Penalty for delaying health cover until mid-30s

Health insurers are to penalise customers who take out policies after the age of 34 under regulations coming into force next year.

A 2% price penalty will apply for each year so that a 44-year-old will pay 20% more for the same policy than someone who is 10 years younger.

The loading will be capped at 70%, at age 69 or over, and credits will apply for past periods of cover and for policies cancelled because of unemployment.

Health Minister James Reilly signed the new regulations into law yesterday but they will not take effect until May 1, 2015, giving a grace period to get insured without incurring a penalty.

The move is expected to generate a rush to join or rejoin insurers to avoid the loading which will otherwise follow customers around for life, but long term it is designed to encourage young people not to delay getting health insurance and not to drop it when cash-strapped.

Either way, the plan is to get the numbers of privately insured people up after the loss of 250,000 customers, mainly under-30s, since 2010. Prices for remaining customers have escalated as a result, forcing even more to reconsider their cover with predictions of a collapse in the industry if current trends continue.

Dr Reilly said the industry needed a higher number of young, healthier customers to offset the cost of older customers who generally made higher claims.

“There is something inherently unfair with the idea of somebody who has been insured all their lives up to the age of 55 paying the very same premium as somebody who takes out insurance for the very first time at the age of 55,” added Dr O’Reilly.

The move ends the simple community rating system of insurance in place since the 1950s which prohibited insurers from charging older customers more despite the fact that they generally make more claims.

Under the new lifetime community rating system, age will still not be allowed to determine prices so long as the customer has been insured since they were 34 or younger. Various credits and exceptions will apply. Anyone moving to Ireland for the first time, or returning after a period abroad, will have a nine-month grace period to get insurance without a loading.

People who have been insured previously but let their policy lapse, will get credit for that, so for example someone who is 50 and takes out insurance after May 1, but was previously insured for 10 years, will pay the 12% loading that applies to a 40-year-old.

In addition, anyone who dropped their insurance because of being unemployed since 2008 will be allowed deduct up to three years from their loading.

Separate legislation later this year will introduce price concessions for those aged 22-34 to avoid the fall-off in cover which occurs at the so-called “price cliff” at age 21 when young adults lose their half-price premiums.


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