Little Chloe Mah was just seven months old when she was diagnosed with Pompe disease, an inherited neuro-muscular disorder that is progressive, debilitating and often fatal.
It is difficult to determine the lifespan of people diagnosed with rare disorders such as hers.
And even if Chloe, now aged five, should live well into adulthood, her parents Kenneth and Patricia Mah are worried about the heavy medical expenses involved.
"People often ask us, how long can Chloe live?" Mr Mah, 45, said.
"But that's not the question. It's about the quality of life, not the quantity."
And so they do whatever they can to help Chloe live as well as possible, in spite of the heavy financial cost.
Chloe requires enzyme replacement therapy at least 26 times a year, with each session costing about $9,500. She also needs various types of therapy - speech and language, occupational and physio.
Her annual medical bills total about $250,000, and other expenses amount to $30,000.
For instance, the filters for Chloe's ventilators need to be replaced every three days, and they cost $5 each.
And her expenses will only increase as Chloe grows older and bigger, with the amount of enzyme she requires for each treatment increasing proportionately with her weight.
When Chloe was a year old, her an-nual hospitalisation bill was $117,000. Now it is a staggering $300,000.
Mr Mah used to earn between $60,000 and $80,000 annually running his own business. He is now a stay-at-home dad looking after Chloe. Mrs Mah, 40, is the head of training and competency at Finexis Advisory. The couple also have a son, two-year-old Cayden.
When Mr Mah quit his business, their annual household income halved, while Chloe's medical bills seemed to triple, said Mrs Mah.
"It was a double whammy," Mr Mah said.
Their annual household income is about $80,000 to $90,000. The family manages to get by with support from insurance coverage, careful financial management and donations.
Chloe has three insurance policies, all purchased in January 2010 when she was two months old and before her diagnosis. To date, the total payout has been $700,000 under a policy known as the AIA Healthshield Gold Max with Essential Plan A, covering the period from June 2010 to January 2015.
The plans cover Chloe's hospital bills and various therapies.
The total premiums for the three policies are less than $200 a month.
The Mah family takes care to limit expenditure by driving to Johor Baru, for instance, to buy cheaper groceries and not going on expensive holidays.
Whatever donations the Mahs receive, they put in Chloe's child development account, a special savings account for children.
"When we are old with no income, who will support her? This money in her fund will be important then," said Mr Mah.
"We just want her to be as independent and as happy as she can.
"With whatever financial planning I can do, and based on Chloe's own capabilities, we hope that she will be able to take care of herself and survive even when we are no longer around."
Mr Mah emphasised the importance of having reliable financial advisers to help out when policyholders make a claim.
"I think without the AIA financial services consultant's (FSC's) guidance, we probably wouldn't even have thought we could have gotten the first claim through," he said.
The Mah family's AIA FSCs - Ms Elaine Yeo and Mr Tommy Tay - stressed the importance of adequate financial protection for the whole family.
The parents, especially, should not be neglected, they pointed out.
Ms Yeo said: "Given that the parents are the breadwinners, they need equal protection against unforeseen circumstances to ensure their children can be taken care of."
According to a 2012 protection gap survey commissioned by the Life Insurance Association (LIA), each working adult requires coverage of 10 times his or her annual income to be adequately insured.
"It is also best to have regular financial reviews to better address a family's changing needs with each new milestone," Ms Yeo added.
The two advisers strongly advised families to get insurance for their children when they are young, to safeguard against any unforeseen threats.
Financial planning for families with special needs children
The Mahs purchased insurance for Chloe when she was two months old, before she was diagnosed, but many families with children already diagnosed with rare disorders will find it difficult to buy insurance or receive financial aid. It is more difficult and expensive to purchase coverage once the child has been diagnosed with a disease.
Families with children suffering from rare diseases face rising medical costs that will stretch on for an unknown number of years. This will impose a heavy financial burden on even middle-income families, who will need to dig into their savings and Medisave, both of which are limited.
Another concern is ensuring that the financial needs of a child will continue to be well met even after the parents or guardians pass away.
Nevertheless, families in these situations can still take action to address such concerns.
Take stock of all available financial assistance opportunities
Families can try to seek both financial and non-financial support from organisations such as Club Rainbow and the Rare Disorders Society. The latter was founded by Mr Mah himself.
Apart from patient support and parent support groups, the Rare Disorders Society, which is a non-profit organisation, also provides financial aid to families.
"A lot of these families often have to go through means testing to apply for financial aid. But for us, when it comes to rare diseases, it's not about how much you earn. The most critical thing is how much are your medical expenses and needs," Mrs Mah explained.
Mr Steven Ong, chief executive officer of Financial Planning Association of Singapore, suggested that families look into hospital funds such as the KKH Rare Diseases endowment sub-fund and NUH Kids Fund.
Understand the government schemes in place
There are also government schemes in place that families may be able to tap.
Families must familiarise themselves with the 3Ms - Medisave, MediShield and Medifund - and how each can help to pay for the medical expenses.
First though, be clear on the classification of your child's disease.
For instance, if the disease was diagnosed at birth, you should check with existing medical insurers and MediShield to determine if the disease is classified as congenital or a neonatal condition that is covered by them.
Since March 2013, MediShield has been extended to cover newly diagnosed congenital and neonatal conditions with no underwriting, so long as parents do not opt their children out.
This, however, is only applicable to infants born on or after March 1, 2013 and are Singapore citizens at birth.
MediShield Life, to be introduced at the end of the year, is the "light at the end of the tunnel" for such families, Mr Ong said.
While subject to terms and conditions, it will cover all individuals automatically.
But for some serious pre-existing illnesses, individuals may need to pay 30 per cent higher premiums for 10 years. In addition, this subsidy is only for Class B2/C wards in government hospitals.
The CPF Nomination scheme, under the Special Needs Saving Scheme as administered by Special Needs Trust Co (SNTC), is an option to help manage the regular distribution of the parents' CPF monies after they pass away, subject to specific conditions. On top of that, the CPF Enhanced Nomination scheme will help parents transfer their CPF monies to their children's Medisave accounts, subject to the ceiling, to ensure the children can pay some of the medical expenses from their own Medisave accounts in future.
Consider insurance and its various alternatives
Parents are strongly advised to consider buying a medical insurance plan for their children as soon as practicable - and not wait until a sudden adverse diagnosis that may render the child uninsurable.
When purchasing a policy, Ms Eline See, council member of Insurance and Financial Practitioners Association of Singapore Executive Council, recommended that parents review the terms and conditions set out in the policies.
"Pay attention to benefits limits, exclusions as well as their claims requirements," she advised.
Trying to apply for insurance after the child has been diagnosed with the disease might be difficult.
Mr Ong said: "Successful application with insurers depends on the underwriting decisions. Some insurers may limit the coverage of the policy by excluding the condition or increase the premiums due to increased risks."
The Mah family wholeheartedly endorses the benefits of insurance even if bought after a diagnosis.
Mr Mah said: "Maybe they can't get medical insurance, but how about life insurance? It doesn't mean you can't get any at all.
"Perhaps you may need to pay a bit more if your child has a disorder, and perhaps there are certain exclusions. But at least you're covered for something with certain insurance."
Ms See said while most insurance options are barred to those already diagnosed with medical conditions, there are still options in the market that cover existing medical conditions, albeit subject to terms and conditions and usually at a high cost. "Insurance policies that cover long-term disability can also be considered," she said.
Mr Aw Choon Hui, deputy chief executive officer of GYC Financial Advisory, noted that a few international health insurers offer plans that cover pre-existing conditions, subject to conditions. These plans have very high premiums compared with standard local plans.
There will also usually be a waiting period of a few years and a cap on the amount one can claim for that condition.
Alternatively, parents can consider enrolling in group insurance at their workplace.
Group insurance refers to company insurance where employees are covered and the employer owns the insurance policy.
However, such policies usually come with a waiting period before treatments for pre-existing conditions can be claimed.
Participation in such policies very much depends on the group insurance put in place by your employer, Ms See said.
Pay attention to rising medical expenses
To avoid being caught out, parents should keep an eye on rising medical costs.
It is important to note that some insurance plans have a lifetime limit to the total claims amount. This means that the plan will lapse once the claims exceed the lifetime limit.
And as medical expenses will rise every year, it is important to review the insurance policies regularly and take into account medical inflation and affordability of the insurance premium.
"As insurance premium often rises with age, it is important to ensure it is affordable in the long term," Ms See advised.
Parents should also monitor their available funds against climbing medical costs over time. Just leaving your savings in a savings account or fixed deposit account might not be sufficient to beat the high cost of inflation for medical expenses, Mr Aw cautioned. He said: "Part of that savings will need to be prudently invested to try to achieve better rates of return in the long run, otherwise it would be rapidly wiped out with rising inflation.
"One practical way is to consider creating a trust and systematically setting aside money on a regular basis to grow over the years so as to provide the financial resources needed for this child in the long term."
Beyond consciously building a special medical fund exclusively for their child's medical expenses, Ms Low Mei Kuen, director of the advisory unit in Providend, said one way to help grow this fund is to contribute to the child's Medisave account, where the current interest rate is 4 per cent a year.
Plan for the future
While battling rising medical expenses will be the key priority for such families now, they should also consider the difficult issues that may arise should the parents die before the child.
This involves appointing an alternative and reliable guardian, planning a constant source of funding for the child, the distribution of this funding source over time and other issues related to caregiving.
Mr Ong acknowledged that there is no magic formula to correctly spread funds out over time, but said parents can consider tapping the various government schemes and creating a legal entity known as a Special Needs Trust with prior instructions on how the money should be used over time.
This trust will continue providing for the child's expenses, as per the trust deed and any letter of wishes given by the parents.
According to Mr Aw, this is important as the parent's assets may not be readily released if the case is embroiled in disputes or challenges from non-beneficiaries.
The trust would ensure that payment for expenses can still be disbursed without interruption as the trustee holds the legal title of the trust's assets, although the child is the beneficiary.
Also, assets such as payouts from the parents' life insurance policies can be injected into the trust upon the parents' deaths so as to boost the assets of the trust. Mr Aw noted that the parents could take on more life insurance on their own lives and assign the proceeds to the trust with the aim of boosting its available funds.
This article was first published on June 28, 2015.
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