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Is private health insurance worth getting for the financially squeezed late 20s and 30s?

People are reconsidering the merits of private cover amid sharply rising insurance costs

Health insurance: The problem with the self-pay approach is that people tend to underestimate how expensive a medical problem can be to remedy. Photograph: iStock

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Brianna Parkins
Wed Feb 14 2024 - 05:00

Your 30s are meant to be easier. You might have figured out what you want to do with your life, you’ve found a haircut that suits you, you’re on your way up the career ladder and you’re earning more.

But this cohort also find themselves squeezed by record-high rents, soaring property prices demanding higher deposits, mortgage repayment hikes if they manage to get on the ladder at all, diminished borrowing power and eye-watering childcare fees. Adding to this is the double-digit percentage increase in private health insurance costs over the past year, meaning the same policy is now costing hundreds extra for many.

The largest insurer in the market, VHI, has announced another price rise averaging 7 per cent for those renewing or joining in March on top of a 7 per cent increase last October. In addition, some plans have increased their excess and capped amounts on outpatient benefit claims, meaning customers could be paying more out of their own pocket.

The other two providers in the Irish market have imposed similar swingeing increases over the past 12 months.

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So is private health insurance worth getting for people in their financially squeezed late 20s and 30s?

There is no one size fits all answer, according to health insurance broker Dermot Goode of TotalHealthCover.ie (which is owned by Locktons). It depends on the individual’s financial circumstances and their health but also their risk tolerance in relying on savings instead of insurance.

Can you afford not to be insured?

“When rates start spiralling, that’s when people come to us to ask about the self-pay route,” he says. “But, for me, the only way that strategy works is if you commit to putting away the same €1,500-€2,000 policy cost every year for five-10 years and you never have to dip into it.

“If you put €1,000 in every year and after five years you have an ACL surgery, that could cost €5,000 all in or an orthopaedic surgery can be €5,000-€8,000 so one small procedure has your fund wiped out.”

Goode says the problem with this approach is that people tend to underestimate how expensive a medical problem can be to remedy. Tests, scans and repeat consultant visits could mean patients find themselves liable for thousands of euro “without even stepping foot in hospital” – just to get a diagnosis.

For example, a full colonoscopy at the Bon Secours Hospital can set a self-pay patient back €1,375.

But what about the public system? Could you get around these fees and health insurance policies by relying on the public system?

In theory, yes though without a medical card, you would still have to pay for GP appointments at the very least. However, it is the state of Ireland’s public health system that is the main push factor for people forking out to join the private system.

According to the last consumer survey from Ireland’s insurer watchdog, the Health Insurance Authority (HIA), 65 per cent of respondents “refute the idea that health insurance is not needed, and that the public system is adequate”.

The most common drivers for people having health insurance, after an employer paying for it, was “inadequate standard of public services” and “lack of access to public services/longer waiting lists”.

Aside from stories about horror waits in emergency departments, tragic missed diagnoses and trolleys in corridors, Goode says people are concerned “with the main elephant in the room of the public health system – the waiting lists”.

According to the HSE, there were 66,745 cases on the outpatient orthopaedics waiting list at the end of 2023. While 20,544 were expected to be on that list for fewer than three months, 11,878 people had an estimated wait time of more than 12 months, and 44 per cent of that number were expected to be waiting more than 1½ years for treatment.

Perceptions about the public system might be skewed according to age, with Christina Prendergast of the HIA pointing out that “among the 18-34 year olds, one in five mentions satisfaction with public services as the main reason for not having health insurance”.

Aside from access (knowing they can get care quickly), Goode says the other reason people get private health insurance is choice – knowing they can decide when, where and by who.

“With private cover, you have more choice around when you can go in and what suits you when it comes to family or work,” says Goode.

So when deciding whether private health insurance is worth it for you, it is important to examine what commitments you have or plans coming up or a spouse who could take over household duties when needed.

For those planning to have children in the future, wanting the same obstetrician throughout the whole process might be one factor influencing your decision to go private or public.

Other important influences on the decision lie in the terms and conditions. The big one is Lifetime Community Rating, which financially punishes those who only get private health cover in their elder years when they’re more likely to need more medical help. Those taking out insurance for the first time aged 35 and older will be charged an extra 2 per cent of their policy for every year they spent aged over 34 without health insurance.

The maximum loading is 70 per cent – applying to those taking out private cover at the age of 69 or older. The loading will apply for 10 years, after which you return to the standard policy price.

Goode says, for this reason, he commonly sees consumers taking out the minimum level of coverage required before they hit the cut-off age to get around LCR.

The other thing to watch out for is when you can actually use your benefits after purchasing your premium.

“Anyone buying health insurance for the first time or after a break in cover of more than 13 weeks may have to serve waiting periods before having full access to all of their benefits. The waiting period for inpatient care for pre-existing conditions can be a maximum of five years,” says Prendergast.

Goode says he often gets calls from younger people on a Monday after they pick up a suspected sports injury over the weekend seeking private healthcare to cover costs but he says the waiting periods mean “it’s a bit like taking out insurance after you crash the car”. For him, the best time to take out insurance is “when you’re healthy”.

What about kids?

One of the other issues of contention regarding coverage is whether it is worth insuring children. After all, as The Irish Times explored last year, they may be covered by school and activity insurance. GP visits for under-eights are free and while private hospitals have paediatric units, specialised children’s hospitals are public.

And then there’s the matter of age limits set by private hospital emergency departments. For example, the Mater Network, the Beacon and the Blackrock Clinic do not accept patients under 16 with the last of those three making exceptions at its Galway location for those over the age of five with minor injuries.

This is when families need to assess their lifestyles, future needs and budgets to decide if coverage is right for them. For those who can afford it but are on the fence, Goode recommends keeping some things in mind.

The first is access to out-of-hours or “fast clinics” offered by private insurers that see minor injuries taken care of without a lengthy hospital wait.

“If it’s something like tonsillitis, I don’t want to be on a waiting list with a child on antibiotics for months longer than necessary; I want to be able to decide who I see and where I go,” Goode says.

While private hospitals may not admit children into emergency departments, they often have paediatric departments that take care of planned procedures and consultations.

It’s also important to consider assessments for things like neurodevelopmental conditions. Support is often dependent on diagnoses, and wait times for autism and ADHD assessments in the public system are lengthy and they are expensive in the private system if you are paying upfront.

To keep the costs down, Goode says kids don’t need to be on the same level of cover as parents. If it suits the family’s needs, they can be insured at a much more basic level.

It also pays to check if your insurer has any incentives. For example, a VHI spokesperson says their child rates extend to offspring aged up to 21 if they are studying full-time, with the fourth and more kids free. Laya has reintroduced a Kids Go Free limited time offer from January 2024 on three plans (Essential Connect Family, Essential Health 300 and Flex 125 Explore) where you pay for one kid and the rest go free.

You don’t have to stay with the same insurer

Lastly, as always, it pays to shop around but it’s especially important when prices are rising and benefits are changing.

According to a VHI spokesperson, when it comes to caps on outpatient claims, “15 plans out of a total of 81 plans have been impacted” while “12 plans out of a total of 81 plans with a €1 day-to-day excess will increase to €10 excess”. However, the “€10 excess is an annual excess. It’s payable once per year so doesn’t apply after the first day-to-day claim”.

The company says the changes were brought in to “address some anomalies” and “ensure fair usage of benefits” while other benefits have been expanded in some cases.

Prendergast says VHI aren’t alone and other “insurers have made benefit changes over the past 12 months, including removing or reducing certain benefits”.

“However, these changes have not been as widespread as VHI,” she says.

While all insurers have put their prices up, Goode calls the change to benefits “a regrettable move we did not want to see or did not expect”.

He advises customers caught up in the changes to pick up the phone first before doing anything drastic. Better deals can be had by asking your existing company to find you a similar plan that may be cheaper or by switching to another insurer safe in the knowledge that waiting times on benefits or pre-existing conditions shouldn’t affect your coverage.

Ultimately, while it’s up to you whether you think private health insurance is worth it for you and your family, take the time to ask yourself how you feel about the public system, consider your future plans and your health needs, and be sure you have found the best deal before you make the decision.

VHILaya HealthDermot GoodeHealth Insurance AuthorityIrish Life HealthFor You