Pay-as-you-go health insurance to offer cover for as little as €395
Published 18/08/2014 | 02:30
A PAY-as-you-go style of health insurance policy is to be introduced in a move that will shake up the market.
GloHealth is to target young people and those who have dropped their insurance in recent years with an innovative plan that allows people to buy a cheap 'cash plan' but then upgrade to full cover if they need hospital treatment.
The company is to sell insurance covering GP visits, scans, tests and small sums for each night spent in hospital, for as little as €395.
If a customer with the cash plan needs to go into hospital, they will then be able to upgrade to a full hospital plan, and only have to pay the difference between the price of the cash plan and the hospital plan.
A two-year waiting period for hospital treatment for those who buy the cash plan will be waived, the Irish Independent has learned.
New market entrant GloHealth is hoping to recruit thousands of young people by launching two new cash plans at the start of next month.
It is likely that rivals VHI, Laya and Aviva will copy this new scheme, giving more options to consumers.
The new arrangement is likely to appeal to young people who have left the health insurance market, those who never had cover and those thinking of cancelling.
Close to 300,000 people have given up health insurance in the past five years, with most of those in their 30s and 40s.
The cash plan will not cover the cost of hospital treatment and a consultant's fee for procedures done in a hospital. However, customers will have the option to upgrade to full hospital plans without having to endure a waiting period for treatment.
New plan 'Activate Cash' will cost €395 per adult a year, and €1,112 for a family of two adults and two children. 'Activate More Cash' costs €645 per adult and €1,665 for a family.
The insurer will allow people who need to go into hospital to upgrade to a full Glo hospital plan, and pay the difference in price between the cost of the cash plan and the hospital plan. This could mean an adult with a cash plan who needs to go into hospital getting a full hospital plan for a year by paying another €200 on top of the Activate Cash premium of €395.
Normally anyone doing this would have a two-year waiting period before being able to use a hospital plan.
The new deal will not apply to pre-existing conditions, and you need to have the cash plan for at least three months to qualify if you are new to the market. However, if you are switching from another insurer and have already served your waiting periods, you do not have to wait before you can upgrade.
Health expert Dermot Goode said others were set to offer similar plans in a move that could transform a health market blighted by surging premiums.
"You could put a family on the cash plan for €1,100 a year and if the dad needs to go into hospital he can convert to the hospital plan, pay the difference, and leave the rest of the family on the cash plan.
"The father can then go back to the cash plan after 12 months," Mr Goode of Total Health Cover said.
People who are taken to hospital for emergency treatment, but who are on the cash plan, can back-date the hospital cover if they upgrade within two weeks of discharge.
GloHealth is also increasing the cost of its Better and Best plans by 10pc. But it is introducing two new plans, Better Choice and Best Choice, at the price the Better and Best plans were up to now. However, the new plans have higher excesses. Child rates are half price for the new plans.
OPTING for a cash plan will not mean you get around new lifetime community rating rules, which will penalise over-35s taking out health cover for the first time.
There are some waiting periods. If you take out a cash plan, and have not had health cover before, there is a five-year waiting period for pre-existing conditions. Taking out a cash plan to get treatment on the dodgy knee that has been bothering you for years will not work.
New hospital plan customers will have a waiting period of 26 weeks. Over-65s will have longer waiting periods to upgrade to a hospital plan.
Glo's 'credit' on its plans to reduce the waiting period for up to two years cannot be transferred to other insurers.
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