Lifetime Community Rating (LCR). What does it mean for your health and your wallet? For anyone that currently does not have health insurance 1 May is an important date. The reason is that from this date major new changes come into effect to Ireland’s healthcare community rating system. Anyone aged 35 or over taking out health insurance as a new member will have to pay more under a permanent age loading.

The older you are when you join, the more you pay. And not just this year, but every year. At present, everyone is charged the same rate, regardless of their age, gender or medical history.

First of all, if you already have health insurance or if you are under 35, the deadline does not impact you.

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However, if you are 35 or over and you take out health insurance as a new member after the deadline a 2% loading will apply to your premium for every year over 35. For example, a 39-year-old will be charged 10% extra a year for their health cover, while a 44-year-old will be charged 20% extra a year, and so on.

This is a permanent loading that will apply to your cover each year, not just in year one, so it will really add up.

THE FIGURES

The loading will be calculated on the gross premium cost. For example, imagine a plan costing €1,000 gross per adult for the year. With tax relief at source, you will receive €200 tax relief and will, therefore, only have to pay the insurer the net cost of €800. However, if you are 44-years-old and you join this plan as a new member on 1 July 2015, you will be liable to a 20% age loading (44-34 x 2%). This will be calculated on the gross premium, which will increase the cost to €1,200 gross. When you deduct your €200 tax relief, this leaves a net cost of €1,000/year going forward. If you join before 1 May 2015, you will avoid these loadings completely.

Why is it being introduced?

According to Dermot Goode, Total Health Cover, there are three possible reasons. Firstly, community rating is only sustainable long-term if you have a steady stream of young people joining as they subsidise the older members who claim more often. Over the past six years, 300,000 of mostly younger people have exited the system, so our community rating is under serious pressure.

LCR will give a much-needed boost to the market as it should encourage a larger base over which to spread the claims burden, which should mean lower annual price increases for everyone.

Secondly, by encouraging more people into the private system, it eases the burden on the public system. As we know, there are currently thousands waiting on either their first appointment to see a consultant and for surgery through our public system – this includes both adults and children.

Finally, there is an inequity in the current system which sees a newly joined 54-year-old treated the same in terms of price and waiting periods as a similarly aged individual who joined 30 years ago when they were 24, and possibly funded the system without ever claiming.

With LCR, those who join earlier will be rewarded by avoiding the age loadings.

Your queries answered

Douglas Good, Total Health Care, answers some queries.

I’m 50 and had cover for 10 years, but I had to give it up due to costs. Will I get credit for previous health insurance cover held?

Yes, you get full credit for cover already held. So if you are 50 and joining after the deadline (say 1 June 2015), you should be liable for a loading of 32% (50-34 x 2).

However, if you had cover some years back for 10 years, then your loading will be 12%. You will have to prove to the insurer that you actually had this cover in place previously. Your previous insurer should have records of this and all health insurers are working on a data-sharing mechanism to help customers source information regarding previous cover.

What if I had to drop my cover previously due to redundancy?

The legislation allows for some credit towards the loadings for this. For example, if you have to drop your insurance cover since 1 January 2008 by virtue of redundancy, the insurers are allowed to give you up to three years credit off the age loading. It’s not clear yet how the insurers will validate this, but you will have to provide some evidence of having lost your job.

My son is 34 and working in Australia. He plans to come back in two years. Should he start taking out a cheap policy now to avoid the loading when he returns to Ireland?

No. Once you join health insurance within nine months of returning to Ireland, you will not be liable for the loadings. Once again, the onus will be on the member to prove you were away to avoid the additional charges.

If I have a medical card, will I be exempt from these age loadings?

No, if you are 35 or over and take out health insurance as a new member after 1 May 2015, the age loadings will apply.

What about comments in the media advising young people not to take out health insurance?

Everyone has a view and you’ll need to make your own mind up on this one. Each consumer has different priorities when it comes to healthcare and differing attitudes to risk.

As someone who has been dealing with consumers on health insurance for nearly 30 years, it’s a personal choice for everyone. I would love to tell you that you can fully rely on the public system and that private healthcare is only for those who want private rooms, but, sadly, this is not the case.

I deal with young people all the time facing waiting lists for sports injuries and other routine procedures. I also deal with the unfortunate cases of those who’ve had to cancel their cover and now find themselves facing pre-existing exclusions when they rejoin.

The only way around this is to either buy private medical cover or build up a wad of cash which you can draw down if needs be (self-pay customers).