If you’re over the age of 35, you may have felt a bit of panic when the new Lifetime Community Ratings on health insurance policies in Ireland was announced earlier this year. The introduction of the Lifetime Community Rating has led to a lot of confusion amongst both health insurance policy holders and non-policy holders. It also saw people scramble to sign up for health insurance ahead of the May 1st 2015 deadline in fear of having to pay high premiums in the future for health insurance.
Post deadline, a cloud of confusion still remains around the current state of purchasing health insurance for over 35’s. On that note, let’s delve into the subject a little further by exploring what it means and what its implications are.
What are lifetime community ratings & why were they introduced?
Lifetime community ratings are loadings applied to the premiums of those who do not take out their first health insurance policy until they are over the age of 35. To put it quite simply, if you take out and retain health insurance earlier in life, you will pay a lesser premium once you reach the age of 35 than someone who hasn’t taken out health insurance before the age of 35. The loadings were introduced to try to encourage young people to take out health insurance earlier in life.
If people actively begin to take out health insurance policies before the age of 35, it essentially helps to spread the cost of premiums more, meaning that cheaper premiums can be offered to all. It is being introduced for people aged 35 years and over as this is the age considered to be appropriate enough to allow people finish their education and enter steady employment and therefore be in a place where they can readily afford health insurance.
Do the new lifetime community ratings apply to me?
If you’re aged 35 or over and have never taken out health insurance before, you will face a loading on account of this when you do take out health insurance. If you have previously had health insurance but cancelled the policy before you turned 35, provisions will be applied and the level of loading will be reduced. How much the loading is reduced by will depend on the number of years that you were previously covered for.
How much extra will I have to pay?
If you’re over the age of 35 when you take out your first health insurance policy, a 2% per year loading will be applied on top of your premium for each year past the age of 35 that has passed without you having health insurance. The total loading fee may vary from person to person as credits can be applied for periods of unemployment and prior cover and the age of entry is also a big factor.
For example, a 65-year-old man who has never had health insurance before would face a loading of 31 x 2% = 62%. A 45-year-old man who had been covered for 7 years by health insurance until 2008 would have their “loading age” deemed at 38 (45-7) and therefore pay only a 4 x 2% (8%) loading.
We hope this guide helps you to better understand the impact of lifetime community rating on your potential insurance premium. The loading makes it even more important to ensure that you shop around before signing a health insurance policy.