Shopping around for health cover can be confusing but don't be put off,writes Laura Slattery
Health usually comes before wealth in champagne toasts and wish fulfilment lists. That might explain why hundreds of thousands of people are prepared to pay around €100 extra a year to health insurer VHI in order to secure what they perceive is a higher standard of cover than that available from its main rival, BUPA.
Six years after it first entered the market, BUPA has yet to shake off its "new kid" tag with some Irish consumers and with every Government-approved price increase comes the assertion that the insurance plans VHI offers are superior or simply not comparable to BUPA's.
The latest VHI increases - averaging at 8.5 per cent extra for renewals and new quotes from the beginning of September - will have sparked a fresh round of soul-searching for price-conscious consumers.
Should they stick with the health insurer they have known and trusted for years or dare to plump for what is agreed - by everyone except VHI - to be the cheaper alternative?
BUPA has denied that price differences between the two companies tend to last only for the months between the date that the VHI increases its premiums and the date it follows suit, usually the following March.
Consumers should not be confused or deterred from shopping around no matter when their premium is due, according to BUPA.
But are consumers scrimping on the level of cover and leaving themselves open to higher healthcare bills in the event of illness if they make the switch?
The table opposite, compiled by independent consultants Mercer, may help you decide. It compares cover under BUPA's flagship Essential Plus plan with two of VHI's nearest comparable products, Plan B and Plan B Option.
The lighter shaded areas represent the benefit that Mercer describes as the best available in that category.
Mr Aongus Loughlin, healthcare consultant at Mercer, says that BUPA's Essential Plus provides cover that is most similar to Plan B Option, the more expensive of the two VHI plans shown.
Under these products, both VHI and BUPA give full cover for private or semi-private accommodation in a public hospital and cover for semi-private accommodation in private hospitals, other than the Mater Private Hospital or Blackrock Clinic.
All plans provide full cover for day care and out-patient procedures in Mater Private and Blackrock Clinic.
Under the BUPA Essential Plus Plan, there is an optional "excess" of €63, which applies each time the member is admitted to a private hospital.
If the member stays in a private hospital for five days at a cost of €1,500, he or she pays the first €63 and BUPA pays €1,437.
This excess - due to increase to €80 for all admissions on or after January 1st, 2004 - can be waived in return for an additional premium.
VHI has started to offer Plan B with an excess of €75, Mr Loughlin says, although it has not promoted this option, which is 10 per cent cheaper.
Tax relief at the standard rate of 20 per cent is taken at source on health insurance premiums. Most people should also be able to avail of a 10 per cent "group scheme" discount, traditionally on offer through employers.
Most credit unions have group schemes for both insurers and a 10 per cent discount is also granted to consumers who apply for cover online.
"No one really should have to pay the full individual cost," says Mr Loughlin.
Although consumers who intend taking out health insurance must do so before the age of 65, they can switch insurers after this age, Mr Loughlin notes.
But younger people and companies that provide health insurance as part of their remuneration packages to employees are the ones more likely to change, he believes.
Students aged 18-21 will save almost €400 by opting for BUPA's student rate. At VHI, student rates are only offered under the higher cost Option plans. An 18-year-old under Plan B pays the full adult rate.
BUPA's higher proportion of younger, healthier members means that it pays out less in claims every year. However, under a policy called "risk equalisation", BUPA would have to make a payment into a fund which would then be used to subsidise the VHI for the higher risks that it carries.
BUPA is challenging a recent decision by the European Commission not to object to risk equalisation in the Irish health insurance market. "It has yet to be seen if risk equalisation will have an effect on premiums," says Mr Loughlin.
Consumers can take a long-term view or they can simply take advantage of premium differences in the meantime, he argues.
As people get older, they may decide to convert to a higher level of cover if they consider themselves more likely to become ill.
In order to prevent paying out to people who know they will need to make a claim, there will typically be a waiting period of up to 12 months between the time consumers sign up for the new benefits and the time the extra level of cover kicks in.
Both insurers will also apply a waiting period to new customers who have not previously had health insurance cover with any company.
For example, pregnant women without prior health insurance will not be eligible for maternity benefit or pregnancy-related conditions by the time their baby is due to be born as a result of a 52-week waiting period rule at both insurers.
Opting for the comfort of the highest benefits available is an expensive luxury. VHI's Plan E Option and BUPA Gold cost more than €1,300 a year for an adult, based on group rates.
"They're very bad value for what you are getting," says Mr Loughlin. "All of the main plans cover you for cardiac treatment in the Mater Private or Blackrock. You're covered for it anyway, so why would you pay another €1,000?"
Consumers also overspend on their children's health insurance, Mr Loughlin adds. "If children get sick, they don't go to the Mater Private or Blackrock, they go to Crumlin or Temple Street."
