January 4, 2024
Get the lowdown on Lifetime Community Rating and how it impacts your private health insurance in Ireland.
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Wondering what’s the deal with Lifetime Community Rating (LCR) in Ireland?
LCR can significantly impact your private health insurance premiums, especially if you enrol later in life. The Irish government introduced it on 1st May 2015 to ensure a balanced and sustainable health insurance system.
We’ll break down LCR to help you understand why it exists and how it affects your health insurance decisions.
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Lifetime Community Rating (LCR) is an Irish health insurance policy encouraging people to take out private health insurance at a younger age and retain continuous coverage.
Under LCR, if you’re 35 or older when you first take out private health insurance, you must pay an additional charge on your policy’s gross cost (aka gross premium or premium).
This extra charge is known as LCR loading or late entry loading.
You don’t have to pay the loading if you bought health insurance before turning 35.
For each year you’re over 34 (i.e., 35 or older) and don’t have health insurance, you must pay an extra 2% of your policy’s gross cost once you get insurance.
The loading is mandatory, and all insurers will apply it to their inpatient policies — policies covering medical treatment that requires hospitalisation.
They will apply the loading each year for ten consecutive years. After these ten years, you’ll pay the standard rate for your health insurance plan.
Use the following formula to calculate late entry loading:
LCR Loading = (Age at Entry - Threshold Age) x 2% , where:
Age at Entry is when you first take out private health insurance. It’s not your current age.
Threshold Age is 34 years (as of February 2024).
Suppose you’re 37 when you first sign up for private health insurance. The gross premium is €1500/year (before any tax relief or subsidies).
Your LCR loading = (37-34) x 2% = 6%
6% of €1500 = €90
Gross premium (after loading) = 1500 + 90 = €1590
Note: Depending on your life circumstances, you may get credits that reduce your level of loading or even be exempt from paying it. We’ll explore this later.
The maximum loading is 70%, which applies when you’re 69 (or older) and purchase health insurance for the first time.
Even if you first take out health insurance at 75, the maximum loading would still be 70%. This cap is in place to avoid overly penalising those who enrol at a much later age.
Don’t want to calculate loading?
Check out the LCR loading applicable from 34 to 69+.
LCR starts at 35 to give individuals sufficient time to establish their careers and financial stability to afford health insurance. The annual loading is set to 2% to encourage early purchases among young people while still being affordable for older new entrants.
Ireland introduced LCR as an answer to various issues with their health insurance policy called Community Rating. LCR doesn’t replace Community Rating; it just adds to it.
Let’s dig deeper into this:
Community Rating is a health insurance policy where everyone pays the same premium for a certain level of health insurance coverage, regardless of individual factors like age, health or gender — with exceptions for children, young adults (18-25 years), and some group schemes.
It aims to give everyone fair access to health insurance.
The health insurance premiums are based on collective risk, balancing costs between lower-risk individuals (typically younger, healthier) and higher-risk individuals (older or with health issues).
As low-risk individuals usually make fewer claims, their premiums support the higher costs of others, maintaining a cost-effective balance.
So, a steady flow of younger people into the system is vital for its sustainability and affordability.
And that’s where the problem lies.
In a community-rated system, a healthy 27-year-old and a 60-year-old with chronic conditions pay the same premium for the same health plan.
This can deter young, healthy individuals from buying insurance early, as they pay the same as those more likely to claim, leading them to delay purchasing.
Consequently, the insurance pool risks being skewed towards older or unhealthier individuals, increasing claim frequencies.
To manage rising costs, insurers might have to increase premiums for all — making health insurance more expensive.
Here’s how LCR solves both the problems with Community Rating:
LCR's higher premiums for late enrollees encourage early purchase, bringing more low-risk individuals into the pool.
This balance of young and old policyholders evenly distributes risk and keeps premiums stable and affordable, ensuring Community Rating’s sustainability.
The Lifetime Community Rating system offers exemptions and credits, impacting the loading on your health insurance.
Credits reduce your effective "age at entry," lowering the late entry loading.
These adjustments cater to circumstances like losing a job, returning to Ireland after living abroad, etc.
The exact details of LCR exemptions and credits may vary. So please verify it with your health insurance provider in Ireland.
Let’s explore various situations to understand exemptions and credits:
If you previously held private health insurance as an adult, insurers factor in this coverage history to potentially reduce loading.
Additionally, a gap of up to 13 weeks in your insurance won’t incur LCR loadings when you rejoin the private health insurance market.
The insurer will deduct these six years from your age at entry to determine your loading:
Chronological age = 50 years
Prior cover = 6 years
Age at entry = 50-6 = 44 years
LCR loading = (44-34) x 2 = 20%
So you’ll pay the same loading as if you first took health insurance at 44 years.
Generally, your private health insurance cover as a child won’t give you credit.
However, some policies may include provisions for paying children under full adult rates. This might qualify for credits, so please check with your insurance provider.
Health cash plans only cover routine medical expenses like GP visits, dental care, etc.
As they don’t provide inpatient cover, they aren’t subject to LCR loading and won’t give you any credits.
You may be eligible for credits for up to three years provided you have been:
Unemployed for at least six months since 1st January 2008, and
Receiving social welfare payments or being financially dependent on someone who has — since you became unemployed.
For example, suppose you’re 65 years old and had prior cover for ten years before losing your job in 2012. You also qualify for two years of credits.
Here’s the loading calculation:
Chronological age = 65 years
Prior cover = 10 years
Unemployment credits = 2
Age at entry = 65 - 10 - 2 = 53
LCR Loading = (53-34) x 2 = 38%
You’ll get credits for any uninsured period of time on or after 1st February 2019 if you meet both the following conditions — regardless of why you cancelled health insurance:
You had prior cover for at least three years. This needn’t be consecutive periods, but please check with your insurer.
You cancelled your health insurance cover for at least six months.
The maximum credit is for three years, which can be one or more periods of six months or more.
You won’t face loading as you enrolled in private health insurance before the threshold age.
However, when upgrading to a higher level of cover, you may need to serve waiting period (maximum two years) before those enhanced benefits kick in.
Until 30th April 2015, just before LCR loadings began, anyone could buy health insurance without extra charges. After this grace period, the only way to avoid loadings is to take out private health insurance before turning 35.
Your LCR loading will depend on the time spent abroad and whether Ireland will be your principal residence (primary home).
To verify this, insurers may ask for:
Evidence for the time spent abroad: Foreign rental agreements, utility bills, bank statements, visa, etc.
Evidence for your date of arrival in Ireland: Visa, passport, flight tickets, etc.
Evidence of a principal residence: Property purchase/rental agreements, tax receipts, work contracts, etc.
The good news?
If you lived abroad on 1st May 2015 and later moved to Ireland, you won’t face loading if you buy health insurance within nine months of making Ireland your principal residence.
But this is a one-time opportunity.
Once availed, the grace period won’t be available if you move abroad again (for at least a year) and return to Ireland for another period of principal residence.
However, you may be eligible for credited periods, which can reduce the LCR loading that might apply upon your return.
Typically, credited periods include:
Time spent abroad.
Times when you previously had health insurance — either in Ireland or another country.
Let’s look at two cases:
Whether you qualify for a credited period depends on how you answer these questions:
Were you living in Ireland on 1st May 2015?
Did you move abroad on or after 1st November 2018?
Did you live abroad for at least six months?
If you answered yes to all three questions, you’ll get credit for the time spent abroad.
You won’t have to pay loading on this credited period if you apply for health insurance within nine months of making Ireland your principal residence again.
If you move abroad and return a second time, you may receive credit for:
The credited period you spent abroad the first time.
Any qualified credited periods you had health insurance in Ireland.
However, you won’t receive credit for your second period abroad.
For example, if you:
Moved to Sweden for three years in 2020.
Returned to Ireland and applied for health insurance within nine months, receiving credit.
Spent two years in Ireland, then moved back to Sweden for a year.
Returned to Ireland and applied for health insurance again.
You’d receive credit for the first three years in Sweden and the two years you had health insurance in Ireland upon your return, but not for the year you spent in Sweden the second time.
If you belong to Ireland’s Permanent Defence Force (PDF) or the European Union’s Joint Sickness Insurance Scheme (JSIS), you won’t face loading if you buy health insurance within nine months of leaving the force/scheme.
You don’t have to pay additional LCR loading when switching health insurance providers in Ireland if you have no break in coverage for more than 13 weeks.
Remember: Your loading is tied to your personal insurance history, not to the specific insurer.
So, if you pay loading to one insurer and decide to switch to another, the new insurer will apply the same loading.
As an Irish employer, if you offer private health insurance to employees, the LCR principles discussed above still apply.
Employees joining a company plan would be subject to LCR based on their personal insurance history.
If a loading is applicable, who pays for it?
Typically, employers pay the entire premium, including any LCR loading.
What about BIK and TRS?
Benefit-in-Kind (BIK): It refers to non-cash employee benefits that have monetary value, such as health insurance.
Tax Relief at Source (TRS): TRS allows for tax relief on health insurance premiums at the source, meaning the relief is granted at the point of payment. For health insurance, this relief is typically set at 20% of the total premium. However, the TRS for Irish Life Health customers has been reduced to 19% from January 2024.
The employee faces a higher BIK because the value of the health insurance benefit, including the loading, is added to their taxable income.
This can be negligible for most people — considering the coverage and peace of mind they get from employer-sponsored health insurance.
On the other hand, the insurer applies TRS to health insurance premiums at the point of sale, reducing the premium that the employer pays. Since TRS is already factored in, the BIK is calculated on the net premium (after TRS).
Check with your insurance provider for the exact BIK and TRS break-up.
Want to offer private health insurance to your employees?
Kota is an employee benefits platform that partners with Irish Life Health to simplify health insurance and pensions for companies. Just set your budget, register your employees, and they can choose the plans that best fit their needs.
For those under 35 seeking an affordable solution to bypass LCR loadings, our Kick-off Plan ILH (starts from approx. €55.13/mo) is a great option.
Check out the other Irish Life Health health insurance plans we offer in Ireland.
Kota doesn’t apply LCR loading — only insurance providers, like Irish Life Health, do. But you can see the loading applied to your premium within the Kota app.
Some ways to minimise loadings on your health insurance premiums include:
Buy health insurance early: The easiest way to avoid loading is to take out health insurance before turning 35. The longer you wait, the higher the loading.
Maintain continuous cover: Gaps (more than 13 weeks) in your insurance cover, especially after age 34, can increase loading when rejoining.
Check for credits and exemptions: Inform the insurer about your health insurance history and any other circumstances that could give you credits/exemptions against loading.
Seek professional advice: Health insurance can be complex, and LCR rules may differ based on individual circumstances. Seek advice from a health insurance expert when assessing your options.
Contact the following authorities:
The Health Insurance Authority
Address: Beaux Lane House, Mercer Street Lower, Dublin 2 D02 DH60
Phone: (01) 406 0080
Email: [email protected]
Irish Life Health
Address: Irish Life Health, PO Box 13028, Dublin 1
Phone: (01) 562 5100
Email: [email protected]
Address: Eastgate Road, Eastgate Business Park, Little Island, Co. Cork, T45 E181
Phone: (021) 202 2000
Email: [email protected]
Address: IDA Business Park, Purcellsinch, Dublin Road, Kilkenny, R95 WKK6
Phone: (056) 444 4444
Email: [email protected]
Ireland’s Lifetime Community Rating may seem complex.
But its impact is clear: the earlier you enrol, the more you save.
So, don’t wait for your premiums to get loaded. Take charge, make informed choices about when to join, and secure your healthcare future.
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👋🏻 Hi I'm Aine, Head of Customer Success at Kota. Whether you're a Kota customer, a Kota user, or you're just browsing, I hope to help educate and empower those who want to know more about owning their own benefits, and building financial autonomy 📚
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