Issue 13 - Spring 2020
When they make Reeling In The Years for 2015, there will be plenty of interesting events to memorialise. There was the day when the Government accidentally legalised over 100 illegal drugs for 24 hours (on March 11th). TV3 celebrated April Fools with an episode of Xposé presented by Glenda Gilson and Vincent Browne. A genuinely historic moment was referendum day May 22nd, when Ireland went to the polls and gave a resounding Yes to equal marriage. Then, there was the moment of widespread confusion when Eircode was introduced on July 13th. The Dubs commenced their (so far) five in a row run as All Ireland Football champions on September 20th. Lots of notable happenings – but surely there’s got to be a slot in there that marks the weeks of water cooler chat and frantic research that led up to deadline day, Thursday April 30th, for over 35s to avoid Lifetime Community Rating (LCR) loading on taking out private health insurance?
If you were in your mid-thirties and beyond at the time, it’s quite likely you’ll remember it. It was a piece of law that was brought into force by then Health Minister Leo Varadkar, which meant that after the April 30th cut-off, anyone who wanted to take out private health insurance (PHI) for the first time would be charged an extra 2% for every year that they’d been alive past the age of 34. The regulation aimed at addressing the age imbalance in the system – since the principle of community rating (whereby everyone is charged the same premium regardless of age, gender and current or future state of health, so as not to price out people who most need cover) is undermined by not having a broad community spread. The system was cracking under the weight of too many older claimants and not enough younger, healthier policyholders to balance the books – so insurers needed a means of encouraging younger people to join up sooner.
The LCR loading law remains in place – and with the exception of returning emigrants who have just nine months grace to buy in and avoid the loading – latecomers to private health insurance now pay the price for not seeking cover by age 34. For example, a 43-year-old sorting their plan today will pay the standard cost of the policy plus 18% on top; and a 54-year-old first-time PHI buyer will face a loading of 40%.
The 2015 deadline brought in 100,000 new people to the system, and the numbers insured have continued to recover year on year from their Recession-time low – almost back to Celtic Tiger levels. Some 45% of the Irish public now has PHI – that’s around 2.2 million people.
He said: “It was a blunt instrument, but from the point of view that about 100,000 people joined, it did work. Also it resolved an anomaly in the system. The problem with the old system was that, whether I joined at 26 or I joined at 54, I was treated the exact same. So a 26-year-old who paid into the system for 30 more years, was treated the same as a 54-year-old who joined yesterday — that’s unfair.”
He added: “So the new system is fairer. Those who have been paying into it for longer don’t pay age loadings. Those who decide to join at a later age will pay a higher premium because they haven’t been paying into the system so therefore they shouldn’t get the same benefits.”
However, Dermot noted, there will always be winners and losers in any new system: “Unfortunately an awful lot of people weren’t aware of the deadline and missed it even though it was well publicised. There are now people with significant age loadings. You also have a lot of people who are back in the workforce, who would have liked to have joined but simply couldn’t afford it at that time.
“We have a lot of older people now returning to Ireland, we’ve a lot of people whose kids have moved on and can now afford to put more into their health cover. And the age loadings are quite a barrier depending on your age.
Others would argue that you can’t have it both ways. If you haven’t paid in you can’t expect to benefit the same degree as to those who have – so as I say there are winners and losers. Overall, however, I think it was necessary to bring it in and they probably couldn’t have done it any other way.”
The legislation was necessary, Dermot said, to uphold the principle of Community Rating: “People now, as they get into their mid-thirties, are forced to decide whether they want to join or not. And that is good if we want to hang on to our Community Rating system. Other jurisdictions have Risk Rating – and that is not good, because it means that as you get older and claim more, you will be priced out of the system – we never want that here in healthcare.”
So are Irish people used to loading now and is awareness good? “I think that loading is well established as a feature of the market now and most people are aware of it. Where people get caught out is if they’re returning to Ireland from abroad – if you left before May 2015 and take out cover within nine months of returning you pay no loadings whatsoever – but most people returning are not aware of that exemption. So people fall between the cracks and they lose out.”
He added: “It’s like any piece of legislation – you can’t accommodate everybody. It just has to be clear, it has to be unambiguous and it has to be enforced equally and, in fairness, it is.”
So it seems that the 2015 law has, broadly, done what it was meant to do – but were there any weaknesses in it? Dermot said: “The only thing I would state is that, and this is not a criticism of the current system, but there really is no incentive for somebody aged 26 to 33 to join because the young adult discounts finish at age 25. Where I think they missed a trick was in putting some incentive in place to make it worthwhile for those people to either join or to keep cover in place.”
I always had private health insurance. It was something my dad instilled in me from a young age and I sorted my own when I turned 21 as my parents took me off theirs. Once my children were born and the 12 week hospital cover for babies born at that hospital lapsed they were put on to ours. I think health insurance is fairly complicated though. The policy I have is more geared towards serious illness and I do think everyone should have it. I think that in 2015, rather than penalise people, they should have offered a greater tax credit incentive. At the moment it is capped as to what gets written off your taxable income. Studies into human behaviour found that people are more inclined to jump on something if it's the right thing to do and if the masses are doing it – rather than when they’re given a hard line. For example, gas companies in the UK put a line on their bills saying: ‘Eighty per cent of our customers paid on time last year’. With that little add on, accounts in arrears fell drastically.
- Emma, Dublin
I remember the insurance deadline well. I was on a policy through work at the time, so I wasn't too stressed about it. I remember it coming under discussion at home because my mother was fretting about my brother’s health-insurance status. (After I was laid off last year, my insurers offered me some sort of a deal on a new policy - I was no longer covered under the work plan! I don't know what I'll do next year). I was pretty disgusted with the rule, though it made a certain amount of business sense.
- Mary, Galway
I didn’t rush to get private health insurance in 2015. At the time I lived abroad so would not have been affected by the deadline. I am currently on a health insurance policy provided by my employer but to be honest I don’t know most of the details. I think the new rule is another example of Ireland’s extortionate tax regime and wonder where the 2% levy per uninsured year is going?
- Ciara, Louth
I don’t currently have health insurance and I have no memory of the deadline at all. I don’t feel like I ever heard or knew anything about it. My wife insists it was one of 2015’s main watercooler topics, but she definitely didn’t bring that one home to chat about!
- Niall, Meath
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