Irish people are cumulatively wasting over €150 million every single year by not shopping around for health insurance. And there are hundreds of thousands of people who are paying hundreds – if not thousands – of euro more than they need to for health cover because they do not make a few calls and ask the right questions.
Fear over making a mistake that leaves you without cover when you need it most, confusion over the hundreds of plans to choose from and a misplaced sense of loyalty to companies that you may have been with for decades are three factors that are leading to such huge sums being spent unnecessarily.
But while health insurance can undoubtedly look complex, when it’s boiled down to two simple questions – is my current plan offering me value for money and could I get a comparable level of cover for less? – it becomes a whole lot simpler.
While the amounts being spent unnecessarily by individuals will depend on the policies they have and the circumstances they are in, a good rule of thumb to use as a guide is that anyone who has been on the same policy for more than three years is probably overpaying by about 25 per cent.
But how is that possible?
It happens in multiple ways.
Firstly, the three insurers operating in Ireland – VHI Healthcare, Laya Healthcare and Irish Life Healthcare – all frequently roll out new plans to attract consumers into the market and the newer policies are almost always cheaper than the legacy ones.
So if you are on an older plan rather than a newer one, there is a decent chance you are paying too much.
How much? According to the Health Insurance Authority (HIA), the overseer of the whole sector in Ireland, people could save as much as €1,000 by switching from one older policy to another broadly similar one. And that is €1,000 per person.
Despite such savings less than a third of the 2 million or so people with health insurance have changed plans over the last two years which leaves about 1.5 million people who have stayed put.
And why is that? People tend to be conservative when it comes to their health insurance and they are afraid of making a mistake and taking out a policy that won’t cover what they need to be covered.
This fear is particularly pronounced when it comes to pre-existing conditions with many afraid to move from one provider to another in case they lose cover or have to wait for coverage to kick in.
Neither of these things are true and if you have insurance with Company A and have already sat out your waiting periods with that company then if you switch to Company B then all the existing cover that you had with Company A rolls over to your new provider. If Company B offers enhanced cover you may have to wait for that to kick in but whatever you had, you keep.
It is also worth noting that the benefits of switching for the older people are greater than the younger people, because they tend to be paying more for their insurance with the over 65s paying between 40 and 45 per cent more for insurance than younger people do. They also tend to be the cohort less likely to switch and much more likely to be on older – bad value – plans.
So how do you switch?
If you have a policy coming up for renewal – and you can only change providers when your annual contract with your existing provider ends – you should do a small bit of homework before you pick up the phone to your provider.
Do not simply ring your insurer and ask the person on the other end of the line what they think you should do. Instead ask if they have a lower cost equivalent plan to the one you are on that is similar and make it clear you are happy to take on some minor reductions, depending on the savings.
This call is always easiest with your existing insurer – so that should be your first call. Your existing provider will have a complete record of all previous claims so tell them everything that’s important to you and detail all your underlying conditions and the procedures you’ve had done, and get them to confirm that any new and cheaper plan covers everything you have had covered in the past.
If that new and cheaper plan would have covered all the claims that have been paid out over the last two years and to the same level then the choice has been made for you.
It is also important to speak to people rather than making modifications online. If you buy online without speaking to anyone then you are entirely responsible for the decisions you make whether it’s a good or bad decision. But if you are talking to representatives of a company and ask them questions and get them to explain everything again and again until you are comfortable you understand then they have a duty of care to you that doesn’t exist in the online space.
Remember when talking to a provider to tell them all the relevant details of your health because they can’t refuse you based on any of your answers. They can’t load your policy with additional charges. They can’t change the terms because you’ve disclosed something. And the more specific you are with your questioning, then the more specific their answers have to be and everything is recorded.
Six ways to know if you’re paying too much:
- If you’re on the same plan for five years or more or paying more than €1,850 per adult
- If you’ve never considered corporate plans which include a small excess per claim
- If you’re afraid to change as you think you might have to serve waiting periods again
- If you have all the family on the same plan or you’re paying the full rate for young adult
- If you’re not getting 50 per cent to 75 per cent back on your outpatient expenses with no excess to pay
And six steps you need to take:
- Shop around well before your renewal date
- Ask for the closest equivalent plan to what you have already
- Disclose everything that’s important to you
- If you’re happy with the answers, just switch!
- Switching doesn’t mean you have to change insurer as in many cases you can get a better deal with the same insurer
- Talk to an expert or at the very least talk to the insurers and to make sure you understand the decisions you have to make
You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.
