Paying more for health insurance after age of 34 is ‘unduly punitive’

Society of Actuaries wants lifetime community rating limit to be cut from life to 20 years

Making people pay a penalty for entering the private health insurance market after the age of 34 is “unduly punitive”, the Society of Actuaries in Ireland has said in a new report. It also suggests in the report that the term of penalties should be cut from life to 20 years.

Under the current lifetime community rating (LCR) system, somebody who first takes out health insurance after the age of 34 must pay an additional loading, calculated as 2 per cent of the premium for each year by which he or she is older than 34, for the remainder of his/her lifetime. This means, for example, that a 40-year-old taking out insurance for the first time will pay an extra 12 per cent on their health cover; the figure would be 32 per cent for a 50-year-old.

However, the Society of Actuaries in Ireland says paying the loading for life is “unduly punitive”.

Australian model

In Australia, a different approach is taken, whereby those entering the private health insurance market at the age of 30 or over may incur an additional penalty for 10 years. Australians who do not take out health insurance cover also face a potential income tax surcharge.


The combined effect of this allows the Australian LCR system to offer a lower payment term than Ireland, but at the same time maintains an equivalent level of deterrence to those people considering deferring their take-up of health insurance into their older years, the society says.

However, this approach would not work in an Irish context, according to the society, as it would lead to a strain on the system, unless there was an increase in the current loading and/or a reduction in the current age starting point of 34. No equivalent potential income tax surcharge applies in Ireland.

Additional payment

Instead, the society has suggested that the burden for consumers could be lightened by reducing the additional premium payment term to 20 years, rather than life, as it currently is.

“The society believes reducing the LCR payment term to a maximum of 20 years is justifiable,” it says.

This would both “fairly and reasonably compensate” the health insurance market for admitting those people who do not join when they are young. It would also act as a deterrent, so that people would join the health insurance market before the age at which loadings apply.

Fiona Reddan

Fiona Reddan

Fiona Reddan is a writer specialising in personal finance and is the Home & Design Editor of The Irish Times