What is the Lifetime Community Rating?

What is Lifetime Community Rating? Community rating is the principle whereby everyone pays the same premium for the same health-insurance product, regardless of age. That's the system that applies in Ireland and it effectively means younger, healthier subscribers are subsidising older, less healthy subscribers.

Under lifetime community rating (LCR), this policy is modified to reflect the age at which you take out cover. The older you join, the more loading you pay.

Why so? The health insurance system is out of whack. Because of the recession, young people are dropping their cover or not signing up, so the market is ageing. That's driving up premiums massively, which in turn is forcing more people off cover. LCR will help to break this vicious circle, by encouraging more young people to buy health insurance.

I hear loadings of up to 70 per cent will apply. Is this fair? That's for a person aged 69 years or over who takes out cover for the first time, an occurrence the Department of Health predicts will be "very rare".

Older people may benefit from Minister for Health James Reilly’s intention to equalise the waiting periods that apply when people sign up for health insurance.

Currently, it can take up to 10 years for cover to apply for a pre-existing condition for someone aged over 65, but the intention is to reduce this to five years.

The Minister is unlikely to be in office to see this intention through.

Generally, the loading will be 2 per cent for every year you are aged over 34 years. This means a 50-year-old taking out health insurance for the first time will pay 32 per cent loading on top of the basic premium, compared to someone who has had cover all this time.

Ouch. Is there anything to soften the blow? Yes. If you previously had cover, your loading will be reduced by the relevant number of years.

Say if a 50-year-old had cover for 10 years but lost his job in 2010 and then was unemployed for three years. That adds up to a credit of 13 years. So they would pay a 6 per cent loading only (three years x 2 per cent).

For anyone coming, or coming back, to Ireland, a nine-month grace period will apply.

Within that period, a person won’t have to pay a loading if health insurance is taken out, but after that a loading may apply, depending on age.

What will happen if I switch to another insurer? This doesn't affect the loading that applies to you. In addition, periods of up to 13 weeks without cover are allowed without affecting your loading.

What about me, I can't afford health insurance? Private health insurance is optional. The department says this means "you do not have to take out private health insurance in order to have access to high quality hospital services".

Will I have to pay a loading for the rest of my life? Yes. The department says the loading that applies when a person buys health insurance after next May will apply in subsequent years, "until Universal Health Insurance is in place". For many people, that's equivalent to saying "forever".