Health insurance price hikes are having a huge impact on company-paid group schemes, many of which are already struggling with legacy benefit structures and old contracts of employment. Other schemes are relying on dated plans and, as well as potentially overpaying for cover, they may also be missing out on enhanced benefits for their workforce. All employers need to act now to mitigate the immediate cost increases but more importantly, create a strategy to control their health insurance costs moving forward.
The past 12 months have been particularly challenging for health insurance members in Ireland with multiple price hikes across all insurers. We’re expecting more of the same for 2024, mainly driven by the cost of claims. Many plans have increased by 15% or more, while all insurers have already announced further increases from January, e.g., Irish Life Health increased by 4.8% average from 1st January, VHI plans have increased by 7% average from 1st March, and Laya have announced their latest increase of 7% average from 1st April. All members and employers need to be wary of these averages as our analysis shows that many of the most popular schemes will be increasing by up to double the average figure. Revenue has also reduced the amount of tax relief on all plans from Laya and Irish Life Health which will impact all their members from renewal (maximum relief reducing from €200 to €190 per adult).
Given the spiralling costs, all employers need to schedule a full review of their company healthcare benefits well in advance of their next renewal. As part of this review, the following should be considered:
Watch out for overpayment – for those employers on the same health cover for 3 years or more, you may be insured on dated plans and therefore overpaying for benefits. As well as missing potential savings for equivalent cover, employees could benefit from lower benefit-in-kind (BIK) charges.
New corporate plans – many employers are on dated corporate plans in the mistaken belief these are still the best deals. In some cases, new plans are launched to the market (often by the same insurer under a different name), and these offer equivalent cover at a lower cost. In addition to cost savings, the new plans often include enhanced benefits which will benefit all members.
Optimum terms and conditions – many group schemes are not receiving the best terms from their insurer. A full review of your group scheme will check for maximum corporate discounts, new plans with similar benefits, full underwriting waivers, upgrade rule concessions, digital doctor services, and bespoke wellness programmes that may be available at no additional cost.
Drive employee engagement – to ensure your employees understand the benefits at their disposal, consider implementing a low-cost engagement programme to ensure all members know what’s covered and not covered by their plan. Health insurance is essential cover, but you want to make sure that your employees know how to use their benefits to avoid unnecessary shortfalls.
For those considering introducing new healthcare benefits, expert advice is essential to ensure that your benefit model is aligned with your strategic objectives. If necessary, a full review will ensure that any new health benefit matches the profile of your workforce, and that the employer is fully protected from exposures such as medical inflation, age loadings, and pending legislation.
For further details on any of the above, please contact:
Dermot Goode, Head of Healthcare Division
E: dermot.goode@lockton.com (opens a new window) or +353 87 9402771
