herald

Thursday 19 April 2018

Families face €130 hike on health cover

COVER RISE: James Reilly has raised levy on policies
COVER RISE: James Reilly has raised levy on policies

FAMILIES face an additional €130 charge on the cost of their health insurance after Health Minister James Reilly raised the levy imposed on all policies.

The higher levy will come into effect from March and will impact on the majority of the two million people who have medical cover.

And the combination of the increased charge and the budget changes to tax relief ultimately mean an extra €330 in the annual cost of policies for a family of two adults and two children, according to GloHealth's Jim Dowdall.

POLICIES

The levy on all private health policies is to ensure older people don't have to pay more for health insurance than a younger person with the same level of cover.

The levy on each policy where there is access to a private hospital – which represents 80pc of policies – will see the levy rise by €49 per adult and €15 per child.

No change is planned in the levy imposed on policies for those who have very basic cover.

The move means a family with two adults and two children will have an extra €128 imposed on their policies by the State.

Each adult policy will now have a total levy of €399 imposed on it – a 14pc rise.

A child with a policy that covers treatment in a private hospital will see the levy on their policy rise from €120 a year to €135.

It comes just weeks after changes in the Budget to the tax reliefs on health insurance policies have meant rises of between €50 and up to €800 per policy in the annual cost of policies.

This is because Finance Minister Michael Noonan restricted the tax relief that applies to health insurance policies to €200 per person.

These Budget changes mean that the cost to consumers of health policies have jumped by between 3pc and 20pc.

The net price which subscribers have to pay for top-level plans will increase by about 20pc because of the government tax relief move alone.

And additional higher costs are set to passed on to consumers as the Government is imposing €30m in extra charges on insurers for using public hospital beds and an expected rise in the levy imposed on all policies would drive premiums higher.

Health insurance expert Dermot Goode said the four players – VHI, Laya, Aviva and GloHealth – had already planning increases before the announcement on the higher levy.

PRESSURES

He expects premiums to rise by 5pc before Christmas to allow companies to capture the large numbers who renew their cover in January.

Another rise of between 10pc and 15pc is then likely in the first three months of next year, he said, to make up for the higher levies.

Minister Reilly said the higher levies were necessary to protect community rating – a mechanism to ensure that everyone pays the same price if they have the same level of cover.

He was aware of the cost pressures on households, but insisted it was necessary to subsidise health insurance for what he called vulnerable patients.

hnews@herald.ie

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