How to get the best deal in private health cover
Published 01/02/2014 | 02:30
Thousands of households across the country have begun the process of renewing their private health insurance. The market now has over 260 plans with more to come next month. So how to ensure you are getting the best value for your money?
Fresh in the minds of all those renewing will be the myriad of newspaper headlines and media sound bites of the past year reminding them of how the market is in crisis and of how insurers have been hiking up premiums yet again.
Some of the headlines included the Health Minister James Reilly's decision to impose costs of €130m on the four health insurers for the use of public beds in public hospitals; an unexpected reduction of tax relief on insurance premiums in the Budget; and the expected increase in the government levy in March, with a further increase announced for March 2014.
It is worth noting that all the above measures that contribute to higher premiums were government measures and not insurers acting to maximise their profit margin. In fact it is worth noting that VHI's total price increase for 2013 was just 6pc.
On Wednesday, the VHI announced their second price increase of 2014 of an average of 3pc, which I must admit is substantially lower than this expert had anticipated, given the new public bed costs mentioned above. So what is the fallout?
Since 2010, some 250,000 people have exited the private health insurance market believing that the cost of the cover was simply beyond their budget. Not surprising really when you consider that the cost of one of the more popular plans at the time, VHI's Plan B Options, increased in price from €985.86 to €2,096.25 per annum. That particular plan is due to rise again in March by 6pc. This year aside, that's an increase of over 112pc in just four years.
However, I would contest that for many of the people who left the market there may have been a compromise that they were simply unaware of. For example, notwithstanding the Plan B Options example above, it might surprise people to know that insurers are providing almost exactly the same level of cover today from €1,011.19 per year. That's less than 3pc more than the cost of Plan B Options four years ago.
This reflects a level of cover that over 70pc of consumers have traditionally been happy with at a cost no greater than it was when 250,000 more people enjoyed it. So how many people in the above statistic cancelled their cover without being fully aware of their options and what is the value in a good health insurance review?
Aviva published a new survey in January which revealed that almost two-thirds of Irish households plan to review their family's expenses to make savings. Two in five households will be reviewing their health cover. In response to this research, Aviva has launched their own Aviva Health Insurance Review to help customers balance the cover they need with what they can afford.
As the years pass by and family circumstances change – be it health, wealth or growing families – one should be reviewing one's policy to ensure it continues to meet one's needs. I would also go so far as to say that, if someone remains on the same plan for more than two to three years, they have most likely moved from good value to bad value, just by doing nothing.
Consumers need to stay abreast of changes or employ the services of a professional. The above example shows us that in that instance, the cost of not reviewing was a premium increase of about 110pc over the past four years.
When starting to review your cover, it is important to reacquaint yourself with the benefits of your existing policy. Without being aware of the benefits you're paying for, how can you properly compare and contrast with other options?
Start by asking yourself a number of questions, or working through them with a professional broker.
Don't be afraid of waiting periods, find out how they affect you from an independent professional adviser or the Health Insurance Authority; have your healthcare needs changed recently and if so, how; does everyone on the policy require the same level of cover; what level of hospital accommodation is important to you?
There are a few current market trends to be mindful of. Due to the pressures on pricing from consistent government intervention in the market, insurers have had to increasingly add excesses and shortfalls on various procedures just to continue to offer affordable cover.
Leading the way in the introduction of such plans was Aviva's 'Focus Plan' range. These plans cover selected public and private hospitals only, but will offer private accommodation in the hospitals covered. The plans do have excesses for the private hospitals and certain procedural shortfalls.
However, they benefit from excellent premiums as a result, with most of them coming in under €800 per annum. As such, these plans were some of the few to remain unaffected by the recent cap in tax relief. So if one is happy with the list of hospitals covered, one can enjoy a level of accommodation that would have traditionally cost closer to €2,000; and cover in one of the country's three hi-tech hospitals (Beacon), which might typically have cost them over €3,000 per annum. VHI and Laya have also since introduced similar plans.
While these plans will require people to get used to using their cover in a different way and may limit the scope for certain elective procedures, they are still ultimately designed to ensure one has access to the best care available in the quickest timeframe with no worry about the cost of that care.
PATRICK BRENNAN IS HEAD OF CORPORATE BUSINESS WITH IRISH HEALTH INSURANCE