Health Insurance Update - November 2016

The Minister for Health, Simon Harris, has advised that the Health Insurance Levy for advanced plans will increase by 10% with effect from April 2017. This increases the levy to €444 for an adult and €148 for a child.

The levy is paid by the insurers on the renewal of a policy into a risk equalisation fund that is predominantly paid out to Vhi Healthcare to compensate them for having the bulk of the high risk membership in a community rated market.

While risk equalisation is a zero sum game and the proceeds of the risk equalisation fund is paid to the insurers, there are winners and losers and widely differing views from the insurers on the effectiveness of the system.

It is likely that the Insurers, irrespective of whether they individually benefit or not from the levy increase, will pass on the cost of the levy increase as it is a low margin market.

We seem to be back to a PR battle between the insurers and the government with Minister Harris quoted as saying that there is "no obligation on insurers to pass on these increases" to the consumer, against a backdrop of low margins and the increasing costs for the insurers for members being treated in a public healthcare settings.

After the relative stability of pricing during Minister Varadkar's tenure as Minister for Health, we may be re-entering a period of volatility with increases approaching double digit percentages expected during the course of 2017.

For further information, please contact:

Gary Fearon
Healthcare & Benefits Lead

t +353.1266.6207


Beech Hill Pension Trustees Limited t/a Aon Employee Benefits is regulated by The Central Bank of Ireland.

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