Corporates need to watch out for a loophole in the Lifetime Community Rating legislation that could see their employees caught for heavy and irreversible loadings on their Health Insurance premiums. Under the recent Lifetime Community Rating legislation which came into effect from 1st May 2015, those who wait until aged 35 or over to take out Private Health Insurance will suffer a loading on the premium of any chosen plan based on their age.

However if you were in the system and on cover prior to that date you were effectively exempt from any such loading, hence the large rush to market up to April 30, 2015.

Certain exemptions have been given. For example, if you were working abroad at the time the legislation came into affect you have 9 months from the date of return to Ireland with which to take out Private Health Insurance and suffer no penalty. However there is a dangerous oversight for people going the other way.

If you are working for a company in Ireland and sent to work abroad on secondment, chances are your employer will remove you from your Irish cover and place you with a domestic insurer in your new place of residence. The issue that arises on return from secondment is that for the purposes of Lifetime Community Rating you are deemed to have been without cover on your return and as such, subject to full loadings as they apply. So for example if a 46 year old employee working for a multinational who was seconded to the United States for a year, would, on his return to Ireland, be subject to a 24% loading on top of the ordinary quoted premium. If the company is not aware of this, they may then feel obliged to carry this loading on the employees’ behalf.

Often when moving employees overseas, companies will have placed their staff on Global Insurance plans offered by the domestic insurer (traditionally VHI Global Plan in the case of GE) on the understanding that it was considered continuous cover with the domestic insurer and thus helped bypass another pitfall of Irish legislation, that of waiting periods. If one was off domestic cover for 3 months or more because they were abroad, one generally had waiting periods to re-serve on return to cover. Global plans were a way of getting around this as it was deemed that cover was continuous throughout.

It transpires however, that for the purposes of Lifetime Community Rating such cover would not be deemed as continuous cover and as such the 24% loading in the example above would apply. In the current multinational employment market where we see employees moving around more and more this is something employers should be aware of.

So how does a Company protect themselves against this eventuality?

Unfortunately the only solution at present is to retain the domestic cover for the employee while abroad, while also having to supplement with a Global or International Plan. In effect, double cover.

Submissions have been made to the Health Insurance Authority to see that this loophole is corrected but until then it is unfortunately a matter of ensuring that you don’t fall foul of the State’s mistake!

What I would suggest is that you identify a basic level of cover that you are happy to move overseas employees on to so as you are not paying full premiums simply to avoid this, but instead pay the minimum level of premium just to ensure continuous cover throughout.

For more information on Lifetime Community Rating and for a Loading Calculator please see our website http://www.irishhealthinsurance.ie/lifetime-community-rating-calculator.html 

Patrick Brennan

Director at IHI