The ElderShield contract with the insurers (The Great Eastern Life Assurance Company Limited and NTUC Income Insurance Co-operative Limited) included a premium rebate provision.  This provision allows the Ministry of Health (MOH) to require the insurers to give rebates back to their policyholders, if the actual claims experience turns out to be less than projected.  The rebates, if any, will be determined closer to the end of the 5-year contract, i.e. end-September 2007, and given out thereafter.

The quantum will be determined by MOH in consultation with our actuarial consultants.  As the quantum will depend on the actual claims experience, it can only be finalised closer to September 2007.  Our preliminary computations suggest that the total ElderShield rebate amount is likely to exceed $60 million.  When confirmed, it will be distributed to the existing policyholders numbering some 770,000.

The rebates, when confirmed, will be given out in proportion to each policyholder’s contribution during the 5-year period.  This will therefore vary according to age and years of participation in ElderShield.  For example, policyholders who joined the scheme in 2002 when they turned 40, will receive a larger rebate than those who turned 40 and joined the scheme after 2002. Therefore, depending on their age and policy duration, existing policyholders can expect to get rebates ranging from $10 to about $260.  For the majority of the policyholders, this is about 7% of premiums paid.

For existing policyholders whose ElderShield premiums are still payable, the premium rebate will take the form of premium discounts to offset part of their next premium payment.  For existing policyholders with single premium policies or have finished paying their premiums, their rebates will be returned to their Medisave accounts, or in cash if their premiums had been paid for in cash.

The rebate will be distributed to existing ElderShield policyholders from October 2007 onwards.  The 2 insurers will inform their respective policyholders accordingly.  The first group of existing policyholders who joined in September 2002 will receive their notification letters by October 2007.