entry age is 40 years old, which follows the base plan.
3. Premiums
Both Medishield Life and ElderShield are fully payable with Medisave and cash.
IP: As the premium of Medishield Life increases with the age range, the premium of private medical insurance will also follow suit. There will be a cap of how much a policyholder can use their CPF Medisave account to pay for this policy. This cap depends on the individual’s age.
Eldershield Supplement: Premium is based on individual entry age and does not increase with age. This can be paid by CPF Medisave and at a cap of $600.
4. Claims
Medishield Life: The insured will be allowed to submit for claims if hospitalised for more than 6 hours and with valid conditions. Claims will be based on the amount of hospital bills.
IP: Most IP plans pay out “as-charged”, which means that they will pay out the entire amount under claims without having you to pay for any gaps in coverage. This is unlike the claims for Medishield Life, which is limited to $100,000 per policy year. When the policyholder has IP with riders, there are options to have additional benefits such as a daily cash benefit.
Note: Medishield Life does not cover pre and post hospitalisation costs incurred, which can be important for those who need to go back frequently for subsequent follow up consultations
Eldershield plan: Provides a monthly cash payout for up to 72 months to help pay out-of-pocket expenses for the care of severely-disabled persons. An individual covered under Eldershield 300 will receive a monthly cash payout of $300 for 60 months and if an individual is covered under Eldershield 400, he will receive a monthly cash payout of $400 for 72 months.
Eldershield Supplement: Eldershield supplements are more comprehensive since you can choose to have a limited monthly cash payout of 12 years or for lifetime, depending on the plan. In addition, it is flexible as you can choose the amount of payout. Some Eldershield supplements also offer the monthly payout when a member is unable to perform 2 out of 6 of daily living activities instead of 3 out of 6, as specified under the CPF Eldershield Plan.
Many may think that having a private medical insurance is more than enough as hospitalisation bills represent the most expensive cash outflow. However, the importance of being protected for long-term care is neglected.
For instance, a person suffering from Alzheimer’s disease will not cause an individual to be hospitalised. Instead, he will need institutional care in nursing homes and hospices, home nursing and home care service such as the provision of meals, upkeep of personal hygiene and perhaps housekeeping. All these involve a long-run cost that can be more expensive in the long run compared to a one-time hospitalisation fee.
This is an unfortunate case which is a real life example that shows an individual getting into an accident on the bus and losing the power of his arms and legs. While he was discharged from the hospital, the accident left him in need of long-term care.
Explore how the available schemes can apply
There are available options that you can consider to enhance the coverage of both the MediShield Life and ElderShield schemes. Work with a qualified financial planner to explore what can be applied to you and transfer away risks that you are unable to financially absorb.
After sharing with some clients on the differences between Medishield Life and ElderShield, some clients were still confused. They came to me with their CPF transaction statements and asked me what those abbreviations meant and when CPF will deduct from their Medisave account. Therefore, to make things easy, I have come up with a guide to CPF insurance related deductions. Click here to download the guide.
(NOTE: Get our Guide to CPF Deductions (Insurance Related) to find out the differences between each CPF deductions. Get your guide here)
Have fun and wishing you success in your risk management planning!
Article by Lee Meng Choe
Email: mengchoe.lee@gen.com.sg
The writer is the Executive Director (Distribution) of GEN Financial Advisory
