Sunday 28 December 2014

Proposed health levy rise to hit firms with €50m bill

'Pressure' on multinationals to cut employee insurance cover

Charlie Weston Personal Finance Editor

Published 05/10/2012 | 05:00

The cost of health insurance has doubled in the past two years
The cost of health insurance has doubled in the past two years

PLANS by the Government to hike the levies on private health insurance could cost companies up to €50m, with foreign-owned multinationals bearing the brunt.

This is because most large multinational pay for the health insurance of their employees and their families -- a total of around 250,000 people.

A permanent set of four levies is being brought in by the Government to ensure older people don't have to pay more for health coverage, this newspaper revealed on Monday.

There is currently a temporary levy of €285 on every adult's health policy, with a €95 charge for children.

Now the Government has told the EU Commission it will bring in a permanent risk-equalisation mechanism that is likely to push up premiums considerably.

Industry experts fear new levies could add as much as €200 to the cost of insuring a family of two adults and two children, with some predicting the new levies will be as much as €200 per adult.

Risk equalisation ensures everyone pays the same for health insurance no matter their age and irrespective of the state of their health, with levies being used to effect it.

Around 100,000 workers are on corporate plans, with most of these having their premiums paid by their employers. Typically, multinationals pay for the healthcare of the workers and their families. This means they are covering the healthcare costs of up to 250,000 people.

A levy rise of €200 per family would add €20m to the cost base for these companies. If the levy rises by €200 per individual it will add €50m to the cost, healthcare experts said.

Health insurers argue that the combination of higher levies and risk-equalisation rules restricting changes to plans without 90-days notice, will add €200 to the cost of insuring each individual.

A company with 2,500 employees typically spends roughly €3m a year on private health insurance. Such a company would have an extra cost of €500,000.

Medical insurance expert Dermot Goode, of Healthinsurancesavings.ie, said a succession of premium rises each year and the rising cost of the levy were pushing corporates into considering huge cutbacks on this expenditure.

Allowance

"Corporates have a certain tolerance level. They can't keep absorbing these rises every year. Many are getting to the point where they feel they can't do it any more," said Mr Goode.

This meant that employers were likely to offer staff an allowance rather than paying for their cover.

"If corporates stop or cut back on spending on health coverage in any way you will get a lot of people pulling out," he added.

The most likely people to drop out are those between the ages of 25 and 34.

If employers stop paying or reduce their employee contribution, it further increases the likelihood of people quitting private health insurance and the public system having the added pressure of servicing them, he said.

Irish Independent

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