It has taken a long time for the Central Bank to intervene in the mind-numbingly complicated way that private health insurance contracts are sold and presented to individual customers. Hopefully product choices will be simplified and br made more accessible when the Bank finishes its review.
Older readers will remember the simplicity of the pre-1996 VHI offerings when the state-owned company was a monopoly. They offered Plans A to E and you could “take ‘em, or leave ‘em.” Prices were relatively high compared to the limited benefits and we all paid big excesses.
Today prices seem proportionately much higher, but much of it is down to the annual health insurance levy of €399 per adult and €125 per child and the huge increase in the cost of a public hospital stay – €813 per night, even if you don’t get your private room. Public patients who don’t have a medical card pay €75 a night for a maximum of 10 nights.
The complexity of the 450 or so different plans on the market is due to the way that old plans, that are regularly replaced, mainly to court the lucrative corporate market, but must be available to individual buyers, are not taken off the market. The corporate client(s) for whom the now redundant plan won’t be returning to it – a better value one will have replaced it – but lots of individual buyers may not be as active in looking for the next, best one, and remain on the older, more expensive one. This is part of the problem the Central Bank wants to clear up.
The only solution – for everyone, not just big corporate clients, say specialist brokers like Dermot Goode (TotalHealthCover.ie) and Roisin Lyons (lyonsfinancial.ie) is to also get their plan reviewed at every renewal.
“I know the term “shopping around” can be a turn-off,” says Lyons, whose website invites you to key in your existing plan for an on-line review and new recommendation. “So I prefer to describe not reviewing as ‘denying yourself and your family the best insurance plan for the premium you can afford’.”
At the end of this month at least 75,000 people (who were 34 or over) who signed up for health insurance for the first time last year in order to avoid the lifetime 2% loading that would apply from May 1, 2015, will now have to renew their membership.
So far, say Lyons and Goode, there have been no new additions to the sets of low cost (c€400), low value public hospital, overnight-only introductory plans from 2015 that only offer bare minimum benefits. (None cover elective treatment or surgery; outpatient or day case consultations. Some even demand upfront payment that will only then be refunded by the insurer.)
“You need to move up to a health plan that costs around €900 a year to get the real benefits of private insurance – access to private hospitals, elective treatments, access to consultants, etc ” says Lyons. She thinks as those people in their mid 30s who joined “just to beat the loading” get older they will see the merits of upgrading.
Meanwhile, all the providers have been bringing out new, often lower cost plans to replace the popular “Plan B-style” plans, with their generous private hospital and outpatient benefits. that remain firm favourites with long standing and older customers. “These older plans are still firm favourites but newer versions have been coming out every year. They all have an annual sell-by date now,” says Goode.
For example, anyone who joined Aviva’s Level 2 Hospital plan when it came out now pays €2,335 a year. “It was replaced by Health Plan ’06, a corporate plan for €1,564 which was replaced by Health Plan 16 for €1,564, which has now been replaced by Health Plan 16.1 for just €1,218, a 22% saving.” The main difference with these replacements is that they include a €75 excess payment.
“Anyone currently on Glo’s old ‘Better Plan’, now €1,412 a year, might want to a better corporate plan, ‘Best Smart Plan’ at €1,162 and save 18%.”
Meanwhile, says Goode, the two biggest players, VHI and Laya have replaced two of their most popular corporate offers that long ago replaced their old ‘Plan B’ classics: “Instead of paying VHI €1,351 for Company Plan Plus Level 1, anyone who did switch to it in the past should now consider the alternative PMI 3613 which costs €1,248, a savings of 8%.
“And Laya customer who’ve been on Company Care Excess, now €1,659, should consider switching to Connect Care 100 for €1,262 and save 24%.”
Similar savings on popular family plans are available, though the brokers say even better value can be had by not keeping everyone on the same plan. You will probably need some help to mix and match the different offers.
Finally, don’t be put off moving to a new provider, say Goode and Lyons, who will talk through any benefit delay where pre-existing conditions may be an issue if you want to increase cover.
Do you have a personal finance question for Jill? Please write c/o this newspaper or by email to firstname.lastname@example.org