VHI hikes corporate plan 23%

PRICES for VHI corporate health insurance plans are to jump by 23% — pushing health insurance right to the top of the HR and finance agenda for many companies.

Commenting on the sharp rise, Mercer consultancy group this was the single highest increase in this market segment since competition was introduced in 1996.

The corporate increase follows announced hikes in early January of up to 45% on individual policies from VHI.

Aviva announced an increase of 14%, along with the increase from Quinn ranging from between 8% and 25%. These increases have pushed health insurance right to the top of the HR and finance agenda for many companies, said Kevin Kinsella, who specialises in this sector of the market for Mercer.

VHI normally notifies companies directly of the changes when they happen, Kinsella said.

About 200,000 employees in Ireland have their health insurance provided by their companies.

About 150,000 of those are covered by the VHI, with Quinn and Aviva providing the remainder.

“2011 is poised to be the year when health insurance price increases will reach record levels for Irish companies. Rising prices and corresponding benefits cuts signal a significant change in the private health insurance market. Companies should review their health insurance plans to ensure that they are on the correct plan at the appropriate cost” said Mr Kinsella.

VHI has also confirmed that it will cut the level of cover provided for certain orthopedic and ophthalmic procedures from 100% to 80%, Kinsella said.

This is new since cuts in benefits have not been part of the corporate sector up to now, he said.

Mercer is advising companies to consider moving from a defined level of cover to a fixed cash allowance, whereby employees are empowered to choose a level of cover which fits with their individual requirements. The complexity of the market combined with falling benefits makes it near impossible for a HR professional to select a single plan which will meet the healthcare needs of every individual, he said.

In this rapidly changing environment workers will have to pick a plan best suited to their needs,” he said.

Benefit reductions will affect organisations at renewal, but new entrants joining after 9 February will be affected immediately.

Perhaps the bigger issue is that the rising cost of health cover will force many companies out of this end of the market.

During the Celtic Tiger health insurance formed part of the remuneration package, especially from US multinationals.

“The day is coming when employers can no longer fund that cost 100%,” he warned.