Massive shake-up of health insurance with launch of cheap plans
The health insurance market is set for its biggest shake-up as insurers attempt to sign up thousands of people before new rules price them out of the market for ever.
A clutch of super-cheap health plans have been launched in what has been described as a once-off price bonanza.
GloHealth is set to launch a new starter health plan at a rock-bottom cost of just over €400 a year for an adult, the Irish Independent can reveal.
The new plan is set to be the cheapest in the market, and comes days after both VHI and Laya launched starter plans. Aviva is due to unveil another low-cost plan in the coming days.
The moves represent the biggest price war ever seen in the health insurance market, and is in sharp contrast to the last few years which have seen multiple rises in premiums rates.
It comes as rules due to come into force from May 1 will penalise anyone over the age of 34 taking out health cover for the first time. A loading of 2pc for every year a person is over the age of 34 will be imposed, meaning a 50-year-old will have 32pc loaded on to the cost of a premium if they never had health insurance previously.
This has prompted a one-off price-cutting bonanza as all four insurers attempt to grab new members.
Between 50,000 and 60,000 people are estimated to be likely to buy cover for the first time before May, leading to a spate of new cheap, entry-level plans to be launched by the four insurers.
GloHealth will launch the new Base plan, which costs just €409. Health insurance expert Dermot Goode of TotalHealthCover.ie said it would be the cheapest plan for an adult.
It comes after VHI unveiled its Start Plan at a cost of €449 a year for adults.
This was trumped by Laya Health with the launch of its €430 a year Assure Vitality.
Aviva is expected to shortly reveal a new €425 a year plan - Select Starter.
The new starter plans are cheap because they exclude cover in private hospitals and clinics, with some of them also excluding treatment in selected public hospitals. They do, however, cover a semi-private room in most public hospitals. And, crucially, the new generation of low-cost plans allow people fast access to treatment as semi-private patients, rather than being on a public waiting list.
Those on the GloHealth Base plan are covered for 54 of the State's main public hospitals, but four public hospitals, including Cappagh in Dublin, are not included.
And those taking out GloHealth's new €409-a-year plan for adults will have to pay the hospital themselves and then claim back on the policy. But there is the option to upgrade to the Net One plan, with no waiting time imposed, if the consumer has to go into hospital and does not want the hassle of having to pay themselves before claiming back the cost of the treatment. Glo is the newest player in the market, with around 100,000 members. It said the price will work out at around €8 a week.
The new entry-level plans are expected to prove attractive to people in their 30s and early 40s taking out cover for the first time. These people risk being priced out of the market if they do not join up before May 1.
Glo is also reducing the price of its Net One plan from €539 to €495, and including travel insurance as part of the package.
It is also launching another entry-level plan, the Initiative Plan, at a cost of €425 a year.
Mr Goode said this was the most intense price war he could remember. "If you asked me recently if we would ever see plans for less than €475 a year for adults I would have said no. I don't think we will ever see health plans as cheap again," he said.
But he warned that the new entry-level schemes were not comprehensive health plans.
"These are not proper health insurance plans. They are entry-level, yellow-pack plans. You need to be spending at least €800 per adult to get a comprehensive health insurance plan."
He said for a family of two adults and two children, Aviva's yet-to-be-launched Select Starter was set to be the cheapest at just over €1,000 a year.
Most of the new plans will be available from early March.
It costs €800 a night for a semi-private room in a public hospital, which means the new plans will have paid for themselves after just one hospital stay.
Glo chief executive Jim Dowdall said: "These plans will provide a real alternative for consumers who have been thinking about entering the health insurance market in advance of lifetime community rating coming into effect on May 1, but who have not been in a position to do so due to the high cost."
The new penalties for the over 34s come about due to community rating. Under this policy everyone pays the same the same price for a policy with similar benefits, irrespective of how old or healthy they are.
This is being changed to "lifetime community rating", which means there will be penalties for those who leave it until later in life to take out cover. This is because older people make more claims and are more expensive to insure.