FAQ’s Lifetime Community Rating

Still have questions on Lifetime Community Rating and how it might affect you? Please see below all the information you should need to know as well as some technical terms you may hear in relation to this topic:
What is Lifetime Community Rating (LCR)?

Lifetime Community Rating (LCR) has been signed into law by the Minister for Health to support sustainability and competitiveness in the health insurance market. This is from 1st May 2015.

Prior to this a person could enter the health insurance market at any age and be charged the same premium regardless of age. With the introduction of Lifetime Community Rating (LCR) you need to enter the health insurance market before the age of 35 to avoid loadings. 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 (over 35).

The planned outcome from this measure by the Government is to encourage people to take out health insurance earlier in life and to control premium inflation across the health insurance market. The introduction of Lifetime Community Rating (LCR) will see customers over the age of 34 pay an extra 2% loading per year in addition to their health insurance premium.

 

When did the introduction of Lifetime Community Rating (LCR) take place?

Loadings apply on health insurance policies written from 1st May 2015 for anyone aged 35 or over. Some reductions and exceptions are allowed. See further details below.

So what changed?

Prior to May 2015 a person could enter the health insurance market at any age and be charged the same premium regardless of age. 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 (over 35).

Under the system of lifetime community rating, community rating changed to reflect the age at which a person takes out private health insurance. You may be charged an additional loading if you join the health insurance market at age 35 or over.

Why did the Government bring this in?

The primary reason for introducing Lifetime Community Rating (LCR) was to encourage younger people to purchase health insurance. Encouraging more people to join the market at younger ages helps spread the costs of claims by older and less healthy people across the market, helping to support affordable premium levels for all.

Is time spent as a dependant on a health insurance policy credited towards potential LCR loadings?

Time spent as a dependant paying the adult rate on a health insurance policy is credited towards potential LCR loadings from age 18 onwards; however, time spent as a dependant on a policy paying the child rate / student rate does not count towards your credited period.

Can you explain the loadings to me/how will they be calculated?

The level of loading depends on the age at which you take out private health insurance. The only way to avoid paying these loadings is to take out private health insurance before reaching the age of 35.  See some examples below. 

LCR_desktop_curve

For example if you are 45 and have never held private health insurance you will pay a 22% loading on your premium for life ( 11 years from the age of 35 to 45 x 2%). See some further examples below See some examples below.

Will I have to pay a loading for the rest of my life if I continue to maintain my private health insurance cover?

Yes. The loading that applies, depending on your age, if you purchase private health insurance after the 30th April 2015, will apply in subsequent years.

Is there any way the loading would not apply to me?

Yes. Everyone who had health insurance before 1st May 2015 will be assumed to have a continuous period of cover and therefore no loadings will apply once you maintain your cover.

Why is Lifetime Community Rating (LCR) introduced from age 35 rather than a younger or older age?

The Government considers 35 to be the most appropriate age to allow young people sufficient time to complete education and to achieve secure employment for a number of years.

If I cancel my policy with my provider do I still have to pay the loadings?

In order to totally avoid the loadings you must not have a break in cover in excess of 13 weeks. If you have a break in cover in excess of 13 weeks loadings may apply to your premium. The level of loading will be reduced by the number of previous years health insurance cover you have.

Is there any way that I will be subject to a reduced loading?

You can reduce your loadings where you have a qualifying credited period. A credited period can apply where individuals previously had health insurance. See the Technical Terms.

In addition, provision is made for a credited period (in total not exceeding 3 years) for individuals who previously had health insurance cover, but who stopped their cover since 1 January 2008 because of unemployment. See the Technical Terms.

Will my age affect my health insurance premium?

Yes.

If you are under 35 years of age you will pay no loading. If you are 35 and over, you may be subject to a loading depending on your circumstances and any credited periods you have built up.

Please be aware that if you are over 35 and have a break in cover in excess of 13 weeks, you will incur a 2% loading per year on top of your premium. The 2% loading will increase every year of your life you spend without health insurance.

What is the maximum loading that will apply?

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.

Why should persons in older age brackets taking out private health insurance for the first time be penalised with a 70% loading?

The loadings increase with age reflecting the higher claims experience in older age groups. If the loadings did not apply to older persons, the rate of loading for young persons would be far higher, and be disproportionate and end up being a financial disincentive.

 

Can you give me some examples of how this works?

Example 1

I am 45 years old and I take out health insurance for the first time, will loadings apply?

Chronological Age 45
Less any qualifying credit – Prior PHI cover 0
Qualifying period of unemployment 0
Age at entry (for loading purposes) 45
Applicable loading (11 x 2% per year) 22%

 

Example 2

I am 45 years old and I take out health insurance, having had health insurance cover for 7 years (up to 2008) – will loadings apply to me?

Chronological Age 45
Less any qualifying credit – Prior PHI cover 7
Qualifying period of unemployment 0
Age at entry (for loading purposes) 38
Applicable loading (4 x 2% per year) 8%

 

Example 3

I am 50 years old and had health insurance previously for 10 years but lost my job in 2010 and have three years qualifying periods of unemployment – if I take out health insurance, will I have to pay loadings and if so how much?

Chronological Age 50
Less any qualifying credit – Prior PHI cover 10
Qualifying period of unemployment 3
Age at entry (for loading purposes) 37
Applicable loading (3 x 2% per year) 6%
Can a health insurer make an exemption for me from the LCR loading?

No applying the loadings will be mandatory and cannot be waived by an insurer.

If I join a PMI provider, what happens if I switch from one insurer to another?

Switching from one insurer to another or from one policy to another does not affect the applicable loading. Loadings, if any, will continue to apply and insurers are required to supply each other with proof of an individual’s prior cover.

Where can I get information about private health insurance policies?

Laya healthcare can provide you with all the information you need in regards to Lifetime Community Rating (LCR), we will also be able to provide a suitable level of cover for your own circumstances based on the excellent schemes we offer.  Simply visit www.layahealthcare.ie.

Independent information can be sought from the Health Insurance www.HIA.ie

I currently have a Cash Plan/HSF policy how does Lifetime Community Rating (LCR) affect me?

All cash plans in the market do not fall under the definition of an inpatient private health insurance plan. Therefore to Lifetime Community Rating (LCR) will affect you if you take out a health insurance policy.

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, regardless of having a cash plan in the past.

My insurance is paid by my employer; will the loading affect my BIK?

If your employer covers the total cost of your health insurance premium including the loading then yes. Below is an example of how this will work.

Example:

Employee aged 40 entering the health insurance market for the first time with no credits.

Example gross health insurance premium: €1,200
Total LCR loading: 6 years x 2% = 12% (€144)

 

Health Insurance Premium only

Gross Cost

BIK Charge

BIK Charge

Lower Tax Bracket

Higher Tax Bracket

Adult as per example €1,200.00 €372.00

€624.00

 

Health Insurance Premium & Loading

Gross Cost

BIK Charge

BIK Charge

Lower Tax Bracket

Higher Tax Bracket

Adult as per example

€1,344.00

€416.64

€698.88

 

 

Some Technical Terms:

Credited Period

In some instances a person will have credits applied to their loadings. These can be the sum (in years and months) of any period of previously held Health Insurance and/or a recognised period of unemployment, (see below). So your loading will be dependent on your age as well as any credited period you may have. The more credited periods you have, the less the loading that is applied. Please note:

1. Such credit only applies to those aged 18 and over who are/were paying a full adult premium rate.
2. Such credit is not applicable if the person aged 18 and over is/was in receipt of a student rate/YAR-applied product.

 

Recognised Period of Unemployment

Where a person had insurance on or after 1st January 2008 and subsequently cancelled their Health Insurance as a result of unemployment (either their own, or a person they were dependent on) and either they or the person they were dependent on were in receipt of social welfare, they can receive a credited period from 6 months to 3 years. The periods of unemployment do not need to be consecutive and can continue to be earned after 30th April 2015.   You will need to tell us what your periods of unemployment were when you are buying health insurance from us so we can discount any loadings by the appropriate amount.

 

Age at Entry

You may hear this term a lot when Life Time Community Rating (LCR) is discussed. This is the age of the insured person in years and months when they take out a Health Insurance contract, minus any applicable credited period (see above for more information on this). The age of entry is the determining factor in deciding what loading a person receives on their health insurance premium. The age of entry is always rounded down to the nearest whole month. So if your age of entry is 37 years and 7 months, this will be rounded down to 37 years. If a person is 40 and has a credited period of 3 years due to having health insurance for 3 years previously, then their age of entry is 40-3 = 37. So they pay 6% loading (3 years x 2%)

 

Overseas Waiver

If you live overseas on or after the 1st May 2015 and return to Ireland, you will be given a 9 month grace period in order to buy health insurance on entering Ireland, where no loadings will apply. Once this grace period has expired, if you are over the age of 34, then loadings will be applied as normal.