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Introduction of Community Rating in Ireland

Today, 1 May 2015, sees new rules governing the price of private health insurance come into effect in Ireland. Companies offering health insurance to their employees will be required to request additional information.

The change in legislation means insurance companies will need to capture some extra details when registering new employees for their company paid Healthcare policy. This information will be required by the healthcare provider in order for them to determine the cost of cover for any new joiners.

In some cases the Healthcare provider may want to contact the individual directly in order to ascertain if they have had any previous health insurance cover, breaks in cover or were out of the country etc. as this will reduce the levy applied.

TMF Group’s experienced payroll team in Ireland are available to assist and explain the details behind this change.

You can also read on for further information.

This legislation will only affect those who currently have no health insurance; you will hear these new rules referred to as “Lifetime Community Rating.”

  • What is Lifetime Community Rating (LCR)?

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.” From 1 May 2015, LCR legislation comes into effect, under which community rating is modified to reflect the age at which a person takes out private health insurance.

Late entry loadings are applied to the premiums of those who join the health insurance market at age 35 or over. If you are 35 years of age or over and did not have health insurance before 1 May, due to LCR your premium may cost more. 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.

  • How is the LCR loading calculated?

From 1 May 2015, if you are 35 years of age or older purchasing a private health insurance policy for the first time, you will have to pay an additional charge. This charge is based on your age at entry into health insurance. For those over 35 and entering a health insurance scheme for the first time a 2% loading will be added for each year they are over 34 years of age. So, for example, if you are 35 the cost will be 2% higher than for a person aged 34 but if you are 44 the cost will be 20% higher.

These loadings will not apply if an employee already had health insurance before 1 May 2015.

  • Who will pay LCR Loadings?

Loadings will apply on health insurance policies that start on or after 1 May 2015.

For first time policy holders aged 35 and over or if an employee has a break in cover of more than 13 weeks after 1 May, they will pay a loading. These are the only incidences where loadings apply.

If an employee has a break in cover of less than 13 weeks this will not affect their loading. Also if an employee was not insured on 1 May but previously had health insurance, they can be given credit for the time they were insured, reducing the number of years to which the loading applies. If they stopped their insurance cover for periods of unemployment since 1 January 2008, up to three years of credits can be provided. If they live outside of Ireland on 1 May 2015 but subsequently move to live in Ireland, a loading will not apply if they get health insurance within nine months and continue to be insured.

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