Written answers

Tuesday, 19 January 2010

Department of Health and Children

Health Insurance

9:00 pm

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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Question 360: To ask the Minister for Health and Children if she will give details of the updating of the health insurance levy; and if she will make a statement on the matter. [48527/09]

Photo of Mary HarneyMary Harney (Dublin Mid West, Independent)
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Private health insurance in Ireland is community rated, meaning that all persons pay the same price for the same product, regardless of their age or health status. This is to ensure that health insurance remains affordable for all, as older and sicker people incur higher claims costs than younger and healthier people. In a risk rated market, health insurance would become unaffordable for those with higher claims costs.

In order to support community rating, a form of risk equalisation/loss adjustment is required to compensate insurers for the higher claims costs of their older customers. The 2003 Risk Equalisation Scheme was struck down by the Supreme Court in 2008. In order to ensure that health insurance would remain affordable for older people, the Government introduced interim three year measures from 1 January 2009 to compensate insurers for the higher claims costs of their older customers. A more permanent, robust risk equalisation scheme to replace the interim scheme is now in preparation.

The interim scheme includes an age-related tax credit credited to private health insurers in respect of each person over the age of 50 they insure. The age-related tax credit, which is in addition to the standard tax relief of 20%, is applicable in respect of all health insurance policies and is funded by a stamp duty levied on private health insurers in respect of every person they insure. As required under the Health Insurance (Miscellaneous Provisions) Act 2009, the Health Insurance Authority (HIA) submitted a report to me in relation to the age-related tax credits and stamp duty it considered should apply for 2010.

I and the Minister for Finance have considered the recommendations of the HIA in the context of our respective roles under the legislation. It has now been decided that the levels which will apply for health insurance contracts taken out or renewed in 2010 will be as follows:

Age-related tax credit

2009 rate 2010 rate

50-59 €200 €200

60-69 €500 €525

70-79 €950 €975

80+ €1,175 €1,250

The stamp duty levied on private health insurers in order to fund the revised age-related tax credit will be as follows for health insurance contracts taken out or renewed in 2010:

€185 in respect of each insured person aged 18 or over (2009 rate €160)

€55 in respect of each insured person aged less than 18 (2009 rate €53)

The necessary changes to legislation will be made by way of the Finance Bill, along with other financial measures announced in the Budget. The changes to the interim scheme will be effective from 1 January 2010.

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