Health insurance: How to side-step the dizzying complexity of changing plans or provider and save yourself thousands

“Switching is a con. It is too complicated, you can only do it once a year and there are no real savings to be made.”

That was the hot take on health insurance from someone Pricewatch was talking to in the middle of last week.

The person was almost entirely wrong, but we will get to all the reasons why they were wrong presently.

First, we have some bad news.

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Last year was “terrible” for more than two million people with private health insurance. The impact of much of that terribleness will only be felt by many in the weeks ahead.

The three health insurance providers – VHI, Laya and Irish Life Health – all hiked premiums at least twice last year, but because of the way the market works, those increases will only impact hundreds of thousands of customers in the weeks ahead.

Unlike gas, broadband or interest rate increases, the cost of health insurance premiums only go up – or down – at the time of a policy’s renewal.

[ Ten cost-of-living changes that could save you €2,000 a year ]

That means those whose annual contracts end between now and the end of February – by far the busiest renewal period – are likely to see the annual cost of their premiums climb by anywhere between €150 and €550.

People on the most expensive plans are likely to see even more significant increases.

Health insurance is the bread-and-butter business of Dermot Goode of Totalhealthcover.ie, and he warns that while 2023 was “a terrible year” as a result of hikes which will have a cumulative impact of “up to 15 per cent”, we can expect “more of the same for 2024″.

Some of the same has already happened, with Irish Life Health recently rolling out another increase averaging 4.8 per cent. Given the way the sector works, we can expect the other insurers to follow suit.

The providers blame the ongoing cost-of-living crisis as well as healthcare-specific inflationary pressures and a greater demand for services in the post-pandemic period, but whatever is behind the spiralling costs, it is consumers who are paying the price.

“What this means is that all members must now shop around for better value cover to try and avoid these price hikes,” Goode suggests.

The shopping-around hymn sheet is one he has been singing from for a long time – and with good reason.

As we have said on this page on many, many occasions in the past, far too many people simply do not shop around when it comes to health insurance.

That fact was underscored by research published last week. In its annual consumer survey, the Health Insurance Authority (HIA) found that 71 per cent of the more than 2 million people with private health insurance have never moved provider.

The average length of time people have had a health insurance policy is 20 years, while the average length of time people have stayed with their current provider is 15 years, the survey said.

Almost 70 per cent have no plans to change their cover when their renewal is due.

The reasons cited for not changing included being happy with their current provider or believing that the cost saving would not be enough to entice them to switch.

According to the survey, 44 per cent of people acknowledge that it can be difficult to understand how health insurance works, along with the terminology that is used. However, just 15 per cent of those who took part in the survey said they would find it very difficult to change health insurance, which, the HIA said, “implies that most people do not find it challenging despite the proliferation of plans”.

HIA chief executive Ray Dolan noted this “consumer inertia”, and urged people to shop around.

The first thing you need to do is arm yourself with some facts. Call your current provider to see whether if they have a lower-cost equivalent plan to the one you are currently on

“Consumers don’t necessarily have to change provider – switching between plans with the same providers is also an option,” he said.

The lack of switching means that many people reading this sentence right now will waste hundreds – if not thousands – of euro over the next 12 months by accepting the status quo, rather than asking themselves and their providers some simple questions.

What is possibly even worse than all the wasted money is that many of those who are not proactive when it comes to monitoring their health insurance might even be denying themselves a higher level of cover.

The benefits of switching are enhanced for older people who tend to pay more for their cover.

How much more? Well, people over the age of 65 typically pay between 40 and 45 per cent more for cover than younger people. They are also less likely to switch, which puts them at higher risk of being on dated plans. It is also frequently the case that the older the plan, the higher the price.

It should not come as any great surprise to learn that we are not a switching nation.

[ Health insurance mix-up: Medical treatment of €10,000 not covered by woman’s policy ]

Most of us stay with the banks of our childhood or early adulthood, no matter what the cost or what they do to us, while well over two-thirds of people never change their gas or energy providers – even when doing so can see annual bills fall by hundreds of euro.

So, if we won’t change something as basic as our electricity provider when to do so comes with absolutely no consequences other than money saving, is any wonder most people never switch health insurance provider?

It is, after all, more complex – a lot more complex.

There are more than 300 different plans to choose from, all of which cover a dizzying array of potential conditions.

Do you want a private or a semi-private room? Would you be grand in a ward? Do you want access to all hospitals or can you do without the high-tech ones? Do you need enhanced cover for eyes or hips? How’s your heart doing? Are you happy to pay an excess? Is that excess per night or stay? On and on through the questions you might have go.

On top of all that, most of us are pretty risk-averse at the best of times, more so when it comes to our health. It is entirely understandable to be afraid of making a mistake by switching to a policy that does not cover what we need when we need it.

And of course, it is even more understandable for this fear to come into sharper focus if you have a pre-existing condition, and are concerned that by switching you might lose cover or have to wait for coverage to kick in.

The good news is that much of the complexity is easy to side-step and it is probably harder to get wrong than many people might think.

There are some very strict rules in place that give consumers protection irrespective of their age or their health issues.

A person who has a long-standing policy with Company A will have already been through their waiting periods and can switch to Company B and get all the existing cover they had with Company A immediately.

To put that more simply, you do not lose the cover you already have by moving from one company to another. If the plan on the table from Company B offers enhanced cover, you will most likely have to wait for that to kick in, but whatever you had, you keep.

Unlike with other forms of insurance, you cannot be penalised financially because of a pre-existing condition or because of your age. When it comes to health insurance, everyone is considered equal in the eyes of the law and in the eyes of the providers.

Ultimately, the questions customers should ask can be distilled down to three – although we are not suggesting you limit yourself to them.

The first question is: “Does the plan I am on offer me value for money?”

The second question is: “Could I get a comparable level of cover for less either with my current provider or one of its two competitors?”

And the third question is: ”How long have I been on the same policy?”

If the answer to that last question is more than five years, then you are probably overpaying by about 25 per cent.

If you are talking to a different provider, be upfront, bearing in mind you will not be penalised for honesty

How is that possible? Well, for starters, all providers like to introduce new plans to bedazzle potential customers, with the newer policies having more attractive pricing than older legacy plans.

So what do you need to know?

Well, for starters, timing is crucial. You can only change providers – without facing a financial penalty – once a year, when your annual contract ends. For most people, the contract terminates in the first three months of the year.

The first thing you need to do is arm yourself with some facts. Call your current provider to see whether they have a lower-cost equivalent plan to the one you are currently on and make it clear you are happy to take on some minor reductions, depending on the savings.

[ Cost of living: Drop your loyalty, laziness and fear and save up to €5,000 a year by switching ]

Your existing insurer will already have a complete record of all previous claims you have made, so the simplest question to ask is whether any new and cheaper plans would have covered all the claims that have been paid out over the last two years and to the same level.

If the answer is yes, then your choice is pretty simple.

If you are talking to a different provider, be upfront, bearing in mind you will not be penalised for honesty. Detail all the important elements of your existing policy, and outline any underlying conditions and procedures carried out. Have them confirm that any new and cheaper plan will cover everything you have had covered in the past.

It is also key to do this over the phone rather than online. Providers like it when we shop online, but by doing so we become responsible for all the decisions, be they good or bad. By talking to a company representative and asking the right questions, and insisting on having everything explained – and don’t feel bad about asking questions – you put the onus on them to make everything clear. Remember, calls will be recorded “for training and quality purposes”, so they can’t take you down the garden path over what is actually said.

According to the Health Insurance Authority, the number of people with private health insurance is rising, but not as fast as in 2022. As of last September, 2.48 million people in the State had private health insurance. That’s 46.8 per cent of the population.

Christina Prendergast of the HIA says that older people, especially, are overpaying by up to 42 per cent. “Some of the policies for people whose circumstances have changed are no longer relevant – for example, if you now qualify for GP card, or medical card, you don’t need the day-to-day cover for claiming back on GP visits. Some people have very high cover for private hospital beds in private hospitals, and they really aren’t wedded to that at all – they just want to know that they can get in somewhere if they need to. Some of the newer policies cover a lot for day-to-day cover, and can be a lot cheaper.”

She adds that in some circumstances, people can lose cover by not shopping around. “We have seen reductions in the cover on a small number of specific plans during the past year. If you are on a corporate plan that is tailored for a company or group of companies’ needs, and the company or companies decide that they don’t want to pay, for example, for full orthopaedic cover any more, then your plan changes at renewal. If you auto renew without checking your cover, then you may find a year later that you don’t have the cover that you wanted.”

She says the over-65s are at the highest risk of paying over the odds. “It’s not down to them being older/sicker necessarily and therefore being ‘riskier’ to insure. It is because they have never switched and are possibly on legacy policies which just might not suit them any more, or there are other very similar products in the market which cost less.”

She does say a caveat to this is that full orthopaedic cover generally does cost more, and for the majority of older people, full orthopaedic is a big consideration. Something like this increases the price of the plan as well.

When it comes to saving money, Dermot Goode says the “best advice is to decide on your budget and simply call your current insurer and ask them to find the closest equivalent plan to your existing cover that fits this budget. If you’re not happy with their recommendation, then you should repeat this process with the other insurers.

“As all the rates are set, this approach doesn’t compromise your negotiating position at all.”

Remember, there is no reward for customer loyalty in health insurance

—  Dermot Goode, totalhealthcover.ie

He points to other tips that could help to reduce your costs.

“Don’t be afraid to take on a small excess per claim (for private hospitals only) [and consider splitting your cover.” That means putting adults and children on different plans – there are no private hospitals for children so it doesn’t make any sense to have them on the exact same plans as you. and Check out any special deals such as discounted or free cover for children under 18.

“Consider reducing your accommodation cover [and] consider ‘network’ plans which cover selected hospitals for a lower premium,” Goode continues.

He also suggests that if dealing with all this it seems daunting, people should “have a trusted friend or family member do this for you”, and adds that for people who are “nervous about making changes, there are plenty of qualified advisers who specialise in this area who may be able to assist you”.

“The final piece of advice is never ‘auto-renew’, as this means your existing policy will simply roll over for another year. At the very least, call your existing insurer to see what other deals might be suitable for you.”

He says people should think of health insurance as they would car or home insurance. “Engage with your insurer as early as possible to get a better deal. Rates are spiralling, but there are new plans and deals coming on-stream almost monthly to suit all budgets and requirements. Remember that nearly 50 per cent of those who shop around get a better value plan with the same insurer. Even if a switch to a new insurer is necessary, rest assured that the legislation protects you in that you won’t need to serve all the new-member waiting periods all over again.”

He stresses the importance of disclosing everything to the new insurer in terms of your existing policy, medical history, pending treatment and cover preferences, and have them confirm everything to you over the phone so you can make an informed decision.

“Remember, there is no reward for customer loyalty in health insurance, [and] irrespective of whether you’re with the same insurer for five years or 25 years, each member will be treated the same and all claims will be assessed based on your policy terms and conditions effective from your last renewal date.

“Finally, if you have elderly parents or relatives who are stuck on the some of the older plans costing €3,000 per adult or more, do them a favour and help them to review their cover to get a better deal. They could be missing out on potential savings of up to €1,000 per adult.”