I propose to take Questions Nos. 881 and 882 together.
The Minister for Health is responsible for the legal framework governing the health insurance market in Ireland. This is a voluntary market operating under the principles of community rating, open enrolment, lifetime cover and minimum benefit. Community rating ensures that everyone can buy the same policy at the same price, regardless of age, gender or health status.
Community rating is enabled through the Risk Equalisation Scheme. Under the Scheme funds are redistributed in the form of credits to compensate insurers for the additional cost of insuring older and sicker members. The credits are funded by a stamp duty levy which is payable by health insurance providers for each health insurance policy issued.
Each year, the Health Insurance Authority analyses the market and makes recommendations on the credit and stamp duty amounts to the Minister for Health. The Minister for Health approves the updated risk equalisation credits and requests the Minister for Finance to approve the corresponding stamp duties required to fund the credits. Approved credits and stamp duty amounts should have a neutral impact on the Risk Equalisation Fund i.e. it should neither produce a surplus nor a deficit. The stamp duty levy relates solely to the operation of the Risk Equalisation Scheme.
Various options for resetting credits and corresponding stamp duties were considered. The level of credits and stamp duty approved was deemed necessary to ensure the continued sustainability of community rating and adequate support for insurers with higher-risk customers.
If the stamp duty levy was not approved this would leave a deficit in the Risk Equalisation Scheme Fund which would then either have to be funded through higher increases in stamp duty in future years or directly by the Government.
Private health insurance companies operate as commercial entities in a competitive market. The Minister does not have a role in the commercial decision-making of insurers and cannot direct pricing or coverage beyond prescribing minimum benefit requirements under the Health Insurance Acts.
Premium setting is a matter for insurers, who consider multiple factors including claims experience, benefit changes, and operating costs. While increases to stamp duties may affect insurance premium costs, stamp duty is a ring-fenced contribution to the Risk Equalisation Fund and supports the credits to enable fairness and sustainability in the private health insurance market.
There are currently 1,769,340 adults and 496,140 children on advanced plans, as well as 133,176 adults and 37,344 children on non-advanced plans. Stamp duty is not automatically applied to each health insurance premium. Insurers decide how to build it into their pricing structures across their portfolio of policy types. For this reason, it is not possible to answer the Deputy’s questions about additional costs per policy or financial impact on families. These decisions are commercial and vary by insurer and product.
To support policy holders, tax relief at source is available on medical or dental insurance policies under the provisions of section 470 of the Taxes Consolidation Act 1997. Income tax relief is granted at the standard rate of tax (currently 20%), subject to certain limitations, on the amount of the premium that covers benefits which are the reimbursement or discharge of health expenses within the meaning of section 469 TCA 1997 (health expenses tax relief).
