Estimate what healthcare and long-term care will cost you in later life.
Open your insurer's website and find the premium table for your own hospital plan and its rider. Write down three rows: the yearly premium at age 65, at 75 and at 85. Next, you'll set those figures, and the cost of one long-term care option, against the healthcare line in your retirement plan. Then you can check whether that line can pay for both in your later decades.
Jasmine started on this when her mother turned 80. Her mother's hospital plan premium arrived and Jasmine read it twice. It was several times what her mother had paid at 60, and it will keep going up every few years. Her mother pays most of it from MediSave and pays the rider in cash. Jasmine then opened her own financial independence plan. Its healthcare line is S$5,000 a year at today's prices, growing at 5% a year (an example figure), and she had no way of telling whether that was enough.
You'll find the basics in module 7 of Financial independence: planning the number and the path, in lesson 7.2, "Premiums rise with age", and lesson 7.3, "Long-term care and the safety nets". Insurance Decoded, lesson 6.3, "Long-term care: CareShield Life and what supplements add", explains the products themselves.
Hospital insurance in Singapore comes in layers. MediShield Life covers everyone for large bills in subsidised wards. Its premiums go up by age band, and you can pay all of them from MediSave. An Integrated Shield Plan sits on top of MediShield Life and adds private cover for a higher ward class or a private hospital. A rider reduces what you would otherwise pay yourself, but under MOH's rider framework, new riders do not cover the minimum deductible and require a higher co-payment from you. Check the MOH website for how the rules apply to your own rider. CareShield Life is a separate policy for long-term disability. It has its own premiums, which you pay over a set period.
Every insurer publishes a premium table listing what each age band pays today. Use the table for your own plan and rider together.
For the private part of an Integrated Shield Plan, MediSave can pay only up to a yearly limit. The Ministry of Health (MOH) sets that limit, and it rises with age. Any premium above the limit is paid in cash, and so is the whole rider premium. Look up the current MediSave limits on the MOH or CPF website. For each of your three rows, note how much will have to come from your bank account.
The table shows today's prices. Insurers reprice every few years, so in thirty years an 85-year-old will pay more than an 85-year-old pays now. To allow for that, grow each row by your plan's healthcare growth rate, from today to the year you'll pay it. Put the grown premiums next to your healthcare line at the same ages and work out how much is left for your other healthcare costs.
Jasmine's plan-and-rider table shows about S$1,500 a year at 65, S$2,600 at 75 and S$3,600 at 85, at today's prices. Grown at 5% a year to the years she'll pay them, those rows become about S$2,400 at 65, S$6,900 at 75 and S$15,600 at 85. Her healthcare line, set up in lesson 1.4, comes to about S$13,300 at 75 and S$21,600 at 85 in future dollars.
At 85, S$15,600 of premiums uses up nearly three quarters of her S$21,600 line, about 72%. What remains has to pay for specialist visits, medicines for chronic conditions, dental work, hearing aids and spectacles. Jasmine decided the line is tight but not clearly wrong. She also knows now where it could fall short.
A hospital stay produces one bill. Long-term care means needing help with daily activities such as bathing, dressing or moving around, and you pay for it every month with no end date. It often goes on for years and is much more common in old age.
If you become severely disabled, CareShield Life pays you a monthly cash sum for as long as the disability lasts. That payout helps with care costs. It is not meant to pay for all of them. The CareShield Life website gives the current benefit, the definition of severe disability and the premiums. In your plan, subtract the CareShield Life benefit from your care costs. You pay whatever is left yourself.
The Agency for Integrated Care (AIC) website lists the main types of care in Singapore and the subsidies for each. In order from least to most intensive, they are:
home care services, with nurses or therapists coming to your home day care centres, which look after older people during working hours a live-in helper at home, with the salary, levy, food and insurance costs of employing one nursing homes, which give care around the clock
Each option has a different cost. To qualify for subsidies, the person receiving care must be a Singapore Citizen or PR. Subsidies are also means-tested. When the household has an income, the test uses household monthly income per person, and the AIC site sets out how that works.
Choose a care option you would want and find out what it costs. Subtract the CareShield Life benefit and any subsidy you would qualify for, and the amount left is your gap. Multiply the monthly gap by twelve and inflate it to the age when care might start.
Jasmine looked up two options. If she needs care at 85, she would choose to stay at home with a live-in helper plus some home nursing. She priced that at about S$3,000 a month at today's prices, before subsidy. She assumed CareShield Life and a modest subsidy would cover about S$1,000 a month (also invented). That leaves her own share at about S$2,000 a month at today's prices, which is S$24,000 a year. Inflated at 2.5% a year, it becomes about S$50,000 a year by the time she is 85 (an example figure). Her whole healthcare line at 85 is about S$21,600, so care is the largest single cost in her plan.
Not everyone needs long-term care, and many people who do need it for only a short time. Planning for the average is tempting, but your plan has to work in your own life. If your life includes years of care, a plan that looked safe can run out of money.
Treat care as a scenario, the same way you handled scenarios in module 5. Pick an age when care starts, assume it continues until your planning age, and check whether the plan still holds. Jasmine already saw the result in lesson 5.3, "Living longer than you planned": with S$2,000 a month of care starting at 85, her money ran out at 95, even in the central case. She will build a full care scenario in lesson 6.4, "Write your housing and care plan".
For the activity, find your insurer's premium table and the AIC page for one care option you'd want, and turn both into yearly figures at the ages that matter.
Write down the premiums you expect to pay at 65, 75 and 85. Then look up one care option on the Agency for Integrated Care site and note its monthly cost.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).