THE hundreds of thousands of medical card holders who could lose their cards in the Budget clampdown face a grim choice – cough up for private health insurance or find some way to pay their medical bills.
As healthcare bills could run into hundreds of thousands of euro if you have a serious illness that requires a lengthy stay in hospital, many of those who are about to lose their card will have no option but to buy private health insurance – if they can afford it.
"Most people who have been relying on a medical card have probably been priced out of private health insurance," said Dermot Goode, general manager with the Cornmarket Group's healthcare division. "Unfortunately for them, they've nowhere to turn. They'll either have to forgo essential treatment or find the money to pay for those bills."
Those who could face losing their medical cards aren't the only ones who will be affected by healthcare changes announced in this month's Budget. The cap on medical insurance tax relief and the free GP for under fives also mean it's time for the 2.1 million people who have private health insurance to rethink their cover.
Private health insurance is not cheap. The premiums could run into thousands of euro a year for an individual – or several thousand if you're a family of six.
Rarely a year goes by without a price hike in private health insurance. So does it make sense to hold on to private health cover if you already have it – or to sign up to it if you're about to lose your medical card?
THE HOSPITAL GOER
If you have a medical card and have been in and out of hospital over the last year, your card covered the €75 daily charge every time you visited a public hospital. If you lose that card, you'll be hit with that charge – up to a maximum of €750 a year. So if you're in hospital for 10 nights, you'll face a €750 bill.
This is one reason why it could make sense to sign up to private health insurance – as long as your premium is cheaper than the maximum €750 public hospital charge. "You can buy basic health insurance plans from €495 and these plans will cover the public hospital charge," said Goode. "If you take out insurance, you could end up paying less in premium than in levy."
The cover for the public hospital levy is a basic benefit in private health insurance policies – so it isn't the only reason private cover could be useful to someone who has just lost their medical card.
However, if the levy is one of the reasons you're considering buying insurance, there's an important caveat – if you're signing up to private health cover for the first time, you will usually have to serve a waiting period before you're covered for the public hospital charge.
If you're joining VHI Healthcare, you'll have to wait eight weeks before you're covered for the levy; if joining Aviva or Glo Health, you must wait at least six months – longer if you're over a certain age or have a pre-existing illness.
Laya Healthcare is the only insurer that immediately covers you for the public hospital levy – unless you have a pre-existing illness or are pregnant.
"Laya Healthcare waives the initial waiting period of 26 weeks for all new customers joining, therefore the €75 levy is covered for all new customers immediately," said a spokeswoman for Laya. "Pre-existing and maternity waiting periods for new joiners still apply."
Remember if you're admitted to a public hospital after an accident or emergency, you're automatically covered for the public hospital levy.
THE CHRONICALLY ILL
If you have a major illness or medical condition and you've just lost your medical card, it may not be worth your while taking out private health insurance – as you could be facing a 10-year wait for cover.
For example, if you're aged 60 or more and you're buying private health insurance for the first time, you'll have to wait 10 years before you're covered for any illness or medical condition you had before you bought the cover. Furthermore, unless you're with VHI, you'll have to wait 10 years before you're covered for the public hospital levy – a very basic benefit.
If you're between 55 and 59 years of age, you must wait seven years before you're covered for pre-existing illnesses; if younger than 55, you must wait five years.
ALREADY INSURED GOLDEN OLDIES
If you're over 55 and have private health insurance as well as a medical card, it could be a bad move to cancel your cover.
"There are a lot of older people who have a medical card who also choose to have health insurance as they feel there's always a risk they'll lose the card," said Goode. "If you're over 55, we'd advise you not to cancel your private health insurance – even if you have a medical card.
"If you ever get on a waiting list, you'll get seen earlier if you have insurance. For example, if you have chronic hip pain, you could be waiting between six months and two years to get an appointment with a specialist in a public hospital – and you could be waiting between three and four years for the procedure publicly.
"With private health insurance, you'll get the procedure much earlier."
If you cancel your private health insurance but then lose your medical card, you'll have to wait at least two years for cover if taking out a new health insurance policy from the age of 65. The only occasion that you won't have to serve the waiting period is if you renew your cover within 13 weeks of cancelling it.
THE TAX TARGETS
Your health insurance could increase by up to 20 per cent because of the cap in tax relief introduced in Budget 2014, according to Goode.
Before this month's Budget, you could have claimed back one-fifth of your private health insurance premiums in tax relief – regardless of the cost of your policy. However, since October 16, anyone who renews or buys private health insurance will only get tax relief on the first €1,000 of an adult's premium, and the first €500 of a child's premium.
So if you're paying more than €800 a year (after tax relief) for an adult's premium, and more than €400 for a child's premium, you'll be caught by the new cap.
"Most plans for adults are priced at between €1,200 and €1,500 a year," said Aongus Loughlin, head of healthcare and risk with Towers Watson. "Most children's plans will be covered by the €500 limit."
To avoid getting hit by the cap in tax relief, consider moving to a plan that costs no more than €800 a year per adult once the tax relief has been deducted from the cost of the plan.
Loughlin said it was hard for an adult to find good private health cover for less than €800 a year. However, some plans he recommended that are just below the €800 mark are VHI's Company Plan Starter, Aviva's Health Level 1, Laya's Essential Choice and Glo's Good Plan.
"These are all plans aimed at the public hospital access side of things but a number of them will provide some access to private hospitals," said Loughlin.
Remember if you're moving to a cheaper plan, you will usually be losing some benefits in doing so.
"You're probably going to lose access to semi-private and private hospitals – and if you need hospitalisation, you'll pay more of the bill than you did previously," said Loughlin.
THE LITTLE TERRORS
If you've children under the age of five, the free GP care, which is expected to kick in next year, could save you a small fortune.
If you've got private health insurance for your family, the free GP care for under fives could make any cover you have for your children's everyday medical expenses redundant – if they're all under five. You'll save money by stripping out the cover for day-to-day expenses and moving to a plan that only covers hospital care.
For example, a family of two adults and two children could save as much as €325 a year by stripping out their children's cover for everyday medical expenses, depending on the policy, according to Goode.
Before stripping out day-to-day medical cover for your child, remember the free GP care covers just that – visits to your child's GP.
If most of your child's everyday medical expenses don't arise from GP visits, it could be a mistake to strip out their day-to-day cover from your private health insurance.