Something that might have been a simple administrative oversight could end up costing a family who contacted Pricewatch thousands of euro in the years ahead and leave them without sufficient health insurance cover for five years.
The story starts with a plea.
“I’m hopeful that you might be able to help us”, wrote a reader we will refer to as Bee. “My husband has work health insurance and pays for myself and our children to have insurance with VHI,” she continued.
The family did not give their cover much thought for a long time but recently had cause to make contact with the provider after one of their children needed to see a specialist.
“I asked my husband to give me my child’s VHI number so I’d have it for the GP in case they needed it for the referral,” Bee wrote.
“When he went to check he saw that VHI had cancelled our policy. They didn’t notify us of this as they said a direct debit was returned twice when presented. We had no idea this had happened as we have no notification of either this or the subsequent cancellation of the policy,” she said.
The cancellation happened in 2022 “so we have had no insurance for over a year and they are saying there will be a 12 per cent levy on any new policy for me. Can they cancel our policy without notification?”
The short answer is no, but that is by no means the full story.
Bee’s story resonated with us because in the 1990s when Pricewatch was not Pricewatch but a dissolute and irresponsible 20-something, something not dissimilar happened to us.
For donkey’s years we had been on the Pope family policy but after getting a job in The Irish Times – or at least on The Irish Times website – we were cast adrift and told to take out a policy of our own.
And that is what we did. Being creatures of habit we automatically signed up with the VHI and thought no more about it.
Fast forward five years when, for reasons that have been lost in the mists of time, Pricewatch decided to upgrade its cover from Plan B to Plan C. To do so we made contact with VHI only to be told that we had missed two direct debits four years earlier and had our policy cancelled.
The person on the other end of the line said that they had written to us twice which they probably did but we had moved house several times over the period and had failed to provide a forwarding address to our landlords.
When we tried to renew our cover we were told that there would be a waiting period before the cover would kick in.
In a somewhat irrational panic, we called the only other provider on the market at the time, Bupa. The person on the end of that line was only delighted to waive the waiting period so we went with that company instead.
The two calls were short and we have occasionally marvelled at how the inflexibility of the VHI operative all those years ago and their insistence that we wait 12 weeks for full cover ended up costing the company dearly in lost premiums in the years since but it was what it was.
Bottom line is, we lost our cover through no fault of the VHI but we could empathise with our reader and understand that it is much easier to keep track of money leaving your account than money not leaving your account.
Anyone who takes out health insurance when they are over the age of 35 has to pay an extra 2 per cent of the gross cost of the policy for each year above the age of 34 that they didn’t have health insurance
The consequences for us were non-existent but the consequences for Bee are huge because of a significant change in the rules in more recent years.
The health insurance sector here operates a lifetime community rating system which means the older you are when you first buy health insurance, the more expensive it will be.
It applies only to those over the age of 35.
Anyone who takes out health insurance over the age of 35 has to pay an extra 2 per cent of the gross cost of the policy for each year above the age of 34 that they didn’t have health insurance.
The Health Insurance Authority uses the example of person who is 45. If they had health insurance since they were 28, they would pay the same amount as someone aged 28 or aged 75 with the same health insurance policy. “However, if you buy health insurance for the first time when you are 45, you will have to pay a lifetime community rating of 22 per cent (11 years x 2 per cent). This means that you will have to pay €1,220 for a health insurance policy with a gross cost of €1,000,” the HIA says.
The difficulty for Bee is that she now finds herself being treated as if she never had health insurance at all and she is in her 50s which means she is being hit with a significant loading fee for the lapse in cover.
She is also being told she will have to wait five years before she will have cover for pre-existing conditions she has.
We contacted the VHI who contacted Bee directly to explain what had happened.
She got back to us to say she had been told that the insurer had posted “two letters to us (which as we have said previously we never received) and that they noted it on my husband’s My VHI site which he wouldn’t be on unless we were putting in a claim and which we haven’t had cause to do”.
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The company have now said she can “pay the arrears which would total nearly €7,000 and that would provide us continuity. If not we could pay from now and incur a 12 per cent loading which for me I believe lasts 10 years. As you can imagine like the majority of people, we don’t have €7,000 lying around, and the idea of the loading and the waiting period is upsetting as we have always kept up our insurance to avoid these things. Had they phoned us we wouldn’t be in this position.”
Now, we have to stress that – ultimately – the responsibility here rests with our reader, just as it rested with Pricewatch when we inadvertently let our cover lapse back in the 1990s.
We also acknowledge that the VHI’s hands are tied by the health insurance framework that exists in Ireland and it can’t just forget about the break in cover and carry on like it did not happen.
The offer to pay the arrears of €7,000 is the best-worst option on the table although we get why that might be unaffordable. So we contacted the VHI again to see if it might be able to do more in terms of the repayment period and at the time of writing it was considering the options it might have and what it might be able to do for Bee.
