Lifetime Community Rating Explained

Lifetime community rating is a system whereby the premium that individuals pay for health insurance rises with the age they enter the private health insurance market, but does not vary in relation to their current age. Under this system, a 50 year old who has held insurance since he or she was 30 would pay the same as a 30 year old, but a 50 year old who purchases insurance for the first time would pay more than a 30 year old.

 

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What is Lifetime Community Rating?

Lifetime community rating modifies community rating so that the premium that individuals pay for health insurance increases with the age at which they enter the private health insurance market. It does not vary in relation to their current age.

Under this system, a 50 year old who has held insurance since he or she was 30 would pay the same as a 30 year old, but a 50 year old who purchases insurance for the first time would pay more than a 30 year old.

Why was Lifetime Community Rating introduced?

Community rated markets depend on a continuing influx of younger people. Younger people claim less on average and, accordingly, a continuing influx of younger people keeps premiums down for everybody. Conversely, if people wait until they are older before taking out private health insurance, premiums will increase for everybody.

Lifetime Community Rating encourages people to join the private health insurance (PHI) market at a younger age and this will help in controlling premium inflation.

When was lifetime community rating introduced?

Loadings apply to people aged higher than 34 taking out inpatient private health insurance for the first time after 30 April 2015.

What loadings will apply?

A loading of 2% of the gross premium will apply for every year of age higher than age 34 that an individual has attained when they first purchase inpatient private health insurance after 30 April 2015.

Will I have to pay a loading for the rest of my life?

Yes, the loading will apply throughout life when a person purchases inpatient health insurance after 30 April 2015.

What is a health insurance cash plan?

A health insurance cash plan provides monetary benefits for a range of medical events but unlike other private health insurance plans, health insurance cash plans do not provide inpatient cover for costs incurred in hospital as a private patient.

Are health insurance cash plans included in Lifetime Community Rating?

No. Loadings will not be applied to health insurance cash plans. If you do not hold an inpatient private health insurance plan by 30 April 2015 and you are over 34, a loading will be applied to any inpatient plans that you purchase after this date.

I am aged over 34 and I have never had health insurance, does that mean that I will have to pay a higher premium when I get it?

Yes. A loading of 2% of the gross premium will apply for every year over 34 you have attained.

I have a health insurance cash plan and I am over age 34. Will a loading be applied to me if I switch to an inpatient private health insurance plan after 30 April 2015?

Yes. Health insurance cash plans are not included in Lifetime Community Rating, so if you do not hold an inpatient plan by 30 April 2015, a loading will be applied when you switch to, or purchase an inpatient private health insurance plan after this date.

Are my previous periods of inpatient cover taken into account in calculating the loading?

Yes, if you take out inpatient private health insurance after 30 April 2015, your previous periods of cover will be taken into account in calculating the loading that will apply to you. If you had continuous cover for the period 1 May 2009 to 30 April 2015, the insurer will consider you to have had continuous cover since the age of 23, even if you have no proof of cover prior to 1 May 2009. If you did not have continuous cover for the period 1 May 2009 to 30 April 2015, but you held insurance prior to 1 May 2009, the onus is on you to prove you held insurance at that time.

Periods of cover held on a health insurance cash plan will not be taken into account for the purposes of calculating loadings.

I am 50 now, I had inpatient private health insurance for 5 years in my late 20s / early 30s and then I let it lapse. Will I have to pay a higher premium under Lifetime Community Rating, given that I first got insurance under age 35?

Yes. Your insurer will calculate your age of entry under Lifetime Community Rating. This will be your age when you are purchasing insurance less any previous periods of cover (in this example 50 – 5 = 45). You will pay the same loading as a 45-year-old who is purchasing private health insurance for the first time, i.e. 22%.

I was covered under my parents’ policy for my whole childhood but it then lapsed. Will I get credit for this when calculating my Lifetime Community Rating loading?

No. Credit does not apply to periods of cover as a child.

What about people who have emigrated, will they have to pay the loading when they return?

Anybody who lives outside of the State on 1 May 2015 and moves to live in Ireland will have 9 months to purchase inpatient private health insurance avoiding the loading under Lifetime Community Rating.

How do I prove that I was not resident in Ireland on 1 May 2015 and moved to Ireland in the last 9 months?

The onus is on you to prove these facts to the insurer. This can be done for instance by providing copies of bank statements opened while abroad, evidence of accommodation lease arrangements or utility bills paid while abroad. Travel documentation or application for a PPS number would be accepted as proof of taking up residency in Ireland.

I had to give up my insurance because I couldn’t afford it any more after I lost my job. Is there any allowance made?

The Regulations include an allowance of up to three years for persons who held insurance prior to the introduction of Lifetime Community Rating loadings but then had to give up their insurance after 1 January 2008, as a result of redundancy. Effectively, such periods will be treated as if you did have insurance cover when calculating any premium loading.

What is the maximum loading that can apply?

The maximum loading that can apply is 70% of the gross premium in the event of a person aged 69 or older purchasing inpatient private health insurance for the first time.

Will all health insurers apply the loadings?

All insurers have to apply the loadings to their inpatient private health insurance plans.

What happens if I switch insurer?

Switching insurers does not affect your loading. Any loadings will continue to apply and insurers will supply each other with proof of an individual’s previous cover.

Can I drop my health insurance for a period without a loading applying?

Breaks in cover of up to 13 weeks are allowed without affecting your loading.

Example

I am 45 year old and I am taking out health insurance for the first time on or after 1 May 2015. My community rating premium (after tax relief) is @1,000 per annum. What premium shall I pay including the lifetime community rating loading?

The annual premium is €1,000 plus €200 tax relief                          €1,200
The loading is 22% of the gross premium of €1,200                        €264
Gross premium including Lifetime Community Rating loading      €1,464
Tax relief of 20% gross premium limited to €200                              €200
Amount Payable                                                                                    €1,264