The best policy: answers to your questions about health insurance

Health insurers have ways of ensuring a robust profit margin, often through confusing pricing plans. Learn to navigate these and you could save a lot of money

Health insurance: more than 500,000 people will be renewing their cover in the weeks ahead. Illustration: Thinkstock

Health insurance: more than 500,000 people will be renewing their cover in the weeks ahead. Illustration: Thinkstock

Mon, Jan 13, 2014, 01:00

Why is health insurance back in the news?
It is rarely out of the headlines, and it is not hard to see why. More than 500,000 people will be renewing their cover in the weeks ahead and many will be wondering how they are going to pay the price after successive increases by the four providers in recent years. Some policies have gone up by more than 70 per cent in the

past four years, adding an extra €1,000 to many people’s annual bills. Then there are the tax changes announced by the Minister for Finance, Michael Noonan, in his last budget, when he cut the relief available to those with health insurance in one stroke, adding more than €500 per year on to the cost of some fairly standard policies.

What kind of impact are the price increases having?
A big one. Many are surrendering policies. According to the sector’s regulator, the Health Insurance Authority, two million people were insured at the end of September, a fall of 62,000 or 3.2 per cent in a year. Most worryingly, the number of people aged 18-29 with health insurance fell from 241,222 to 217,588, a decline of 10 per cent. Young, healthy people allow the costs for older, sicker people to be controlled, which is known as intergenerational solidarity. If the young leave the market, that falls apart.

Can I save a lot by switching?
Yes you can. Health insurance expert Dermot Goode is very clear on this: he says not switching costs you money and almost everyone who is on a bad-value policy can save themselves hundreds of euro a year by shopping around. Those with gold-plated policies can save even more. Switching from what used to be known as VHI plan E to the current equivalent of VHI plan D could knock more than €1,500 off the cost of your annual premiums, and all you lose is access to private rooms in high-tech hospitals such as the Blackrock Clinic and the Mater Private. Frequently, even that doesn’t matter. The Blackrock Clinic, for instance, has all but scrapped its semi-private rooms so the second from top-tier plan gives you much the same level of cover but at a significant discount.

I have never shopped around for health insurance, so why should I start now?
If you have been on the same plan for more than three years you are probably over-insured, says Goode, and “if every member of the family is on the same level of cover then you are wasting money”.

But switching is complicated, right?
It can be. There are more than 275 separate health insurance plans on the market. By the end of the year, there will be more than 300.

Why so many?
Why indeed. The insurers say they are constantly rolling out new plans in response to consumer demand, but the reality is quite different. The HIA said in a report published before Christmas that the companies are adopting strategies to segment and select profitable business by creating differential pricing for targeted groups.

Sorry, what?
Companies want to attract younger, healthier people as well as locking big companies into deals. So they develop plans specifically for both groups. The young are attracted by cheap policies that don’t offer cover for ailments likely to afflict only an older cohort. Then the price of policies offering broader cover are hiked. Insurance companies also offer discounts to corporate clients, but would rather not let you have them. But under legislation all plans have to be made available to everyone. So what do the insurers do? They bring out new plans with confusing names, which they sell to corporates while leaving you in the dark. Sneaky.

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