The biggest change in the Health Insurance market in years happened in May 2015 and passed quite a lot of people by… Up until then, everybody in Ireland was charged the same premium for a particular health insurance plan, irrespective of their age, gender and the current or likely future state of their health. This feature of Health Insurance in Ireland is called community rating.
However a significant change happened in May 2015, with the introduction of Lifetime Community Rating (LCR). Under LCR, community rating is modified to reflect the age at which a person takes out private health insurance. Late entry loadings are applied to the premiums of those who join the health insurance market at age 35 or over. If you take out private health insurance earlier in life, and retain it, you will pay lower premiums compared to someone who joins when they are older. In short, anyone who enters the Health Insurance market from age 35 onwards now pays more (forever) than people who joined before age 35.
If I joined before age 35, am I sorted?
Well yes and no, the answer is never that simple! If you joined before age 35, you have beaten the LCR deadline and won’t pay the late entry loading. However we’ve also seen that many customers rushed to buy cover in order to simply beat the LCR deadline. A lot of people bought their plans on-line and maybe didn’t really consider what the plans actually cover.
Many of the plans bought would have been basic entry level plans, as they are the cheapest option and attractive to people making quick decisions. However these plans offer a very low quality of cover, and may only give access to inpatient public hospital cover.
It is important that members are aware of what they are paying for, and how their plan will benefit them (or will not benefit them) should they require medical treatment. As your health insurance advisor Lyons Financial Services are best placed to review your plan, and can ensure that you have the right cover in place for your specific circumstances.
With numerous promotions available with all providers and all their plans having different features and benefits, member can upgrade their cover to a more comprehensive plan which will give better access to private hospitals and treatment centres, and will give more money back on general day to day medical expenses.
Why was LCR introduced?
The primary purpose of introducing LCR is to encourage people to purchase health insurance at a younger age. Encouraging more people to join the market at younger ages helps spread the costs of older and less healthy people across the market, helping to support affordable premium levels for all.
Age at entry loadings now apply on health insurance policies written from the 1 May 2015. From this date, anyone who takes out private health insurance at age 35 or over, and who do not have qualifying periods of credit, will pay a loading. The level of loading will depend on the age at which the person takes out private health insurance. The only way to avoid paying late entry loadings is to take out private health insurance before reaching the age of 35.
And the loading can be significant if you delay in taking out your Health insurance. If you are purchasing a private health insurance policy for the first time at age 35 years or older you will pay a 2% loading on top of your premium for every year you are aged over 34. For example, if you take out a private health insurance policy for the first time at age 40 you will pay 12% more than someone who took out their cover before age 35. And you will pay this loading for every year of your policy.
If you are age 35 or over, the loading is just increasing every year you delay in taking out cover. So it makes sense to enter the market as soon as possible. If you already have cover in place, it is also really important to keep your cover going, to ensure that you don’t end up with a loading on your policy when you re-enter the market.
What should you do now?
First of all, if you are age 34 or younger, entering the Health Insurance market now will ensure you avoid the late entry loading – remember the loadings apply to every year going forwards, not just the first year.
If you are age 35 or older, every year you wait is simply increasing the loading of your premium by 2% for every year you are aged above 34 at entry. And remember this loading will apply every year then into the future.
If you are already in the Health Insurance market and your renewal date is approaching, now is the time to review your cover and make sure that you have the right Health Insurance policy to meet your needs.
We know that this can be a minefield for you, finding the best plan to suit your circumstances. So we stand ready and waiting in Lyons Financial Services to help you… just give us a call on 01 8015808.