Lifetime community rating

Lifetime community rating encourages people to take out private health insurance at a younger age, therefore controlling inflation in the market. The policy was signed into law last July and became operational on 1 May.
Premia will increase for accounts where the customer purchases health insurance for the first time at the age of 35 or older. These ‘late entry loadings’ will only apply to new customers and will initially be set at 2 per cent per year of age over 34 – with credit provided for previous periods of health insurance cover and for periods of unemployment since 1 January 2008.
Loading will continue as long as cover remains in place and will be capped at a maximum of 70 per cent i.e. for people aged 69 and over. Immigrants (including returning emigrants) moving to Ireland can avoid loadings if they purchase health insurance within nine months of establishing their principal private residence in the State. eolas considers how the change will impact the health insurance market.

Cash plans are not included so if customers did not hold an inpatient plan before 1 May, loading will apply when they subsequently switch to (or purchase) an inpatient health insurance plan.

Lifetime community rating will incentivise insurers to provide discretionary price discounts to young people, who have tended to avoid purchasing health insurance due to the recession. Increasing the number of customers in the lower age brackets should help to offset the cost of healthcare for older people.

Loading rates will be reviewed by the HIA in 2017 and are due to stay in place until universal health insurance is in place. Health Minister Leo Varadkar has commented: “We need to get to a place where people really value their health insurance.” He encouraged over-35s to take out insurance before 1 May “to keep down the cost of insurance for everyone as they get older.” The Minister acknowledges that some customers will be unable to afford the new premium but contends that health insurance should be seen as a priority, alongside house and car insurance.

People Before Profit TD Richard Boyd Barrett has, though, accused Varadkar of “acting like a tout for private health industry” and claimed that the late entry levy is discriminatory for older people e.g. 32 per cent for a first-time customer aged 50. He sees a contradiction between lifetime community rating and universal care and has called for more government investment in the Health Service. The new policy is “yet another measure that people on lower incomes could not possibly avail of due to the overwhelming burden of austerity.”

Insurance companies competed to lower the cost of their policies prior to 1 May with Laya Healthcare bringing forward a €9 per week scheme and Vhi reducing prices on seven of its schemes.

A calculator for estimating lifetime community rating is available at www.hia.ie