In 2015, a significant change unfolded in the Health Insurance world, one that continues to influence it today. This transformation, known as Lifetime Community Rating (LCR), was a strategic move aimed at increasing health insurance uptake among the younger demographic while managing the relentless increase in premiums. 

Before to the introduction of the LCR, a concerning pattern began to emerge. Many young individuals were voluntarily dropping their health insurance coverage, planning to return to the market at a later date when they anticipated needing it more. This directly contributed to the significant rise in health insurance premiums.

Community rated markets rely on the consistent increase of younger participants, who generally file fewer claims. This helps to keep premiums manageable for all policyholders. However, the shift towards purchasing health insurance at later ages contributes to escalated premiums due to the higher likelihood of claims from older individuals. Here, the concept of Lifetime Community Rating comes into play—a framework to encourage individuals to take out private health insurance from an early stage, essential to prevent a huge increase in premiums across the board.

LCR Explained

Those purchasing health insurance for the first time after the age of 35 encounter late entry loadings on their premiums. These loadings incrementally grow over a decade, emphasising the fact that earlier uptake leads to lower costs in the future. For example, taking out your first policy at 35 results in an additional 2% charge, while at 36, this escalates to 4%. Should you acquire Health Insurance for the first time at the age of 44, the annual premium increase amounts to a substantial 20%.

The need for advice

There are a number of conditions and rules around Lifetime Community Rating, and we’ve touched on some of them below. Advice should be sought from a health insurance expert in relation to these – we of course suggest that you talk to the Health Team in Lyons Financial Services. These include the below:

• There are several situations in which credit will be provided, such as for previous periods of health insurance and for some periods of unemployment.
• People who are migrating to Ireland have up to 9 months to take out health insurance, without a loading applying.
• If you had private health insurance previously, but let it lapse, the level of loading is reduced by the number of previous years health insurance cover.
• The maximum loading that can apply is 70% of the total premium. A loading of 70% only arises on very rare occasions, where a person aged 69 or older is purchasing private health insurance for the first time and then for a maximum period of 10 years.
• An individual insurer cannot make an exemption for you from the LCR loading – they cannot waive it.
• Switching from one insurer to another or from one policy to another does not affect the applicable loading. Loadings, if any, will continue to apply and insurers are required to supply each other with proof of an individual’s prior cover.

Lifetime Community Rating introduced a new level of complexity into the Irish health insurance market. Where confusion exists, so does the need for advice. We suggest that you speak to a member of the Health Team at Lyons at 01 801 5808 or query@LFS.ie to discuss the best route forward for you in relation to your health insurance needs.