SELF-EMPLOYED AND EAGER FOR BENEFITS... BUT AT WHAT COST?

QAs a self-employed person, I’m obviously pleased to finally be able to get disability benefit. Will I have to pay more PRSI? How do I qualify? And are other benefits on the way for the self-employed as Leo Varadkar promised as Social Protection Minister?

ADisability pension benefit is being introduced for you without the need for PRSI increases, at a cost of €23million to the Exchequer. This is a boost for 324,000 people who will be able to claim this pension should they become unable to work due to long-term illness or disability.

The benefit of €198.50 per week won’t be means-tested but it will be taxable. To qualify you must have:

260 paid contributions (Class A, E, H or S) since you began paying social insurance, and...

48 PRSI paid or credited contributions (Class A, E, H or S) in the last complete contribution year or the second-last contribution year before the date of their claim.

The move is part of a revamp of PRSI to improve its woeful record of providing value to workers who pay it.

I asked the Department of Social Protection (DSP) whether sickness and jobseekers’ benefits would be extended too, following the Taoiseach’s commitment and the recent completion of a review of social welfare by consultants KPMG.

A spokeswoman said the review found that the combined cost of introducing invalidity, illness, jobseekers’ and carers’ benefits for Class S contributions (the type paid by self-employed people) would be €118million in 2018, rising to €223million in 2020. By 2025 the cost would be €413million and, over the period of the review (55 years), the cost would rise to €1.3billion by 2071.

The review reckoned that unless the Exchequer pays for all of this, PRSI rates would need to increase by 94%, raising the Class S contribution rate from 4% to 7.8%. That sounds a lot, but it might actually be worth paying extra PRSI for – as most self-employed people agreed in a recent DSP survey. However, no decision has yet been made on it.

QMy wife and I are insured with VHI under Health Plus Extra, which is costing over €5,000 a year. We are both pensioners and are finding it difficult to keep up the payments. If we switch plan or insurer, can we get the same cover and will there be a waiting period? My policy is set to expire at the end of the year.

AYou can switch to another insurer (or another plan within the same insurer) without serving any waiting period as long as similar benefits apply.

If you upgrade to better benefits you would have to serve a waiting period of up to two years for hospital care and usually up to 26 weeks for out patient care depending on the insurer (Laya, for example, doesn’t have any waiting period for outpatient benefits).

However, this is only in respect of the upgraded benefits. So you will not lose out by switching at the end of your contract.

Every health insurer has plans known as corporate plans that generally offer the best value (see Tip of the Week).

You could even halve the cost of cover with similar benefits by moving to a better plan with any insurer, including VHI, if you pick the right one.

Dermot Goode of Totalhealthcover.ie recommends Laya as particularly good for osteo care.

However, you may also have special requirements – such as cover for scans in particular hospitals – so you should talk to Laya or VHI and go over your needs very carefully.

They are obliged to give you a straight answer if you ask the right questions.

There is a knack to this. Instead of asking them to recommend a policy, challenge them to find you ‘the closet equivalent plan to what you currently have in place, but at a lower cost’, says Dermot Goode, who charges €125 per telephone consultation if you want to tap into his advice.