MediShield Life Fund
This page provides details on the MediShield Life Fund, including its liabilities, capital and Operating Loss Ratio.
Last updated 18 November 2024
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About the MediShield Life Fund
The MediShield Life Fund is designed to be self-sustaining and based on actuarial principles, with each age group paying premiums to broadly support its own current and future claims.
To honour expected claims and expenses from all policyholders, the MediShield Life Fund must set aside sufficient financial resources as liabilities. The MediShield Life Fund’s liabilities are calculated by external actuarial experts in accordance with requirements set by the Monetary Authority of Singapore and are in line with industry standards. For prudence, additional resources are also held as a buffer to manage risks arising from adverse scenarios.
Liabilities Supported by the Fund
Liabilities are monies that are set aside in the MediShield Life Fund to honour expected future commitments including:
Future premium rebates
To ensure that MediShield Life premiums remain affordable in one's old age, part of the premiums that policyholders pay when young is set aside, and returned as premium rebates when they are old and likely no longer working. The contributions from each age cohort will be used to support their own rebates in their old age. This helps to distribute premiums more evenly throughout policyholders’ lifetimes.1 For more information on premium rebates paid, please click here.
Claims incurred but not yet submitted or paid
This is for expected incoming claims, where the treatment has already taken place (and hence hospitalisation expenses have already been incurred) but claims have yet to be submitted or paid. This also includes the projected future costs for those who have started on multi-year treatments.
Claims not yet incurred but expected to be paid in the future
This is for claims where treatments have not taken place but are expected to occur in the next few years based on actuarial projections after allowing for future premium collections. This also includes an allowance for the fact that premiums typically remain constant for several years at a time, whereas average claims go up each year with the increasing cost of medical treatments.
Capital
The MediShield Life Fund maintains sufficient capital so that it can meet its commitments to policyholders. Holding sufficient liabilities and capital is consistent with the insurance industry’s best practices and the requirements set by the Monetary Authority of Singapore for private insurers. The MediShield Life Fund maintains sufficient capital to absorb the impact of adverse events without requiring sudden increases in premiums. A larger capital base provides greater protection and assurance for the scheme and its policyholders, but it is carefully balanced against premium affordability.
MediShield Life Fund Operating Loss Ratio
The operating loss ratio compares total premiums collected to total monies required to ensure that the Fund is able to meet its liabilities now as well as into the future. Total monies required for the fund includes immediate claims paid out each year and the change in required liabilities needed for future commitments (as described above).
The average Operating Loss Ratio of the MediShield Life Fund between 2020 to 2023 was 100%. This means that on average, the total premiums collected have matched the total monies required for the MediShield Life Fund to meet both current and future claim commitments.
Table: MediShield Life Fund Operating Loss Ratio (in $millions)
Year | Premiums Collected [A] | Total Monies Required for Fund Operations [B] + [C] | Operating Loss Ratio2 ([B] + [C] / [A]) | |
|---|---|---|---|---|
Claims Paid [B] | Change in Required Reserves [C] | |||
2020 | $1,971m* | $1,046m | $974m | 102% |
2021 | $2,343m* | $1,197m | $1,447m | 113% |
2022 | $2,422m* | $1,259m | $892m | 89% |
2023 | $2,471m* | $1,384m | $954m | 95% |
2020 - 2023 | $9,207m | $4,886m | $4,267m | 100% |
Source: CPF Annual Reports * In 2020, 2021, 2022 and 2023, the Government provided $623.4mil (32%), $822.9mil (35%) , $721.9mil (30%) and $605.3mil (24%) respectively in premium subsidies and other forms of support to help keep premiums affordable for Singapore Residents. | ||||
The Ministry of Health and CPF Board will continue to ensure that MediShield Life premiums are priced actuarially, on a sound and sustainable financial basis in the long-term. Members can be assured that the Fund is able to honour all of its claims and remain sustainable in the future.
1 The eventual amount of premium rebates will depend on the amount of assets that are available. This is dependent on various factors, such as scheme experience and how much in premium rebates have been given out.
2 Does not include expenses and investment returns.