Health insurance: How to save up to €1,000 a year on your plan

Many hundreds of thousands of people with health insurance will see their policies come up for renewal in the weeks ahead and it is likely that well over half of them will end up wasting money because they don’t shop around and ask the right questions of their providers.

How much money will be needlessly spent will depend on the type of policy a person has and how long they have been on that policy but as a rule of thumb, anyone who has been on the same policy for three years and who stays put will probably end up paying around 25 per cent more than they need to over the next 12 months.

Pricewatch has said this on many, many occasions in the past but this time it is not just Pricewatch who is saying it but the head of the Health Insurance Authority (HIA) Laura Brien whose job it is to guide people through the sometimes complex maze of health insurance.

She points to the HIA’s most recent research which looked at the price differentials between newer and older plans. For the exercise, the authority focused on two categories – plans that have been on the market for less than three years and those that have been on the market for more than three years.

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“What we’ve seen is that on average, the prices of the plans that were in existence, pre-2019 are 25 per cent, more expensive than the plans that have been introduced since then,” she says. And how can that be?

I can tell you straight away that 50 per cent of all people with health insurance are on the wrong plan

“What happens is that the insurers introduce good value plans to attract consumers into the market, then people stay on those plans and gradually prices go up over time, and [the insurers] introduce another new plan. So if you’ve been on a plan for more than three years, the same plan, there’s a very, very high probability that there’s a better plan out there that has a comparable set of benefits.”

While the HIA tends to be agnostic about prices its does have a sense as to how much more people are paying as a result of an absence of shopping around. Brien says that if plans are broken down “by a very simplistic categorisation, which is, you know, semi private room, how much of an excess or a shortfall is there than a person looking at a private room with a reasonable sort of mid level access [and] a shortfall say of €150 per claim, there are plans out there where you could save up to €1,000 from the most expensive to the cheapest plan within those categories.

“And that’s per person. There are certain plans that have been out there for a very, very long time where the price has gone up every year and similar plans have been introduced more recently, with very comparable levels of benefits but at much lower rates.”

With savings of that magnitude on the table, people must be racing to the phones these days to take advantage of them? Not remotely.

Brien suggests that only 29 per cent of people with health insurance or around three quarters of a million people have changed their insurance plan over the last two years. That means around 1.5 million people have not.

She says there are “only about 35 per cent of people who have ever switched, and a lot of people have only switched once”.

The figure is not, she notes, as bleak as a cursory glance might suggest because around 30 per cent of the market has health insurance through an employer which means “there there’s a certain amount of the market, that’s not going to be in the switching environment”.

But even so that is a lot of money that could be saved by a lot of people.

“People are conservative, they’re risk averse,” she says “We see this with older who are worried about pre-existing conditions, they’re worried that if they switch provider and they have a pre-existing condition, they’re not going to be covered, or they’re going to have to wait for coverage and, that is not true. If you’ve sat out your waiting periods with one insurer they carry over in the event of any pre-existing condition to another insurer.

She stops short of saying the fears of older people are being a exploited by providers but says that the older age groups “have an even higher level of inertia than the younger groups do” and the system “works against people who have a high level of inertia and that probably applies across all age groups, although it applies more to the elderly.”

And the benefits of switching for the older people are greater than the younger people, because they tend to be paying on more for their insurance. “The over 65s pay between 40 and 45 per cent more for insurance than younger people do,” Brien notes. “Some of that is higher levels of benefit but a lot of that is the inertia that comes from being on the same plan for 10 or 15 years.”

Switching aside, the numbers with health insurance have been “kind of ticking up quarter by quarter” as the population grows and more people enter employment but also because people are more conscious of the trolley crisis and waiting lists and are doing what they can go protect themselves from the crisis.

Hospital overcrowding is “certainly one of the things that came out in our survey, which was that, you know, access to hospitals and concern about waiting lists was one of the major drivers of deciding to take out health insurance.

The cost of living crisis has yet to impact those numbers. “We haven’t seen it just yet,” she says, “We keep thinking it’s going to turn around and it hasn’t although if we go back to the financial crisis happened in 2008, the numbers with health insurance didn’t start to decline until 2010 1112, and bottomed out in 2013. So there was a bit of a lag between people feeling the pinch in their pocket, and a decline in health insurance numbers.”

While the HIA has to be somewhat circumspect when discussing pricing, Dermot Goode, from health insurance brokers totalhealthcover.ie has no problem talking money and rarely pulls his poounches.

“I can tell you straight away that 50 per cent of all people with health insurance are on the wrong plan,” he says. “A lot of older people are overspending by 30 to 40 per cent. And that’s just purely down to inertia. They’re afraid to move off the plans that are on the market for 30 years.”

He points to some of those older plans and their prices citing the VHI Health Plus Extra which is priced at €2,784, Laya’s Essential Plus which costs €3,083 and Irish Life Level 2 Hospital Scheme, which is about €3,380.

You must speak to the insurance companies and get them to verify everything or get an adviser who’s qualified to do it for you just to make sure that you’re making the right decisions,

“Are they all good plans? Yes. Are they good value? In my view, absolutely not. These are the plans that are held by a lot of older people and the challenge for these older members is that they want to save money but they all have existing underlying conditions and when they phone their insurance companies if there any little seed of doubt whatsoever and they’re afraid to switch and then stay where they are.”

The frustration in his voice is evident when he adds that “these people can absolutely get amazing deals for anything from €1,800 to €2,000 so, can they realistically save maybe €1,000 a year and still have superb cover? The answer is absolutely yes. There’s no such thing as loyalty, it’s completely misguided, there is no benefit, no rewards for loyalty, in health insurance whatsoever.”

He says that if a person has a policy coming up for renewal and doesn’t “pick up the phone and put them under pressure” then “you’re already losing, the insurance company wins. That’s number one. Number two, if you don’t do your homework before you phone the insurance company, then you’re going to lose.”

What does he mean by homework?

“Phoning up and saying what do you recommend means you’ve lost. You have to put the right questions to them. In other words ask ‘Do you have a lower cost equivalent plan to what I have that’s similar and I am happy to take on some minor reductions, depending on the savings?’ ”

Utilities, electricity, gas equipment, prescription drugs, everything is going through the roof

Another tip Goode has is to always start with your existing insurer. Not only will many people feel more comfortable staying with the insurer they have – maybe paying less by moving to a different plan – but the company will also have a complete record of all previous claims.

“You can sit back with your mug of coffee and literally tell them everything that’s important to you and ask them everything, covering every underlying condition and every procedure you’ve had done, and get them to confirm that the new plan covers all of that. The clincher is your existing insurer will have all of your claims details on the screen so you just aske ‘If I was on that new plan and had all those claims that you paid for me over the last two years, would they have been paid to the exact same degree?’ That’s all you have to do because the claims are sitting there in front of them and if they say yes then it makes the decision very easy for you.”

He points to a very specific example of the savings that are out there. “A couple with the VHI’s Health Plus Extra could stay with the VHI but look at its new plan Advanced Care 50 day to day which is €2,016. It is literally €750 cheaper so a retired couple could save €1,500 by switching to that plan and stay with the VHI.”

He also points to the importance of speaking to people rather than making modifications online. “You must speak to the insurance companies and get them to verify everything or get an adviser who’s qualified to do it for you just to make sure that you’re making the right decisions,” he says while accepting that as he is just such an adviser he would say that.

“But if you buy online, and don’t speak to anybody, then effectively it’s what we call ‘execution, only’, you are responsible fully, for the decision you make whether it’s a good or bad decision because you haven’t spoken to anybody. I always say to people, get on the phone and quiz them, check everything, tell them everything. The Irish psych, when it comes to insurance companies is to tell them nothing but the beauty about health insurance is you can tell them everything, because they can’t refuse you. They can’t load you. They can’t change the terms because you’ve disclosed something. And the more specific you are with your questioning, then the more specific their answers have to be and everything is recorded. And in fairness, they want to give people the right information at the at the right plans.”

He says that the savings are real and up for grabs for hundreds of thousands of people. “I think the incredible thing is the people that do it properly. The first time it’s the hardest time for the people to properly deal with this but the most common thing we hear back all the time is why didn’t I do this 10 years ago? It’s never too late though.”

He does warn that switching or no switching, price hikes are coming down the tracks as insurers are worried over rising claims as in the middle of a cost of living crisis, “everybody’s claiming everything”.

He also points to the higher cost of inputs into the hospital. “Utilities, electricity, gas equipment, prescription drugs, everything is going through the roof. We were surprised that they didn’t move last year, because all the hospitals are telling us that their costs of running their business have literally increased by multiples. And that feeds into their negotiations with the insurance companies on increases.”

He points to a 5 per cent increase announced by Irish Life earlier this month. “We’re expecting the others to possibly increase their rates by a similar percentage by March 1st. And if we could get away with 5 per cent in terms of cumulative increase for this year, that’d be a bonus but we are right back into back into rising costs right across the board for health insurance.

Six ways to know if you’re paying too much:

If you’re on the same plan for five years or more or paying more than €1,850 per adult

If you’ve never considered corporate plans which include a small excess per claim

If you’re afraid to change as you think you might have to serve waiting periods again

If you have all the family on the same plan or you’re paying the full rate for young adult

If you’re not getting 50 per cent to 75 per cent back on your out-patient expenses with no excess to pay

And six steps you need to take:

Shop around well before your renewal date

Ask for the closest equivalent plan to what you have already

Disclose everything that’s important to you

If you’re happy with the answers, just switch!

Switching doesn’t mean you have to change insurer as in many cases you can get a better deal with the same insurer

Talk to an expert or at the very least talk to the insurers and to make sure you understand the decisions you have to make