Older people to bear brunt of insurance relief changes

Elderly people who do not live “gold-plated” lifestyles and who suffered a raft of other budget cuts are to be among the worst hit by the slashing of health insurance tax relief — with bills likely to increase by hundreds of euro.

As grey voter anger mounts over Budget 2014, consumer groups revealed an elderly person could be facing premium hikes of up to €470 per person when they renew.

In sharp contrast to Finance Minister Michael Noonan’s comments that the decision to cap 20% tax relief on insurance bills at €1,000 would only affect people on “gold-plated” policies, it has emerged that up to 90% of health insurance users will be affected by the cuts to tax relief.

It is also understood neither Health Minister James Reilly nor the Health Insurance Council were informed of Mr Noonan’s planned changes before the budget. The changes will mean premium hikes of 3% to 20% for customers.

The industry average premium is a gross rate of €1,500. Prior to the tax relief change, the net cost of this for an adult was €1,200 but after the change, the cost is €1,300.

Consumer expert Dermot Goode of healthinsurancesavings.ie said many old people are on plans such as VHI Plan B, which now costs €2,771 but would cost €3,400 without the 20% in tax relief that is deducted at source.

If there is only tax relief on the first €1,000 of that €3,400, pensioners and other groups on those plans will face a premium hike of €470.

He said: “Elderly people, many with underlying illnesses, choose these plans as they are in hospital regularly and don’t want to face hike excesses every time that they attend a private hospital.

“These people prize their health insurance dearly as it is very important to them at this stage of their live and they have been paying it for 30 and 40 years.”

Middle-ranking health insurance customers, typically on level 2 VHI, Laya Healthcare’s Essential Plus, and Aviva’s Level 2 Hospital, are facing premium hikes of about €180-€250 per year.

Level 2 plans are described as the “Ford Focus” of health insurance and are held by 80% of customers, whereas the likes of VHI’s Plan B and Plan E are held by 5% of members, with Plan B very popular with senior citizens. Plan E, according to Mr Goode, would be the “Mercedes or Range Rover” of health plans.

People on VHI’s most expensive Plan E will see their premiums rise by €1,000 to €4,900 because of the budget.

Insurance Ireland’s Health Insurance Council spokesman Michael Horan said: “The €127m reduction in tax relief combined with the public bed charges of €30m means that an additional €157m needs to be raised by the end of 2014. This will ultimately have to be funded by customers through their premiums.

“We urgently call on the minister to review this measure and consult with health insurers on the issue and if the intention was to address ‘gold-plating’ we call for a revision of the cap.”