The Health Insurance (Amendment) Act 2012 (the “Act”) introduces a permanent scheme of risk equalisation (the “Scheme”) in the private health insurance market. The proposed measures are intended to replace the existing Interim Scheme of Age-Related Tax Credits / Community Rating Levy which was introduced in 2009. The Scheme is proposed to take effect from 1 January 2013.
The measures introduced under the Act affirm the purpose of the Health Insurance Acts 1994 to 2011 (the “Health Insurance Acts”) by ensuring that access to health insurance cover is available to all consumers of health services with no differentiation made between them on grounds of age, gender or health status. The Act is also aimed at enhancing two core principles of the Irish private health insurance market, namely (i) intergenerational solidarity (ie, the younger and healthier individuals in society effectively subsidise older and less healthy people) and (ii) community rating (ie, all subscribers are charged the same premium for a particular plan irrespective of risk factors such as age, gender or health status and the premium therefore reflects the risk of the insured population instead of the individual policyholder).
Some of the key amendments introduced by the Act include the following:
- Section 2 broadens the scope for sharing the burden of the costs of health services between insured persons by extending the costs subsidy (which is currently only between young and old) to include the more healthy and less healthy;
- Section 2 adds a new criterion to be taken into account when achieving the objectives of the Health Insurance Act 1994 (the “1994 Act”), namely, the importance of discouraging registered undertakings from engaging in practices such as market segmentation which might have the effect of favouring the coverage of the more healthy, including the young, over the coverage of the less healthy, including the old;
- Section 4 gives the Health Insurance Authority (“HIA”) the power to make regulations to enable it to carry out its new functions and administer the Scheme and removes the requirement for the Minister for Health to present draft regulations for approval of the houses of the Oireachtas prior to making regulations;
- Section 5 provides for offences for contravening the provisions of the Act and provides that the HIA may bring summary proceedings where offences are committed. The provisions of Section 5 may come into operation 30 days after the passing of the Act;
- Section 7 extends the period of time that an insurer must maintain the price of a health insurance contract from 31 days to 60 days and amends the 1994 Act to prevent the varying of premiums by reference to health risk status, age, sex or frequency of provision of health services;
- Section 9 amends the notification periods for submissions to the HIA in respect of new types of health insurance contracts, changes to existing contracts and the withdrawal of products;
- Section 13 provides for changes to the specific factors that the HIA must have regard to in carrying out its evaluation and analysis of data provided by health insurers. These factors now include, average insurance claim costs in respect of sub-groups to include agent, gender and level of cover;
- Section 13 provides that the risk equalisation credits provided for under the Scheme will replace the tax credits available under the current Interim Scheme of Age-related Tax Credits;
- Section 13 also provides that the HIA will make recommendations to the Minster for Health on the applicable rates for risk equalisation credits. The Minister will propose the rates for the risk equalisation credits to be given effect through primary legislation and will consult in advance with the Minister for Finance. The Minister for Health will continue to make recommendations to the Minster for Finance in relation to the rates on stamp duty;
- Section 14 provides that any overcompensation made to an insurer will now be paid to the risk equalisation fund rather than to the Exchequer and that the timeframe for carrying out the overcompensation test will be a rolling three year basis;
- Section 15 inserts new sections into the 1994 Act which (a) provide for the Scheme; (b) set out to whom the Scheme will not apply; (c) provide for the making of payments from the risk equalisation fund; (d) empower the HIA to establish a risk equalisation fund and set out what will be paid into and paid out of the risk equalisation fund (including a provision that the Minister for Finance may advance funding to the HIA to ensure that it maintains sufficient moneys); (e) require the HIA to categorise each type of health insurance contract into advanced and non-advanced contracts to allow for appropriate risk equalisation credits and stamp duty payments to apply; and (f) provide that the Minister for Health will make regulations relating to the making of claims for risk equalisation credits under the Scheme;
- Section 17 provides for the appointment of authorised officers of the HIA who will have the power to secure enforcement of the provisions of the Act and to assist the Minister for Health and the HIA in carrying out their functions;
- Section 18 expands the functions of the HIA by requiring it to manage and administer the Scheme; and
- Schedules 3 and 4 provide for the applicable rates for risk equalisation credits for 2013.
Please click here for the full text of the Act.