your welcome !! next time you go to the pub buy me a pintSo the under-fifties will subsidise the over-fifties - yippee, I'm over fifty so thanks a lot to those under-fifties with health insurance amongst the askaboutmoney readers!
The supreme court decision basically did away with community rating so that meant companies could charge based purely on age. Hence why this initiative is being brought in to soften the blow that would have occured to older customers.
mmmh not sure what happens there ! could be another money spinner for the Gov, take the excess tax reliefnot heard from hibernian or quinn on this one eitherI worked for BUPA Ireland. This decision looks like it's a kick in the teeth to the average, middle income family because of the €160 per adult/€63 per child levy, assuming the insurers pass it onto the consumers.
Kitty, can you tell us if Vhi will be passing this levy onto its customers?
And let's be very clear here. The ONLY way that premiums could have become risk rated is if the Health Insurance Acts were changed to allow it. Even the recent supreme court ruling, which struck down risk equalisation, confirmed that community rating stayed in place. Everyone on any given plan paid the same rate.
As for the ugly picture being painted for over 50's, can you elaborate on this? Were over 50's being faced with massive premium hikes if this move didn't go through? (Bearing in mind these are community rated products and the price increase one customer gets has to apply to all customers). Indeed, how does this resolve Vhi's arguments that they are paying out more money per "older" customer than the other two health insurers? That's still going to happen, isn't it? If I understand this initiative correctly, the levies received will directly fund the higher tax reliefs available. So VHI's claims costs will still be of a similar pattern to the last number of years. Won't the "death-spiral" still continue?
The main point that people were putting forward after the Supreme Court ruling was that the other two health insurers would launch products that would have younger people flocking in their droves and leave the older people out in the cold and therefore increased.
This could have been resolved by updating the Minimum Benefits regulations so that it included benefits and services that would be relevant to all generations, including the older.that would be good... No adds for Mr quinn during Podge and Rodge this week, you must advertise during the Late Late and the Dail report... someone from competition authority would probably have something to say on that oneAnd to close the loop, the Minister could have introduced regulations governing the marketing of health insurance products to ensure they were being marketed openly and fairly. The health insurance acts allow this.
It should also be pointed out that when VIVAS launched, their products appeared to be very much aimed at the younger age market (eye laser surgery, teeth whitening, new maternity benefits). But 4 years on, they are still the smallest player in the market. The younger age market didn't migrate to them in any fashion that could have caused the market to de-stabilise.
Instead the Government, deciding that some window etching needed to be done, felt the hammer and chisel would be the best tool...
EDIT: Oh, to answer the original poster's question, my understanding of how this works is that the levy is collected from the insurer for each member they have. This levy is paid directly to the Exchequer which will then pay for the increased tax relief that the over 50s get. What I don't know though is what happens if an over 50 is on a product that costs less than the tax relief available? e.g. Plan B is currently €665 (give or take). An 82 year is entitled to tax relief of up to €1,175. Does the 82 year old pay anything?
I understand this thing now. The community rating applies to the net charge. In the above example, presuming the levies balance the tax reliefs, Plan B will still cost €665 net (ignoring the 20% relief) but VHI will be legally bound to increase the gross cost to the 82 year old to €1,840. I reiterate this is a very clever gotcha to Quinn/Hibernian and those smart asses on the Supreme Court.EDIT: Oh, to answer the original poster's question, my understanding of how this works is that the levy is collected from the insurer for each member they have. This levy is paid directly to the Exchequer which will then pay for the increased tax relief that the over 50s get. What I don't know though is what happens if an over 50 is on a product that costs less than the tax relief available? e.g. Plan B is currently €665 (give or take). An 82 year is entitled to tax relief of up to €1,175. Does the 82 year old pay anything?
I'm a bit confused about claiming tax back on VHI, Could someone tell me if my mother who is 69 and is retired and pays her own VHI be able to claim back for it even though she does not work or hasn't done so for a number of years. If so how would she go about it?
I'm a bit confused about claiming tax back on VHI, Could someone tell me if my mother who is 69 and is retired and pays her own VHI be able to claim back for it even though she does not work or hasn't done so for a number of years. If so how would she go about it?
I understand this thing now. The community rating applies to the net charge. In the above example, presuming the levies balance the tax reliefs, Plan B will still cost €665 net (ignoring the 20% relief) but VHI will be legally bound to increase the gross cost to the 82 year old to €1,840. I reiterate this is a very clever gotcha to Quinn/Hibernian and those smart asses on the Supreme Court.
You have definitely got this wrong, sorry. Your error is in misinterpreting the words "tax relief" as applying to the customer. The tax relief goes to the insurer through the deduction at source mechanism, it belongs to the insurer and not the customer, after all it has nothing to do with the customer's tax position.Well, no, VHI CAN'T charge older people anymore than they would charge anyone else.
Ignoring tax relief, community rating means everyone on any given product for the same period of time must pay the same price (with allowances for group rates, student rates and child rates). The Health Insurance Act clearly states this (in so far as any Act states anything clearly). So VHI can't increase the cost for older people because that would contravene the Act.
My understanding of all this is that whereas before we had a situation where everyone paid the same rate (because everyone got the same discounts and tax relief), we will now have a situation where older people will pay less than younger people because they will get more tax relief.
You have definitely got this wrong, sorry. Your error is in misinterpreting the words "tax relief" as applying to the customer. The tax relief goes to the insurer through the deduction at source mechanism, it belongs to the insurer and not the customer, after all it has nothing to do with the customer's tax position.
Otherwise you would be right and the insurer would have to be paying 80 year olds instead of charging them. The terminology is deliberatly misleading to try and get round those Supreme Court prima donnas but it serves to be greatly confusing and that's why I framed this topic as a question.
Yes, that's my read. Crafty yes, but hats off to them. The Supreme Court were really really pompous and self important to rule risk equalisation illegal. RE is what the government and the Dail wanted ergo it was in spirit legal. So maybe the legal draftmanship wasn't up to scratch. Do we really need a Supreme Court, IMHO no, sack them and save a few bob.I've re-read the DoH press release and you're definitely right about it being misleading!
So if your interpretation is correct (because really that could be interprested in a number of ways), it's not really tax relief, unless it's some kind of corporation tax relief. That is, for every member over 50 years old, the health insurer will get €XXX back...
The crafty buggers....
Further complication. If your employer is paying your VHI (say), is the BIK on the Net cost, the Gross cost before 20% tax relief or the Gross Gross cost before 20% tax relief and over 50 tax relief?
Net amount of course - sorry for any confusion caused.
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