Joy at last …so don’t let VHI kill the party
Here’s how to benefit from the cost cuts – while dodging a major health (insurance) scare!)
We all breathed a sigh of relief this week as inflation eased to just 2.7% – a level not seen for years. Transport costs, including air fares, fell 4.5% in a month. And food prices finally dropped – a remarkable turnaround after two years of exorbitant hikes.
Energy bills are coming down too as two major suppliers announced sizeable price cuts in recent days.
And all of this feeds into the likelihood of interest rates falls sooner rather than later.
Then… we were brought crashing back down to earth with a massive hike in health insurance. So what’s going on? Are prices really on a downward slope? And what can we do about it. First the good news…
Energy costs fell sharply in recent days for nearly a million and a half people. Energia and Electric Ireland announced price cuts in both electricity and gas from March 1.
Electric Ireland leapfrogged to the top of the value table with its second price reduction this winter for more than 1.1 million residential electricity and gas customers.
Other suppliers may move again as wholesale prices fall – Flogas is due another cut. But as things stand, Electric Ireland has edged out in front for now.
It will reduce residential electricity and gas prices by 8% and 7% respectively effective from 1st March 2024.
Energia’s 300,000 customers will also get price cuts of 7.5% and 5% on gas and electricity.
This means that Electric Ireland’s dual fuel customers will see a combined annual reduction of €264.07, while Energia’s will benefit to the tune of around €170.
But everyone benefits from this new competitive edge in the energy market. And customers of other suppliers could save up to €1,175, depending on what deal you are on.
While these cuts are welcome, wholesale energy prices are still twice what they were a few years back, so we still need to chase savings where we can. So what should you do?
SWITCH AND SAVE
Firstly get onto comparison sites Bonkers.ie and Switcher.ie to see how much you can so easily save.
I’m still with Flogas and I could now save €987 over a year by switching to a dual fuel deal with Electric Ireland, according to Bonkers.ie (less a €100 fee for breaking my contract early).
But if switched and gas and electricity separately now, how much would I save?
I would save €470 and €519 respectively if I switched gas and electricity separately, a total of €989. That’s actually €2 more than I would pay with a handier ‘dual fuel’ deal, which saves me the hassle of two separate switches.
The savings would be even greater – up to €1,175 – compared to the dearest providers on the market, according to Switcher.ie
But they could also be less than mine if you are on a cheaper deal than the one I am on.
You can switch even if you’re still in contract – or on a fixed price contract – by paying an exit fee ranging from €50 to €100 per fuel type. That’s €100-€200 for a dual-fuel contract. So get onto your supplier and tell them you’re leaving. I did this with Flogas a couple of weeks ago and they offered me a sweet deal I was going to take until Electric Ireland came along with a more compelling offer.
A slight downside with Electric Ireland is that the exit fee from your contract is €100 – twice what it is for most suppliers.
And pre-paid gas suppliers have a much worse sting in the tail if you want to switch.
If you’re on a pay-as-you-go/prepay gas, a €200 charge will apply if you switch to a non-prepay gas tariff.
This fee is applied by Gas Networks Ireland and has not been factored into the savings calculations here. NOTE: Prices were worked out by Bonkers.ie based on the next year of paying current rates up to the point of decreases kicking in on March 1 with some providers.
Now the bad news…
VHI’S AT IT (AGAIN)
VHI has announced a swingeing 7% hike in its health insurance rates this week – for the second time in five months and third time in less than a year. This latest increase will be by an average of 7% (but can be much higher) and will impact all members joining or renewing from March 1. VHI is also introducing caps to benefits on some plans such as Company Plan Plus Level 1.3, PMI 3613 and Company Plan Extra Level 1.
Also coming in are new excesses for out-patient claims on corporate plans, which could lead other insurers following VHI’s move. So what should customers do? ‘The message is simple – do not accept these increases without engaging with the VHI and the other insurers to find a more affordable option. If in doubt, seek independent advice and let someone else do the research for you,’ says Dermot Goode, of Totalhealthcover. ie, part of the Lockton group.
‘For those with older family members, it’s essential now that you help them to research the market as these increases will simply be unaffordable.’
Check what plan they are on – as some have come in for especially severe hikes. Between €230 and €315 per adult will be tacked on per adult to the Health Plus Extra and Premium Care schemes. That marks a whopping €449 on Health Plus Extra and €693 on the Premium Care scheme since last March.
There are many thousands of long-suffering members on Health Plus Extra, as this is the popular but very old Plan B Options (insurers punish customers for inertia by racking up prices on older plans). It is looking very pricey now and you can get similar benefits for much less.
‘For a retired couple on dated plans such as Health Plus Extra, the increase since March 2023 will cost them just under €900,’ adds Mr Goode. ‘A couple on the gold-plated Premium Care scheme will have to find an additional €1,386 if they want to remain on the same plan.’
Families insured on the likes of One Plus Plan or Enhanced Care 350, will have to pay €504 (16%) & €440 (19%) respectively. And the popular Company Plan Plus Level 1.3 corporate plan will increase by €586 or 18%.
‘These are massive increases which will simply be unaffordable for many members,’ he says. ‘We are advising all those renewing on or after 1st March to urgently review their options with VHI and switch to an alternative insurer if necessary. The best advice is to decide on your budget for your family health cover and challenge the insurers to find you similar cover that fits this. Auto-renewing without checking our alternative options should be avoided.’
Unfortunately, the VHI doesn’t allow switching to other plans while under contract, unlike Laya and Irish Life Health.
RISE AND REPEAT?
This cycle of multiple health insurance price hikes looks set to continue in 2024 as the cost of claims keeps rising, Mr Goode says. It may even eventually reach US levels of pricing, where families routinely pay many hundreds per month for basic health insurance.
That’s a fact of life we have to face as healthcare costs spiral – albeit mainly for positive reasons. We are living longer, expect higher wages and benefit from extraordinary advances in technology that unfortunately cost a lot of money.
But for most other areas, economists believe that prices are coming down in the long term – and interest rates will soon follow.