Suggestions to improve Eldershield

1 May 2012

Editor, Forum Page
Straits Times

Elderhield is the long term care insurance promoted by the Ministry of Health. It now provides a monthly payout of $400 for up to 72 months, to an insured person who has been medically assessed to be unable to perform at least three out of 6 specified activities of daily living.

The monthly payout of $400 is clearly in adequate to meet the cost of employing a care giver at home or to put the elderly in a nursing home.

The Minister of Health said that he is going to review the current scheme. I wish to suggest the following points for his consideration:

a) The Ministry should continue to play an active part in setting the framework to ensure for the fair treatment of  consumers and for the fair assessment of eligibility for a payout. The claim payout rate, compared to the ctuarial estimate, should be published.

b)  The Ministry should carry out regular audits to ensure that the insurance companies are pricing the insurance product fairly and are not making excessive profits by over-charging the consumers, or are reckless in under-pricing their product, leading to the prospect of insolvency.

c) The Government should consider giving a fiscal incentive to encourage the public to increase the amount of coverage on a voluntary basis. This can take the form of (say) a 30% subsidy on the cost of the long term care insurance. If consumers need to pay only 70% of the actual cost, more people are likely to come forward to buy the supplementary insurance and encourage insurance companies to compete for this attractive market.

In many countries, the Government has found that some form of tax or fiscal incentives is helpful to develop the insurance market and to overcome the resistance of consumers to set aside money for their future needs. Singapore should follow the experience of these countries, in order to get our citizens to plan for their future needs.

Tan Kin Lian