Sell your kidneys for top health cover?
Even if you think you need them, many top-tier health insurance plans are poor value, writes John Cradden
It seems unlikely that health insurance providers would ever try to cull the most expensive, top-of-the-range, 'gold-plated' plans from their product ranges altogether, but it's hard to see what you get by paying up to five grand more than what a good mid-range plan costs.
Even if you want to be guaranteed access to the best in private hospital care, why would you opt for a plan costing up to nearly €7,000 a year when you could have a plan costing half that, but offering what looks like very much the exact same in terms of hospital in-patient benefits?
Only about 5pc of people who have health insurance are on the top-of-the-range plans, like VHI's Plan E or Laya's HealthManager Gold or Aviva I Plan Level 5, according to broker Dermot Goode of totalhealthcover.ie. "The percentage is very small and it's shrinking," he said.
But who buys them aside from the very well-off who want the top medical plan simply because they can afford it or who can't fathom the idea of sharing with riff-raffs in semi-private rooms?
Some of them might include those who had family plans in the past but, when their kids left home, they invested the savings in better cover, said Mr Goode.
"But there are people who are on these plans not because they want to be but because they have a very serious underlying medical condition," he added.
For example, they might want plans that cover them for the Mater Private or the Blackrock Clinic, the two top centres for cardiac procedures. "You could have somebody who had a quadruple by-pass in their late 30s or early 40s and for whatever reason they want to make sure that they get back into Blackrock or the Mater Private if any complications arise.
"There are a lot of people on those top plans unnecessarily because they don't realise that some of the benefits they are paying all that money for, they can get them on the lower plans," continued Mr Goode.
"A lot of people assume that to be covered for major heart procedures you must be on the top plan, but what they don't realise is that with pretty much all the mid-level plans costing €1,200 and upwards, they usually provide full cover for the 50 major heart procedures that can be carried out at Blackrock and the Mater Private, and they also cover day-case procedures there."
Indeed, much of the competition in the health insurance market over the past year has been at the more affordable end of the market, particularly with the introduction of stripped-down, high-excess plans to attract new members over-35 fearful of the age-related loadings that would apply after Lifetime Community Rating was introduced last April.
Roisin Lyons of Meath-based health insurance broker Lyons Financial said: "We tend to see a lot more competition between the lower to middle-range plans as the majority of the market would be on a more affordable level of cover, but there are some plans at the higher end of the scale that are more competitive than others."
For example, VHI's HealthPlus Platinum (Plan E) at €4,843.25 and GloHealth's Ultimate Plan at €3,399 offer similar levels of inpatient cover.
"Members generally tend to be on these plans as they value cover for the Mater Private and the Blackrock Clinic. There may be differences in relation to what members can claim back on their outpatient expenses but these plans are mainly focusing on in-patient cover.
"If members value or want increased cover for outpatient or day-to-day claims, add-on packs can be purchased." Whichever of the top plans you might be on, if you've been on them more than two years, you are in what Mr Goode describes as a "high-risk category" for over-paying.
He said the majority of his clients are people in their 50s or older who have been insured for years on the older plans. Some are recently retired and so find themselves on fixed incomes, so they're reviewing their cover and asking themselves if they really need it.
Mr Goode added that older couples in good health are definitely more mobile in being able to switch cover to equivalent-but-cheaper plans, but if they have underlying medical conditions, they fear that switching might result in a reduction or a downgrading of what they consider to be vital cover. "They are willing to look at lower-cost equivalents, but they don't want to start taking their chances and reduce their cover, which is understandable," he said.
The decision in Budget 2014 to introduce a cap of €1,000 on the amount of premiums that qualified for 20pc tax relief on health (€500 for children) was a big blow to many of those on top plans, said Mr Goode.
"Up until then if you were paying €3,350, you got 20pc tax relief, which means nearly €700. Now this is capped at €200. The increase was effectively €700 for those on the very top plans. That caused an awful lot of people to reduce their cover down."
Even for those on a mid-level plans costing just over €2,000, like VHI's HealthPlus Extra (Plan B Options), the tax relief was halved, he added.
But by switching or even downgrading slightly they can still keep their gold-plated plans and potentially halve their costs, said Mr Goode.
For instance, Laya's Essential Secure costs €3,556, yet not only does it offer the identical in-patient benefits as VHI's HealthPlus Platinum (Plan E) at €4,843 - around €1,300 more - it also has better outpatient cover, according to the Health Insurance Authority's plan comparison website (hia.ie).
You could also downgrade slightly from VHI's HealthPlus Platinum to HealthPlus Premium (Plan D) costing €3,350, save €1,500 per annum and still be covered for the same hospitals. "The only difference is that they are not covered for a private room in the private hospitals, they'll be semi-private," said Mr Goode.
It's a bit of a lottery as to whether you can get a private room if you end up in a public hospital, so a policy that covers you for private hospital is the only way to guarantee privacy, but this is where the premiums start to rocket.
"Blackrock Clinic only has private rooms so you will get a private room there in any case, but in Mater Private, you'll get a semi-private room at worst," said Mr Goode. "But you have to ask, is it worth over grand a year extra?"
But what if you are on a mid-level plan but want to upgrade rather than downgrade?
There are the waiting periods to consider. You may have to wait up to two years for any higher benefits on an upgraded plan depending on your insurer, your age and whether or not you have a pre-existing condition. For instance, if you are over 65, VHI's waiting period for higher benefits is two years, compared with 26 weeks for those under-55 - as long as you don't have a pre-existing condition.
"This rule prevents members upgrading their plan to access a higher benefit and, once the treatment is over and the claim has been paid, downgrading to a cheaper plan," said Ms Lyons.
But even the number of people upgrading is said to be falling off as prices continue to rise.
"People are now choosing the level of cover that meets their needs," said Mr Goode. The majority of top plan members are trying to reduce their costs, which might mean taking on an excess, reducing day-to-day expenses or switching to a corporate plan. "They know that if they reduce or downgrade their cover, they know where the reductions are. It's all about what fits your 'care pathways'," said Mr Goode.
If switching or upgrading, he advises consumers to ask insurance brokers or agents to explain to them exactly what the differences are, and where exactly the extra cover might be.
Sunday Indo Business