Written answers

Tuesday, 1 December 2009

Department of Health and Children

Private Health Insurance

12:00 pm

Photo of Ruairi QuinnRuairi Quinn (Dublin South East, Labour)
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Question 149: To ask the Minister for Health and Children if there is a €128 levy charged on all private health insurance policies; the reason this levy is charged; if there are circumstances in which persons are exempted from paying the levy; and if she will make a statement on the matter. [44103/09]

Photo of Mary HarneyMary Harney (Dublin Mid West, Independent)
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The Irish private health insurance market operates on the principle of community rating, where all persons pay the same amount for the same health insurance contract, irrespective of age, health status, gender or other issues. In order for community rating to work a system of risk equalisation is required, where insurers with a younger cohort of customers compensate those with an older cohort of customers. Following the decision of the Supreme Court in 2008 that the Irish risk equalisation scheme was ultra vires, measures needed to be put in place to ensure that private health insurance remained affordable for older people. The interim scheme provided for in the Health Insurance (Miscellaneous Provisions) Act 2009 consists of an age-related tax relief which is funded by a levy placed on the private health insurance companies.

The scheme operates by giving tax relief to private health insurance companies applied in respect of each insured person over the age of 50 as below: 50-59: €200 60-69: €500 70-79: €950 80+: €1,175 The scheme will have the effect of ensuring premia prices are community rated at net cost to the consumer, and that each person will pay the same amount, net of tax reliefs, for the same policy. The additional tax relief under the scheme is being granted at source to the insurer. It is granted on the basis that the insurer must charge the same net premium to all persons covered by a plan.

In order for the scheme to remain cost-neutral to the Exchequer, the age-related tax credit is funded by placing a levy on private health insurance companies for each insured person. For 2009, this levy is set at €160 per person, and €53 per child insured. It is important to stress that the levy is applied to the private health insurer, not to the individual customer. It is a commercial matter for each individual company to decide whether or how much of the levy they pass this on to their customers. In those circumstances, and in a community rated market where all insured people pay the same price for the same contract, it would not be possible to allow for any exemption from the levy for individuals.


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