There are only a few things in life we spend our hard-earned money on while hoping we will never have to use.
Fire extinguishers, Imodium and CPR courses all rank highly on that list but usually insurance is the one product we purchase to protect against worst-case scenarios, while crossing our fingers hoping they don’t arrive.
Nearly half the population has private health insurance, with 43.7 per cent of us covered, according to Health Insurance Authority (HIA) figures from March 2023.
There are several pull factors encouraging consumers to take up health insurance, like the option of a private room, choice of consultant and additional benefits such as acupuncture. The unfortunate reality of the health system in Ireland, where reports of over 830,000 patients on hospital waiting lists are common, however, means people feel insurance is a necessity.
Younger people are encouraged to get health insurance earlier but this is tricky for a cohort struggling with high rents, junior salaries, eye-watering house deposits and childcare costs. Coughing up anywhere between €500-€1,500 a year for a plan on top of the cost of living crisis is a big ask.
Only 38.9 per cent of the population aged between 18 and 29 had coverage last year, according to the HIA market report. That number jumps to 44.1 per cent for 30 to 39-year-olds. This is where the Lifetime Community Rating kicks in, which makes insurance progressively more expensive for anyone 35 and up joining for the first time.
And it’s set to get worse. Big insurers in the market like Irish Health and Laya are in to their second round of price hikes this year.
So, how can health insurance first-timers or under 40s looking to switch get the best deal when there’s over 300 plans to choose? Here’s some tips to get you started.
Cheapest doesn’t always mean the best deal
Going with the no-frills plan because you feel young, healthy and have yet to see inside of a hospital might cost you more in the long run. Health insurance expert Dermot Goode, who compares policies for a living, said younger customers often “want to spend as little as possible if they are healthy or don’t have medical history”.
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While basic policies start around €500 and will cover some costs, consumers could be left with sticker shock on high excess bills or outpatient costs, such as consultants fees.
“They’ve stripped almost everything back. It’s like going out to buy a car and coming back with a moped – it’s not going to be pretty,” explained Goode
While taking care to emphasise that “everyone is price conscious at the minute” and that people can only get a plan they can afford, Goode said it’s important to figure out if the consumer going for the basic package would be able to pay for the things it didn’t cover.
“One thing younger people miss is the consultants fees. It’s important to think about what would happen if they developed a medical problem,” he said.
“Before you are even brought into hospital, you go to the GP. The GP is going to send you to a consultant which, privately, could cost €250-300 for the first visit. The consultant might need an ultrasound, an X-ray or bloods, which all costs, and then you have to go back to the consultant again and pay another fee before you even get into hospital.
“People can spend €500-800 on routine diagnostics, which you have to do before going to the hospital. Some basic plans only kick in when you get admitted to hospital but for anything before and after, you pretty much get nothing back.”
The other thing to watch is excess. This is the money not covered by your insurance for certain procedures, hospital stays or even some outpatient benefits.
“For an extra €100 or €200 in some cases, you might be able to buy a policy with an excess of only €250, instead of €500, so you would be better off if you needed a procedure,” said Goode.
The gamble is: do I want to pay more for something that might not happen? Or will I end up with a large, nasty bill due to an unforeseen illness or injury?
“In a lot of cases, it comes down to risk,” said Christina Prendergast, head of communication for the Health Authority Ireland.
“If you are willing to take on the risk of paying part of the cost, choosing a policy with an excess can result in a lower premium. If you are not willing to accept this risk, you can choose a product without an excess.”
Know thyself
One of the mistakes Goode sees with younger customers is the belief their fit and active lifestyle means they don’t need things like private hospital, clinic cover or outpatient benefits. When, actually, it could be the opposite.
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“I might see a healthy 25-year-old who only wants to pay €900 for cover but turns out they are very active, play GAA or rugby and they might need physio or acupuncture or access to a rapid clinic or they tear their ACL and they want to see the best consultant to get back training as soon as possible,” he said
“For an extra €300 on a plan, they can get up to €1,000 back in benefits.”
This is particularly true for people looking to access counselling or other mental healthcare. While most plans will have inpatient psychiatric coverage, outpatient benefits can vary wildly. Some plans may cover 50 per cent of all visits, others may only cover up to five, some none at all. This means €70 weekly visits can add up.
According to Goode, this is where corporate plans might be a good option.
“Anyone can join these, despite the name. Always include an employee assistance programme, which gives you 24/7 access to a qualified counsellor on any issues bothering you.”
Aside from your lifestyle or medical history to consider, it’s also important to factor in what your future might look like in the next few years when deciding on insurance.
“For example, you might be planning to have a baby, in which case outpatient cover and maternity cover might be of particular interest to you,” advised Prendergast.
Timing is key
Okay, so you might need a higher level cover as your knees start to go playing football or if you plan to have a baby. The smart thing to do is just pay for it when you need it and save some cash in the meantime, right?
Wrong – for a couple of reasons, starting with the lifetime community rating.
“One thing that is important is that, a bit like a pension, it’s best to ‘start early’,” said Prendergast.
“If you are a ‘first timer’ to health insurance from age 35 onwards, you will pay a lifetime community rating loading of 2 per cent for every year that you didn’t hold health insurance over that age (ie six years x 2 per cent if you are 40). The loading applies for 10 years.”
That means those under 35 won’t have to pay any of that pesky LCR.
“Once you are in the health insurance ‘club’, you don’t pay any more for your health insurance at 75 than you do at 45, due to Lifetime Community Rating,” she said.
This is where entry level plans can act as “a stepping stone”, according to Goode.
“Entry-level plans when people can only afford the bar minimum can help you get on the ladder to avoid age loadings and get waiting periods for pre-existing conditions out of the way.”
Be wary about staying on these too long, however, as this is a “big mistake”. Any upgrade in hospital cover will see a two-year waiting period before the benefit can be used, Goode said.
This could be an issue particularly for those now needing fertility or maternity benefits as their ages and lives change.
Those who bought cheap plans in 2015 to avoid the loading stayed at the same level but, now, “eight years later on, those entry levels plans could see that policy increased to €950,” according to Goode.
“Those people think they’re staying on the cheapest plan but they don’t realise insurance companies launch new plans every year that could be cheaper. For example, Irish Life has a basic product for just over €460 so they wouldn’t even have the cheapest plan any more but they’re paying more for less benefits.”
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It doesn’t pay to be loyal
Insurance companies are required to treat all customers the same when it comes to policy prices regardless of medical history, age or years they’ve held insurance.
Usually, only groups such as companies with an employee scheme can access up to 10 per cent of a loyalty discount. This means it pays to shop around and to compare policies using the free tool available on the HIA website or a paid service like irishhealthbroker.ie, which charges €150 for individual and family cover assessments.
Worried that switching to a similar plan that’s cheaper might mean resetting waiting periods? You shouldn’t, according to Prendergast.
“Once you serve these waiting periods, you will not have to serve them again if you switch to another insurer or another policy, as long as you haven’t had a break in cover of more than 13 weeks.”
Switching to a plan with higher coverage could see waiting times kick up to a maximum of two years in some cases, however.
“It might seem very daunting, as there are over 300 plans, but the majority of people – over half of those holding health insurance – are on one of 27 plans and 32 per cent on just 15 plans, the five most popular plans with each insurer,” she said.
So, good luck out there finding the perfect plan. Let’s just hope you’ll never have to use the most serious parts of it.
