Health Insurance Lifetime community loading - objective view of health insurance from a financial point of view

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jaykay

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Hi,
I'm a 44 year old without any health insurance. I don't have anything against health cover but I have never been offered it by an employer.
I took a look at it about 10 years ago when they were bringing in Lifetime community rating. Decided against it then and thankfully have not had any need in the intervening years.
At this stage my 9 years over 35 will probably mean quite a lot of loading on top of my standard insurance premium.
I am still inclined to just put away money towards health costs myself, rather than pay for cover. I can then start paying for cover as I get older, perhaps around 55 years old.
Does anyone know the exact calculation for the LCR loading? If I want to do some sums to work out loading if I start cover from 55 years old.
 
Details here on the loading:

There is a 2% increase in price (known as a loading) for each year over 34 years of age. For example:
  • If you are 35, the cost is 2% higher than for a person aged 34
  • If you are 44, the cost is 20% higher (2% x 10 years).
  • Max loading is 70%.
  • The longest you will have to pay a loading for is 10 years.

Private health insurance

Introduction to private health insurance and the rules that apply to insurance providers.
www.citizensinformation.ie www.citizensinformation.ie
 
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jaykay said:
Does anyone know the exact calculation for the LCR loading?
Click to expand...

Lifetime community rating (LCR)

Lifetime community rating is a system whereby the premium that individuals pay for health insurance rises with the age they enter the private health insurance market, but does not vary in relation to their current age.
www.hia.ie www.hia.ie
  • If you are aged 35 or above when you first buy health insurance, you will have to pay an extra 2% of the gross cost of your policy for each year above the age of 34 that you didn’t have health insurance. This additional charge is called a Lifetime Community Rating loading.
Click to expand...
Edit: post crossed with @odyssey06's.
 
odyssey06 said:
The longest you will have to pay a loading for is 10 years.
Click to expand...
The HIA don't say that...

Lifetime community rating (LCR)

Lifetime community rating is a system whereby the premium that individuals pay for health insurance rises with the age they enter the private health insurance market, but does not vary in relation to their current age.
www.hia.ie www.hia.ie
However, if you buy health insurance for the first time when you are 45, you will have to pay a Lifetime Community Rating of 22% (11 years x 2%). This means that you will have to pay €1220 for a health insurance policy with a gross cost of €1000.
Click to expand...

What is the maximum loading?​

The maximum loading is 70%. This applies to people aged 69 or above buying health insurance for the first time.
Click to expand...
 
odyssey06 said:
@ClubMan my reading of "The longest you will have to pay a loading for is 10 years" is that if you take out insurance at 55 then after 10 years cover e.g. from age 65 you are no longer loaded.
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Ok, thanks. I thought you were saying that the loading was capped at 10 years x 2% = 20%. E.g minimum((age - 34), 10) x 2%
 
jaykay said:
I am still inclined to just put away money towards health costs myself, rather than pay for cover.
Click to expand...
It’s unwise to self insure. You could end up spending nothing and having tens of thousands of euros rotting on deposit. Or you could have expenditure that could wipe you out financially.

My advice is that anyone who can afford private health insurance in Ireland should buy it. I’ve never met a doctor that didn’t have it and that’s all you need to know.
 
Thanks for the replies.

So I'm trying a comparison here on 2 scenarios. Start cover now or start in 10 years. Cost after I hit 65 years old will be the same in both scenarios, so I'll work out cost up to age 65.
Let's say the average plan cost is about €1500 per year. And the cheapest plan is €500.

-Scenario 1, If I started cover now on the cheapest possible plan.
Cost €500 per year (cheapest plan just to tick the health cover box)
Loading (44 - 34) x 2% = 10 x 2% = 20%.
Cost per year of €600.
By the time I hit 55, I will have spent 11 x €600 = €6600.
Then cost of €1500 per year til I hit 65:
€15000 + 6600 = €21600

-Scenario 2, if I waited til 55 years old to start cover.
I have saved €6600 by not beginning cover til now
Cost €1500 per year from age 55
Loading (55 - 34) x 2% = 21 x 2% = 42%
Cost per year of €2130. Need to pay that for 10 years, less the saving from not having cover for 11years.
€21300 - 6600 = €14700
 
I completely see what you are saying, but can one not use the €6k saving to offset that? I could put the 6k into EFTs now and that will rise in value over the 10 years.
Best case scenario I can cash that in, worst case scenario I use it to pay for medical fees over the 10 years.
I know there is a worse worst case where I have to pay 100k in medical fees but how common is that by age 55?
 
jaykay said:
Best case scenario I can cash that in, worst case scenario I use it to pay for medical fees over the 10 years.
Click to expand...
health-beauty-patient-stock-stock_market-graphs-stock_graphs-dcr0040_low.jpg
 
jaykay said:
I completely see what you are saying, but can one not use the €6k saving to offset that? I could put the 6k into EFTs now and that will rise in value over the 10 years.
Best case scenario I can cash that in, worst case scenario I use it to pay for medical fees over the 10 years.
I know there is a worse worst case where I have to pay 100k in medical fees but how common is that by age 55?
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6k really won't get you very far paying for medical expenses.

Health insurance is one of the few (or only) things in life that I'm absolutely delighted if I don't get value for money from. If I never had to make a claim against my health insurance I'd be only too delighted!
 
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Private hospitals and consultants do not like taking on self-payers as they usually greatly underestimate the chances of needing care and definitely underestimate the cost of that care. A few nights in a private hospital ICU will quickly deplete savings.

Trying to time when to buy insurance is unwise and is only setting yourself up for stress at a time when you least need it.
 
jaykay said:
I know there is a worse worst case where I have to pay 100k in medical fees but how common is that by age 55?
Click to expand...
It's many times more common that someone's house burning down. If you have insured your home against fire, then it would be irrational to rely on reasoning like this justify not getting health insurance.
 
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