Week Two: Pricewatch five-grand challenge. How to cut health insurance costs

Have you been faithful to a health insurer for more than two years? If the answer is yes, there’s a very good chance you’re paying well over the odds. By switching provider, or by staying with the same one and simply switching plan, you could knock hundreds of euro off your annual costs without seeing your cover diminished.

Similarly, if you have all your family on the same level of cover or if you’re paying for extras such as a private room or are insured on dated plans such as VHI Health Plus Extra (B Options), Laya Essential Plus or Aviva Level 2 Hospital plan, you’re probably paying more than you need to.

Less than 30 per cent of those with health insurance have switched provider, and, on the surface, it sounds complicated. There are more than 300 different policies on the market and the number keeps growing. In reality, however, switching is easy.

The key thing to remember is that insurers must give you full credit for all time spent with another company, and if you’re switching to an equivalent plan you are covered immediately. It makes no difference what condition you are in. That sentence is worth repeating. You cannot be penalised when switching just because you might be older or sicker than another person.

In fact your new provider may only really ask you three questions: who are you currently insured with? What plan are you on? And how long have you been on that plan?

Existing conditions are irrelevant and it doesn’t matter if you’re planning to have a double hip replacement tomorrow; you can switch from insurer A to insurer B today, and insurer B becomes liable for the cost of the procedure.

And though the insurers cannot pry into your life by asking loads of questions, you can ask as many questions of them as you like. Make sure those questions are very specific. Your calls will be recorded, so the person on the other end of the line is obliged to tell you the whole truth.

A good starting point is: “Have you any plans across your entire range – including your corporate plans – that are equivalent to the plan I am on, and how much do they cost?” You should also ask what cover you lose by switching. The key thing is to put the onus on them to explain everything.

Alternatives

Once you have an idea of the names of the alternatives, the Health Insurance Authority website, Hia.ie, is the next stop. It has easily decipherable details of every plan on the market and a comparison tool that lets you see how your existing plan stacks up against other policies.

While the HIA site is good, it is a regulatory authority and is forbidden from offering advice. Dermot Goode works under no such constraints. He is one of Ireland's leading authorities on health insurance, and his website Totalhealthcover.ie has a price-comparison tool and can make suggestions based on users' stated needs.

“In most cases, it doesn’t make sense to have everyone on the policy on the same level of cover,” he says. “Adults and children have different requirements, and you should select a plan for each person reflecting their needs only. You can actually have everyone on the one policy but all on different levels of cover.” He gives an example of a family of two adults and two children on the Laya Essential Plus scheme. That will cost them €5,791. By moving the children to the Laya Control 150 Connect Scheme, this family can save €585 and still have excellent cover in place.

He warns that many consumers assume student rates are applied automatically once a dependent turns 18. This is not the case: policyholders have to contact an insurer to claim a student rate. Doing so can lead to big savings. The VHI Health Plus Access (Plan B) costs €1,820 per adult, but by claiming the student rate you can reduce your cost to €620, saving €1,200.

Taking on a policy excess – a sum policy holders pay if they make an insurance claim – is one the best ways of reducing your costs. Savings vary, but reductions of 10-35 per cent are possible if you are willing to accept a small excess in private hospitals only. “Consumers mistakenly believe that these excesses apply per night, which is not the case. On most plans, the excess is per admission,” says Goode.

For example, the Aviva Health Level 2 Hospital plan costs €1,957 per adult, but by dropping to that company's Health Plan 16 and taking on a small excess – €75 per admission – you can reduce costs to €1,248 per adult (€709 saving or 36 per cent).

If you want to maximise your savings, you can opt for much higher excesses. However, be careful on these plans as one or two admissions could wipe out all your savings. A good rule of thumb is the lower the premium you pay, the higher the level of risk you’re assuming.

Watch for special offers. Many consumers miss out on valuable savings by not monitoring market developments. GloHealth has a continuous offer of free cover for children under three on most of its plans, and Aviva Health launched new plans and a discounted child offer on its Family Value plan from November1st.

Private rooms in private hospitals are never guaranteed, and for many people represent overinsurance. Unless having one is essential, consider dropping a level for similar cover but huge savings. For example, two adults going from the Glo Ultra plan to a lower hospital such as their Best Plan could save €1,572 – 35 per cent – in annual costs. The plans are not identical but the savings could make the switch worthwhile, and you would still have excellent cover in place.

Don’t forget corporate plans. These tend to be the most competitively priced plans on the market and are worth considering before you renew cover. Despite their name they are open to everyone. They normally cover public and private hospitals and usually include some level of day-to-day cover for your routine medical costs. They include excesses in private hospitals, so check benefits and terms and conditions fully before buying.

Just because you are on a corporate plan already does not mean you are getting the best deal. The plans tend to change each year and are replaced by newer – cheaper – versions. Make sure you track the changes to stay on the best value option.

Goode suggests people look at the VHI's PMI 3613. It costs €1,123 per adult while the Laya Control 150 Create costs €1,144 per adult. Aviva Health's Plan 16.1 is €1,137 per adult while the Glo Better Plan Excess Cash is €1,144 per adult. "For any family with adult dependents, they should move them off dated hospital plans to these corporate alternatives for more appropriate cover and much needed savings," he says.

If health insurance is beyond you – in spite of potential savings – then you could consider a medical cash plan to cover costs such as GP, physio, dental, optical, consultations, alternative treatments, health screening, A&E and other expenses.

If you opt for a plan such as the Family Direct A scheme from HSF Health Plan, you pay €678 for the family for the year and this scheme covers all the above expenses, so you get 100 per cent back on your dental and optical costs up to €500 per annum. If you have to pay the €75 overnight charge in a public hospital, you’re fully covered, as this plan gives you €80 cash per night for up to 40 nights in hospital in any one year.

All told, then, a typical family of two adults and two children could – by our estimates – knock at least €800 off the cost of their annual health insurance bill without losing much cover.

DOING WELL: SIX WAYS TO SAVE ON HEALTH INSURANCE

• If you have been on the same plan for more than two years you will save money by switching
• Look at taking on more excesses to cut the cost of your premiums. But adopt a common-sense approach and take into consideration your own health at all times.
• Don't have everyone in your family on the same plan. There are no private children's hospitals, so paying for gold-plated coverage for them makes little sense.
• Don't be hung up on the private rooms. Even if you pay for one, you will only get it if one is available. And remember some high-tech hospitals only have private rooms now, so you'll get one even if you don't pay the top rate.
• Look at corporate plans and make sure to keep checking them when renewal time comes around, because new cheap plans are often quietly launched by providers to attract big companies.
• Cash-back plans can save you money. Companies such as the Hospital Saturday Fund are worth looking into.It is not a full replacment for private medical insurance but it can take the sting out of the cost. You can also have a cash-back plan on top of your health insurance.

FIVE GRAND CHALLENGE: THE STORY SO FAR

€3,000: Total savings so far

Can we help you save five grand a year without draining the colour from your life? We think so. Austerity has forced most consumers to reduce spending already, but many of us can still cut our living costs.

Last week we suggested ways to save €2,200 on your weekly shop. Today, we show ways a family can save up to €800 on health insurance.

We are at €3,000 so far. Five weeks to go.