State levy now takes 20pc of your premium
THE hike in the levy imposed on most health insurance policies means the government charge accounts for more than a third of the cost of annual premiums for some families.
Health Minister James Reilly has called on insurers to absorb the higher levy instead of passing it on to consumers.
But the second largest private health insurer, Laya, said it is not possible to avoid passing on the higher cost to customers.
And Aviva and Laya are expected to pass on what they regard as an extra charge imposed on them.
The levy is designed to ensure that everyone pays the same price for the same level of cover.
It is to shoot up by €49 an adult to €399 per policy from March for anyone whose policy gives access to a private hospital or clinic – the majority of those with health cover.
Health insurance expert Dermot Goode has calculated that the levy is now so high that it will account for between one fifth and a third of the cost of health insurance premiums for a family on a good-value plan.
Mr Goode, of Healthinsurancesavings.ie, gave an example of the Glo Better plan where the cost of the levy represents 36pc of the overall premium.
With VHI's One-Plus plan, the levy will make up 33pc of the overall premium; with a similar percentage for Laya's Essential Connect plan.
Mr Goode predicted price hikes of at least 15pc in premiums in the coming months.
When combined with changes in the tax reliefs on policies, these changes will mean a rise of €475 for Laya's Essential Connect plan for a family of two adults and two children since the summer, Mr Goode predicted.
State-owned VHI welcomed the rise in the levy.
It will be the biggest beneficiary of the hike as it has more older customers than its rivals.
A VHI spokeswoman insisted yesterday that it does not intend to pass on the higher levy to customers.But insurance experts doubt this.
Since its introduction in 2009, the levy has jumped from €160 to €399 per adult – an increase of 149pc.
The cost per child is also set to increase to €135, a hike of 155pc since its introduction.
Laya's Donal Clancy said: "We strongly believe that increases to the health levy, which follows the recent cap on tax relief and the public beds re-designation charge, will drive more people out of the health insurance market that has already seen record numbers of people drop their cover."
Aviva Ireland's chief executive Alison Burns said the higher levy will add €128 to the cost of health insurance for an average family of two adults and two children on the most popular products in the market.
She added that plans by the Government to allow public hospitals to charge private patients up to €813 per night for the use of a public bed will push up premiums by between 10pc and 15pc.
And the changes in the tax reliefs announced in the Budget will mean nine out of 10 adults will pay an extra €100 for their health cover, Ms Burns said.
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