In 2015, a significant transformation unfolded in the realm of Health Insurance, one that continues to wield influence today. This transformation, known as Lifetime Community Rating (LCR), was a strategic move aimed at increasing health insurance uptake among the younger demographic while taming the relentless escalation of premium costs.

In the period leading up to the advent of LCR, a concerning trend emerged—numerous young individuals were relinquishing their health insurance coverage, with the intention of rejoining the market at a later stage when their health needs would likely warrant it. This trend had a direct impact on the surging health insurance premiums. 

Community rated markets, in essence, rely on the consistent influx of younger participants, who generally file fewer claims. This dynamic helps keep premiums manageable for the entire spectrum of policyholders. However, the shift towards obtaining health insurance at later ages inevitably contributes to escalated premiums due to the higher likelihood of claims from older individuals. Here, the concept of Lifetime Community Rating comes into play—a strategic framework to incentivise individuals to take out private health insurance from an early stage, a crucial measure to prevent a rampant increase in premiums across the board.

The mechanism behind Lifetime Community Rating is straightforward yet impactful. Those purchasing health insurance for the first time after the age of 35 encounter late entry loadings on their premiums. These loadings incrementally grow over the span of a decade, underlining the principle that earlier adoption leads to diminished future costs. For example, taking out your first policy at 35 results in an additional 2% charge, while at 36, this escalates to 4%. Should you acquire coverage for the first time at age 44, the annual premium increase amounts to a substantial 20%.

The need for advice

There are a number of conditions and rules around Lifetime Community Rating, and we’ve touched on some of them below. Advice should be sought from a health insurance expert in relation to these – we of course suggest that you talk to the Health Team in Lyons Financial Services. These include the below:

• There are several situations in which credit will be provided, such as for previous periods of health insurance and for some periods of unemployment.
• People who are migrating to Ireland have up to 9 months to take out health insurance, without a loading applying.
• If you had private health insurance previously, but let it lapse, the level of loading is reduced by the number of previous years health insurance cover.
• The maximum loading that can apply is 70% of the total premium. A loading of 70% only arises on very rare occasions, where a person aged 69 or older is purchasing private health insurance for the first time and then for a maximum period of 10 years.
• An individual insurer cannot make an exemption for you from the LCR loading – they cannot waive it.
• Switching from one insurer to another or from one policy to another does not affect the applicable loading. Loadings, if any, will continue to apply and insurers are required to supply each other with proof of an individual’s prior cover.

Lifetime Community Rating introduced a new level of complexity into the Irish health insurance market. Where complexity exists, so does the need for advice. We suggest that you speak to the Health Team at Lyons at 01 801 5808 to discuss the best route forward for you in relation to your health insurance needs.