Money Times - Febuary 28, 2017

Posted by Jill Kerby on February 28 2017 @ 09:00


Anyone who is either renewing their health insurance or finds themselves in a public hospital bed soon, is in for a Spring money shock.

First, the public hospital bed.

Slipped in when no one was noticing on New Year’s Eve, the HSE announced that from January 1, 2017, the cost of a public hospital bed would go up to €80 a night from €75 for a maximum of 10 nights, unless the patient is a full medical card holder. (Infants up to six weeks old are not charged; women receiving maternity services and people with infectious conditions or children suffering from certain disabilities or disorders are also exempt.)

The hospital will either present you with this maximum €800 bill as they discharge you or they will send you the bill by post. If you have private health insurance but have been treated as a public patient, your insurer will refund you this cost. If you don’t have VHI, Laya or Irish Life Health insurance or a cash plan from the likes of HSF.ie, which will partly cover this expense depending on your policy, you will have to stump up for the overnight rate yourself.

Meanwhile, if you have private health insurance and are entitled to a private room in a public hospital, the overnight charge now ranges from €659 to €1,000 a night depending on the type of public hospital you’re attending and whether you are in a semi-private or private single room. 

However, there is no guarantee of such private accommodation, and many insured patients are also ending up on A&E trolleys or in public wards. Should you unwittingly admit to being a private insurance customer, the public hospital will bill your insurer for the full overnight private rate (which is averaging at €813 per night) even if you don’t get a private/semi-private room.

The blatant overcharging is one of the reason’s why private health insurance premiums have been soaring in recent years.  But from April, there will be another reason – yet another increase in the Health Insurance Levy which is to rise from the current rate of €403 to €444 for every adult policy that costs €1,000 or more and from €134 to €148 for a child’s policy. 

This levy, a ‘risk equalisation’ measure, is collected by every insurance company and paid to the State to effectively subsidise the VHI, the government’s own health insurer for its disproportionately larger group of older customers.  The levy was introduced in 2009 at a rate of €285 and €95 respectively.

Under our lifetime community rating system, everyone pays the same premium for the same product, regardless of age or state of health. In other words, older, sicker insurance holders are not penalised with higher premiums; instead they are subsidised by younger insurance holders who make fewer, less expensive claims.

However the legacy of so many older members at the VHI – which was a monopoly for 30 years until the mid-1990s, means that all c2.1 million private health insurance members subsidise the state company for their higher costs.

I’ve argued in this column many times that such high transfer payments could have been avoided or mitigated if the VHI had been broken up into a number of smaller companies and privatised. This was never done and it remains in the full ownership of the Department of Health.

What has happened – inevitably as the population ages and treatment costs increase – is that the risk equalisation charge just keeps going up and many younger people drop down to cheaper, lower benefit plans.

With nearly three quarters of all private health insurance customers renewing their policies in the first three months of a new year, you need to keep these still rising charges and levies in mind when shopping around for the most affordable policy. The cheapest plans do not provide the best value. Talk to a good broker.

For people on very tight budgets, and especially families who cannot afford health insurance, a cash health plan like www.HSF.ie may be a good option. These single premium plans (there are seven to choose from) cover every member of the family and provide a tax-free cash payment for medical expenses like hospital overnight and day cases, GP and consultants, prescriptions, dental, optical, physio, chiropractic and osteopathy and other alternative treatments, osteopathy, medical tests, surgical appliances, accident cover and even adoption and maternity grants.  Monthly premiums range from €11.28 to €65.45  (€135.36 to €785.40 per annum.)

Mid range HSF plans – at €369.60 and €508.20 per annum – will pretty much cover the overnight charge of €80 for a public hospital stay, up to 40 nights in any calendar year.  HSF membership won’t allow you to jump long waiting lists to get hospital treatment, but the cash payments will help cover the cost of some private diagnostic visits and treatments and if you do end up in hospital, the inevitable travel and parking costs once you get there.  jill@jillkerby.ie



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