Private Medical Insurance and Associated Insurances
What to master
Private medical insurance (PMI) is health insurance regulated by the Health Insurance Authority, with community rating, open enrolment, lifetime community rating (LCR) and minimum benefit rules. Insurers must charge the same price to everyone of the same age for the same cover and cannot individually underwrite. LCR loadings apply to people joining later in life, with credits for prior cover. Waiting periods apply to new members and to pre-existing conditions. Risk equalisation transfers funds between insurers. Associated insurances include cash plans, dental, travel and income protection; distinguish these from PMI. Consumers have cooling-off and renewal rights, and upgrades can restart waiting periods.
Traps
Assuming PMI replaces public healthcare. Applying individual risk pricing. Forgetting LCR loadings and waiting periods. Confusing cash plans with PMI. Ignoring that upgrades may restart waiting periods. Treating travel insurance as PMI. Missing that community rating means the same premium for the same age and cover.
Worked example
A 40-year-old joins PMI for the first time. LCR applies at 2% per year over age 35, so the loading is 5 years × 2% = 10%, payable for 10 years subject to the age-55 cap. Community rating means the insurer cannot charge more because of the individual’s health history.