Blog Homepage > What is Lifetime Community Rating and will it affect you?
On 1st May 2015, Lifetime Community Rating will be introduced to the Irish health insurance market.
Currently in Ireland, everybody is charged the same premium for a particular health insurance plan, irrespective of their age, gender and the current or likely future state of their health. This is called community rating. With the introduction of Lifetime Community Rating, from 1st May 2015, this will change.
We know you’ll be wondering how this may affect you, so we’ve put together our top 10 FAQs to help you get to grips with these changes.
1) What is Lifetime Community Rating (LCR)?
Under LCR, community rating is modified to reflect the age at which a person takes out private health insurance. Late entry loadings or penalties will be applied to the premiums of those who join the health insurance market at age 35 or over.
35 years of age is considered to be an appropriate age to allow young people sufficient time to complete education and to achieve secure employment for a number of years.
As a result of new Lifetime Community Rating, if you take out private health insurance earlier in life and retain it, you will pay lower premiums compared to someone who joins when they are older (i.e. over age 34).
2) Who will pay Lifetime Community Rating loadings?
Age at entry loadings or penalties will apply on health insurance policies from the 1st May 2015. From this date onwards, anyone who takes out private health insurance at age 35 or over, and who does not have qualifying periods of credit, will pay a loading.
The level of loading will depend on the age at which the person takes out private health insurance. There is a grace period up to 30th April 2015, during which individuals of any age can purchase private health insurance without incurring loadings. Following the expiry of the grace period, the only way to avoid paying late entry loadings is to take out private health insurance before reaching the age of 35.
3) How are the loadings calculated?
From the 1st May 2015, if you are purchasing a private health insurance policy for the first time at age 35 years or older you will pay a 2% loading on top of your premium for every year you are aged over 34. For example, if you take out a private health insurance policy for the first time at age 40 you will pay 12% (2% x 6) more than someone who took out their cover before the grace period expired.
The loading that applies when a person purchases private health insurance after the 1st May 2015 will apply in subsequent years also.
The maximum loading that can apply is 70% of the total premium. A loading of 70% will only arise on very rare occasions, where a person aged 69 or older is purchasing private health insurance for the first time.
4) Are there any exemptions from Lifetime Community Rating loading?
Yes. Everyone who has health insurance at the end of the grace period (30th April 2015) will be assumed to have a continuous period of cover and therefore no LCR loadings will apply. In addition, the Regulations set out certain circumstances when age at entry loadings can be reduced, where the customer has a qualifying credited period. A credited period can apply where individuals previously had health insurance.
Provision for a qualifying credited period (in total not exceeding 3 years) is made for individuals who previously had health insurance cover, but who stopped their cover since 1st January 2008 because of unemployment.
5) If I had private health insurance previously, but let it lapse, do I still have to pay the loadings?
Yes - but the level of loading will be reduced by the number of previous years health insurance cover.
6) Will my age affect my health insurance premium?
Yes. If you take out private health insurance on or before the 30th April 2015, you will not have to pay the Lifetime Community Rating loading. After 1st May 2015, if you are under 35 years of age you will pay not have to pay the Lifetime Community Rating loading. However, if you are aged 35 or over, or have a break in cover in excess of 13 weeks, you will incur a 2% loading per year on top of your premium.
7) Can I drop my private health insurance cover for a period of time?
Periods of up to 13 weeks without cover will be allowed without affecting your loading. If a break in cover of over 13 weeks occurs you will be subject to a loading.
8) I can’t afford private health insurance, will loadings apply to me in the future?
Private health insurance is optional. All residents of Ireland are entitled, subject to certain charges, to receive public in-patient and out-patient hospital services. This means that you don’t have to take out private health insurance in order to have access to hospital services.
People who cannot afford the premiums for private health insurance, or who do not wish to take out private health insurance for any other reason, continue to have the same entitlement to services in the public hospital system on the basis of clinical need.
9) Will I still get a discounted premium for my 19 year old student dependent?
Yes – with the introduction of LCR there is also a ‘young person’s discount’ being introduced. This will vary from provider to provider and discounts will apply on certain plans only. The insurers will have discretion from 1st May 2015 to charge discounted premiums for young adults in the age range:
Additionally, there will no longer be a requirement for a young adult to be a student or dependent on an adult policy in order to qualify for the discounted premium.
10) Can the LCR loading or Young Person’s Discount vary depending on the insured person?
The LCR loading and Young Person’s Discount are calculated per individual member, if applicable. This means that multiple loadings or discounts can be applied to the one policy, depending on how many people are insured within the policy and if they’re subject to a loading or eligible for a discount.
The Health Insurance Authority will carry out a review of the operation of LCR after a period of two years.
If you have further questions and would like to get independent information about private health insurance policies, the Health Insurance Authority provides information on all policies online at www.hia.ie.
What’s more, Cornmarket’s team of health insurance experts are just a click or a call away, and can talk you through any queries you may have and advise you on the best option for you.
Please note that Cornmarket cannot be held responsible for the information contained on external websites.