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Healthcare Update April 2007

You will have read in previous healthcare bulletins there have been significant changes and developments in the Irish health insurance market since December 2006, especially centred around the initial closure of BUPA Ireland and subsequent take over by the Quinn Group. For an update on recent changes in this area, with particular attention being paid to Quinn Healthcare, VHI Healthcare, and other reforms in private health insurance.

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As you will have seen from previous bulletins there have been significant changes and developments in the Irish health insurance market since December last especially centred around the initial announcement BUPA Ireland’s withdrawal from the market and its subsequent take over by the Quinn Group.

Below is a synopsis of some of the major developments / changes announced in the market since then.

Quinn Healthcare

On the 17th April 2007, Quinn Healthcare was officially launched and completed the take over of the BUPA Ireland business in Ireland.

New business from the 17th April will be administered and underwritten by Quinn Healthcare but existing business will be administered by Quinn Healthcare and underwritten by BUPA Insurance Limited until some legal matters are finalised.

At present the plans on offer from Quinn Healthcare are exactly the same as BUPA Ireland and we wait to see if the plan and product offerings to members will change in the coming months as BUPA Ireland’s new owner becomes accustomed to the Irish Private Health Insurance market.

Quinn Healthcare has announced that there will be no increase in the existing levels of premium charged by BUPA Ireland and that there will also be a price freeze for 2007 benefiting both existing and new business.

Vhi Healthcare - VHI DeCare Dental (Benefit changes and Price increase)

For the second time in only six months VHI DeCare Dental has announced another price increase and a reduction in the dental benefits being offered to new business from 8th May 2007 and existing business from their next renewal date on or after the 8th June 2007.

This new planned price increase does not affect the Company paid Corporate Plan which increased by approx. 10% last November or the Corporate Plan available to Flex schemes. However, there is an increase of 20% for the Dental plans available to Voluntary Groups/Affinity Groups and Individuals.

The main benefit changes are:

Company Paid – Corporate Plan

• Annual per person maximum benefit for crowns €500 (previously no maximum)
• Annual per person maximum all other treatments €2,000 (previously no maximum)

Voluntary Groups/Affinity Groups and Individuals – Dental Plan & PRSI Plan

• Premium increase of 20%
• Introduce an annual excess of €100 for Major restorative work (crowns etc)
• Remove Orthodontic cover for all new business
• Introduce a 25% Co-insurance payment for Denture cover
• Remove benefit for Bridges for new and existing business
• Endodontic treatment (root canal) will reduce from 70% cover to 50% and the waiting period will go from 3 months to 12 months.

These changes will require those who currently have a VHI DeCare dental plan or are considering same to review the premiums and benefits now on offer to ensure that the plans meet with their particular needs and expectations.

Medical Expenses Tax Relief – Excess reduced

The Finance Act 2007 introduced a new excess in termsof tax relief for Medical expenses.

Previously a person could claim tax relief at their marginal rate of tax for any medical expenses not recoverable from another source (VHI etc) provided they reached an excess of €125 for individual expenses or €250 for pooled (family) expenses. The excess for 2007 and subsequent years has now been set at €125 for all circumstances.

The Finance Act 2007 is also abolishing the requirement that the taxpayer who pays the medical expenses has to be related to the person in respect of whom the expenses were incurred to be eligible for the relief.

Private Health Insurance – Reform measures

On 25th April the Minister for Health and Children announced that the Government had approved a number of reform measures for the private health insurance market in Ireland to create a “level playing field” and enhance consumer choice and competition.

This follows the publication of reports from the Competition Authority and the Health Insurance Authority (HIA) in January last and the Barrington Report published last month which all recommended a number of changes to the private health insurance market in Ireland.

The main reform measures being proposed are as follows:

• VHI derogation from solvency requirements to end in 2008 and that VHI now to be regulated by the Financial Regulator.
• A new VHI bill to be published that will, on enactment, allow VHI to establish subsidiaries to operate its ancillary services such as Swiftcare Clinics and Travel Insurance.
• Reduction of Risk Equalisation payments by 20% to encourage more competition (this was passed by the Houses of the Oireachtas on 26th April 2007)
• Introduction of “Lifetime Community Rating” designed to encourage people to take out health insurance earlier in life.
• A request to companies with payroll deduction facilities for health insurance to offer at least two providers and possibly request Company paid group schemes to put their health insurance provision out to tender every three years.
• Health insurers to provide members with clear statements of consumer rights and standardised renewal notices.

The implementation and timing of these proposed changes are yet to be finalised but we will keep you up to date of developments and the impact these will have on Private health insurance provision in Ireland, especially the impact on Company paid / Voluntary Company Group schemes.

Watson Wyatt (Ireland) Limited’s Healthcare consulting practice is uniquely placed to help you review your existing arrangements and provide independent advise as to how you might maximise your health insurance benefit offering and identify potential cost savings.

If you would like to find out more or get specific information as to exact benefit changes outlined in this bulletin or any specific areas covered please contact at the following:

Aongus Loughlin
aongus.loughlin@watsonwyatt.com
01 614 6872
087 283 4983