IN MAY 2015, the government introduced the new Lifetime Community Rating (LCR) legislation to incentivise younger people to join health insurance earlier which is essential for the viability of our community-rated system. This means that everyone should pay the same for their health cover irrespective of age, gender or medical history.
LCR mean that anyone joining who is over 34 will be liable for age loadings equivalent to an additional 2% for each year over the threshold, eg a 44-year-old with no previous cover will have a 10-year loading which is an additional 20% to their gross premium each year.
Entry level plans
We estimate that approximately 100,000 new members joining health insurance to beat these loadings and thousands more have joined since then prior to their 35th birthday which is when the loading kicks in.
Research indicates that nearly half of these members simply joined a cheap, entry-level plan just to get into the system with the objective of upgrading their cover at some point in the future. The other half were mostly older members who joined a comprehensive plan covering public and private hospitals.
Our research indicates that those on the entry-level plans mistakenly believe that there are no savings to be made at renewal time as they’re on the cheapest plans possible. This is incorrect as many of these plans have increased substantially over the past three years or have been overtaken by a lower cost equivalent scheme.
For those with young families on the policy, there are discounted deals now available which could reduce their costs further for even better cover.
Discounted deals
For example, many Laya customers joined the Assure Vitality scheme which now costs €599 per adult and €175 per child (Family Cost €1,548). But they could now switch to a similar plan called Assure Protect which will reduce their costs to €536 per adult and €170 per child which reduces the total family cost to €1,412.
However, as Laya are offering free cover for the second and subsequent child under 18, this family could reduce their total cost to €1,242 by placing their youngest child on the Flex 125 Choice scheme for the next year which will be free-of-charge. This reduces their cost to €1,242 for the family which is a total saving of €306 or 20% for the coming year which is a massive potential saving.
The Laya Assure Protect scheme covers all public hospitals which may not be the case with some of the lower cost alternatives from the other insurers.
Switching
Consumers who had opted for the Select scheme from Irish Life Health costing €565 per adult and €194 per child (cost for a family with 2 adults and 2 children = €1,518), can now switch to their equivalent Select Starter scheme which will reduce their costs to €486 per adult and €135 per child which is a total cost for a typical family of €1,242.
This equates to a family saving of €276 or 18% which is a huge saving. Some of these reductions are possible because Irish Life Health reduced the cost of many of their entry level plans from April 1 on the back of the reduction in health insurance levies recently announced by government.
The same applies to VHI members who may have joined the VHI One Plan Starter which now costs €510 per adult and €154 per child (Family cost of €1,328 for 2 + 2).
These members could now consider the VHI Start Plan at €448 per adult and €103 per child for the coming year. This plan doesn’t cover every public hospital but may be more than adequate for a family looking to minimise their costs. The family cost of this plan will be €1,102 which is a saving of €226 or 17% for the coming year.
Don’t pay more than you have to
Health insurance is expensive enough so don’t pay any more than you have to. Even if you are on one of these entry-level plans, make sure you contact your insurer to see if they have a lower cost equivalent available for you. If not, then check with the other insurers as well.
Never ‘auto-renew’ as this means you are most likely to overpay for your cover.
Dermot Goode is a Health Cover Analyst with totalhealthcover.ie.
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