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Levy on health insurance policies to increase

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Minister for Health Stephen Donnelly.

Minister for Health Stephen Donnelly.

Minister for Health Stephen Donnelly.

THE levy on most health insurance premiums is to increase in what is a reversal of what happened last year.

Health Minister Stephen Donnelly said he has received Government approval to push up the annual levy on what are called advanced health insurance contracts to €438 a year.

This means the levy will account for around a third of the cost of a typical health insurance policy for an adult.

The increase works out at €32 for the types of plans most people buy.

The levy on what is called non-advanced plans is going now next year to €109, a fall of €12.

The levy that is in place at the moment came down last year leading to an annual saving of €45 for most of those with health insurance.

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.

Last year the levy came down because there was a surplus in the Risk Equalisation Fund due to lower claims during the Covid pandemic.

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

Mr Donnelly said the duties collected on health insurance contracts through the levy do not go to the Exchequer.

Minister Donnelly said: “The risk equalisation credits, and stamp duty levies are critical to the sustainability of our health insurance market, which is designed to be equitable and fair, by spreading the cost of health insurance across the entire insured population, ensuring everyone pays the same price for the same health insurance product.”

The move to increase the levy for most of those with health cover comes after rebates were paid by Vhi and Laya last year due to a lower number of claims due to Covid.

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In the summer Laya Healthcare paid refunds worth around €240 per family.

It was the second time since the pandemic struck that it has paid money back.

And VHI Healthcare paid out a third rebate in May, with a family of two adults and two children getting typical refunds of €400.

Health insurers made huge savings during the pandemic because fewer people claimed from their health insurers for procedures in public hospitals due to Covid-related overcrowding.

Broker Dermot Goode of TotalHealthCover.ie said the reduction in the levy for non-advanced plans would only impact around 15pc of those with health cover.

He said most people were on advanced plans, and would see an increase.

Mr Goode said it was hard to work out why the hike in the levy was needed when record numbers were taking out health cover, and insurers were paying rebates.

He said health insurers were likely to pass on the cost of the levy to customers immediately.


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