Insurance body rows back on widowed surcharge claim

CONOR POPE, Consumer Affairs Correspondent

The Health Insurance Authority (HIA) has been forced into an embarrassing climbdown after its chief executive warned married people with health insurance under the policy of a spouse they could face surcharges of as much as 70 per cent if their partner died and they took out policies in their own name.

Under a major rule change to be implemented from May, anyone over 35 who does not have health insurance will face more expensive premiums if and when they take out a policy after lifetime community rating is introduced.

This means anyone aged 35 or over taking out health insurance for the first time will have a permanent age-related loading of 2 per cent per year of age over 34 years. A 54-year-old, for example, would pay a loading of 40 per cent on their premium each year.

Speaking on Newstalk, the head of the HIA Don Gallagher said that if someone was the beneficiary of a policy taken out in someone else's name they would not be considered to have an insurance policy "in their own right" and would be hit with the loading should their circumstances change.

This would mean that a person could have health insurance for 40 years and still be considered a new entrant to the market if they take a policy out in their own name.

"In their own right they must take out a contract in their own right by the age of 34," Mr Gallagher told Newstalk presenter Pat Kenny.

Mr Kenny pointed out to the head of the HIA that if the holder of a policy dies, other people on it could face a massive surcharge.

He said that man or woman on their spouse’s policy for decades could end up paying a 70 per cent surcharge if their partner died and they had to take out a policy in their own name.

Agreeing, Mr Gallagher said being a named beneficiary “doesn’t ordinarily apply to most people.”

When Mr Kenny pointed out that this answer was not satisfactory and described the rule as “insane”, Mr Gallagher had no response but said that he would be “happy to respond in writing if you wish”.

The HIA then followed up the interview with a statement of clarification in which it said that where an adult rate of premium was paid for an individual that will be taken into account in calculating the amount of age-related loadings that may apply after 30th April.

“Currently health insurers apply a reduced level of health insurance premium in respect of children and full time dependant students. These periods of cover where reduced health insurance premiums apply, are not taken into account for the purposes of lifetime community rating and the calculation of age related loadings,” the statement said.

However, if a full adult premium “is paid in respect of anyone, including a dependant student, such periods of cover are taken into account for the purposes of Lifetime Community Rating. Similarly in the case of an individual where a full adult premium rate is being paid for them by their spouse, such periods of cover are also taken into account for the purposes of Lifetime Community Rating.”