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Regulator announces once-off fall in levy on health insurance

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The reduction is due to lower claims during the Covid period. Stock image

The reduction is due to lower claims during the Covid period. Stock image

The reduction is due to lower claims during the Covid period. Stock image

PEOPLE with health insurance are to receive a small benefit with a once-off reduction in the Government levy imposed on their policies.

The levy decrease will mean an annual saving of €45 for most of those with health insurance, according to the Health Insurance Authority (HIA).

The HIA said it expects the reduction to be passed on directly to consumers.

For lower-level plans that only cover public hospital treatments the reduction amounts to €35.

The annual levy supports the community rating system which allows everyone, regardless of their health status and other risk factors, to buy the same health insurance policy at the same price – known as risk equalisation.

The HIA said the reduction is a result of a surplus in the Risk Equalisation Fund due to lower claims during the Covid pandemic.

There had been calls last year for a cut in the levy at a time when most private hospitals were taken over by the HSE to provide surge capacity to deal with Covid-19 cases.

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Despite the reductions, the levy will still represent around a third of the cost of an adult’s premium. The levy will fall to €406. The average cost of an advance policy is €1,500, the HIA said.

On a non-advanced plan the levy will fall from €157 a year to €122. A non-advance plan costs around €620 a year.

Advanced refers to policies that cover both public and private hospitals, while the non-advanced policies usually provide full cover for public hospitals only.

HIA chief executive Laura Brien said: “This [reduction in the levy] is largely due to Covid and the reduced number of claims to health insurers which in turn lead to a reduction in the payments from the scheme to the insurers relative to the payments into the scheme.”

The reduction in the levy has to be approved by Health Minister Stephen Donnelly.

Broker Dermot Goode of TotalHealthCover.ie said if the effective date of the change is January there is a risk that thousands of members that renew in December may miss reduction or may have to wait until the next renewal to avail of it.

He said he expects that all insurers would pass on any levy reductions immediately, but this is never guaranteed.

Vhi is the main beneficiary of the €760m subsidy risk equalisation scheme that compensates insurers with a disproportionately large share of older and sicker customers.

The ‘Sunday Times’ newspaper recently reported that the European Commission is investigating a complaint that the levy to support the Risk Equalisation Fund amounts to state aid as Vhi is owned by the State.


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