VHI introduces cancellation fees

NuMarvel

From today's Irish Times:

VHI customers now face €50 fee for switching mid-contract
EITHNE DONNELLAN, Health Correspondent

THE STATE’S largest private health insurer, the VHI, has begun imposing fees on customers who cancel their insurance cover midway through the year.

Since May 1st it has been charging a €50 cancellation fee to those who switch insurers midway through their 12-month contracts, and is also insisting on clawing back from them part of the annual Government levy it pays on their behalf.

News of the charge emerged yesterday when the Health Insurance Authority, the industry regulator, published figures showing the number of people covered by private health insurance across the State fell by 14,000 in the first quarter of this year. This was in addition to 31,000 people cancelling their insurance policies in 2010 and 37,000 doing so in 2009.

The VHI said the first day a customer takes out a health insurance policy with the company – all of which are 12-month contracts usually paid in monthly instalments – it has to pay the Government a levy on their behalf. This is currently €205 for an adult and €66 for a child and the levy cannot be recouped from the Government, even if the customer cancels their policy.

The VHI said as it normally recoups the money from customers over their 12-month contract it was “only fair to our existing customers that any customer breaching their contract is liable to pay a pro-rata amount for the levy already paid for on their behalf” as well as an “administration fee” of €50.

The Government introduced the levy, which has led to a hike in insurance premiums, after the Supreme Court in 2008 struck down a risk-equalisation scheme designed to compensate insurers with a greater number of older people on their books. The money collected from the levy goes into a tax-relief scheme to subsidise health insurance costs for subscribers aged 50 and over.

Quinn Healthcare said last night it did not impose cancellation fees or attempt to claw back the levy when customers cancelled policies. It said this would serve to restrict movement and switching within the market.

Aviva does not impose cancellation fees or try to recoup the cost of the levy either.

The VHI stressed the cancellation fee is not imposed in some situations such as where a customer is made redundant or moves abroad, where a policyholder dies, or when a policy holder moves to a new employer who has a company paid scheme.

Declan Moran, director of marketing and business development at VHI, said if somebody cancelled their policy after four months, the VHI would want to recoup the amount of the levy which had been paid out on their behalf for the other eight months of the year.

He added that cancellation fees were not new to people. They were familiar with them from mobile phone and other contracts and while some may be unhappy about the VHI adopting them, most people understood contracts should not be breached, he said.

So it appears that VHI's approach to competition is.... charge 'em!

This is only applicable to customers who join or renew from 1st June 2011* (as per Rule 5a of their June 2011 rule book). So if you renew later in the year and switch before your renewal, they can't apply this rule as it wasn't applicable at your last renewal.

*The article says May, but that's when customer would have been told about it, with effect from June.

parsi

The secret is in the term "contract".

Leave your mobile contract and you'll pay,
Leave your UPC contract and you'll pay.

Interestingly Aviva increased their premia by over 14% last week...

caitrionaanne

12 month contract has always been in the T+C's for VHI and by allowing people to cancel and change cover during this contract before was actually oout of VHI's good will really. Ya have to remember that they are a business as well and need to have enuf money coming in to pay claims for customers. If people keep cancelling during a contract VHI are straight away at a loss cos they paid the levy for that person. Personally I dont agree with the cancellation fees, especially when it comes to genuine people who really cant afford it but I can also see VHI's point of view. All I can say is god love the poor guys working in the call centres!!!

NuMarvel

A follow up from yesterday's Irish Times:

Minister criticises VHI €50 customer cancellation fee
MARY MINIHAN

MINISTER FOR Health James Reilly has reacted angrily to the imposition of fees on VHI customers who cancel their private health insurance cover midway through the year.

Dr Reilly said the State’s largest private health insurance provider should concentrate on reducing its cost base instead of “penalising” customers who chose to move to a different company.

Since May 1st, the VHI has been charging a €50 cancellation fee to those who switch insurers midway through 12-month contracts. “I’m very concerned about this. I mean, we all know that the fact that VHI is so dominant in the market is creating problems for us and this does nothing to address this,” Dr Reilly said.

“I would much prefer that the VHI address its cost base rather than penalising customers who chose to move.”

Speaking after addressing a conference in Dublin, Dr Reilly said he would look into the matter.

He acknowledged some good work had been done in recent years on reducing the cost base. He praised the outgoing chief executive, Jimmy Tolan, for his work in that regard.

The VHI is also insisting on reclaiming from former customers part of the annual Government levy it had paid on their behalf. The VHI has said the cancellation fee is not imposed in all situations.

The company’s director of marketing and business development Declan Moran said most people understood contracts should not be breached. Similar types of cancellation policies applied to mobile phone customers, he added.

I understand what everyone is saying about a contract, and normally I'd agree. However, VHI is still the largest insurer in the market, primarily down to inertia. It shouldn't be allowed to put up extra barriers to switching until the playing field is more level.

However, regarding VHI having to pay the full year levy, I think the Government needs to change that. If someone changes credit card providers mid year they only have to pay the Government levy once, so something similar should be enforced here.

broker2008

parsi wrote: »

The secret is in the term "contract".

Leave your mobile contract and you'll pay,
Leave your UPC contract and you'll pay.

Interestingly Aviva increased their premia by over 14% last week...

No they didn't. It was 9 weeks ago.

bigsaver99

Vhi are now forcing people to pay the full premium for the year if they renewed before the 1st of may

Vhi will amend their rules booklets on 1 June 2011 to include the penalty payable upon breach of the 12 month contract.
Customers who wish to cancel their contract mid-term and have had no claims in that contract year, will be charged a €50 administration fee plus the health insurance levy pro-rata for the remainder of the time left on the policy ( the health insurance levy is currently €205 per adult and €66 per child).
For customers who have had claims in that policy year, Vhi will seek the total outstanding premium.

This was updated today on the HIA website

Note: All customers with a renewal date prior to 1 May will be liable for the full policy premium upon cancellation. Customers with a renewal date from 1 May will be affected by the changes made to their rules booklets on 1 May where Vhi will seek a penalty upon cancellation of the contract rather than the full premium, as long as no claims have been paid. Amendments to rules booklets on 1 June further clarify previous changes made on 1 May which states a penalty will be sought upon breach of contract.

This is extremly worrying as it does not allow for competition in the market, if the vhi had operated efficiently it wouldnt have to do this to its members, but vhi will lose a lot of members next year because of this as most people nowadays who are struggling financially dont want to be tied into a contract especially for something as expensive as healthcare.

lynn f

Have just tried to cancel policy with VHI and told about breach of contract. never received any notification about this from VHI. Have been advised to go to ombudsman. If everyone who has this problem contacts ombudsman then surely something has to be done about VHI trying to charge full premium for cancelling before renewal date. The whole point of changing insurer is for better deal/less cost!

bigsaver99

I work in the healthcare business and iv contacted various different people about this and apparently vhi have put this into members rules booklets but did not notify them of this. The Hia who are supposed to help people are siding with the vhi as I had many questions for them and they only fobbed me off, partly because they dont have a clue in there,

Any query I have for them all I get is a half arsed answer and the ombudsman would have spoken out against this if he gave a ****.

I didnt hear newstalk today but I have heard that this topic was brought up today,

VHI will suffer for this in the future if the other insurers dont follow suit now aswell because it costs them money but for something like healthcare which is so expensive it really hinders fair competition.

lucky46

I will be leaving the VHI next year and keep my eyes and ears open for a way out in the running year.
Can we all think of a way to revoke these draconian measures to their innocent clients.

My renewal was last March and on the 'Consumer Rights Statement' they sent me is the question
'Can I change my health insurance plan or insurer at any time?'
Answer: 'you have the right to change your health insurance plan, or insurer, without penalty.'

Yet, they are now saying that I will have to pay the full premium if I'd want to leave...

broker2008

http://www.vhi.ie/pdf/products/memberhbook_Jun11.pdf

Section 5A.

I haven't heard of one court case and if they did................:eek:

lucky46

If I'm uninsured for 13 weeks, they will let me pay the full amount during a 'waiting period', when they only pay out for accidents. After that the excess is so high that, in my situation, they never had to pay out in 15 years.
When something serious did happen I received the medical card!! Still paying VHI though because of the waiting period...
The government is taking 205 euros per year,per adult, (66 euros per child), this is included in the premium. Is around 45% of the Irish population covered by private health insurance?

Who would you ACTUALLY be taking on?

broker2008

The government pass the levy on. The majority goes to VHI as they have most of the old folks. It is effectively a subsidy to VHI yet they charge bigger premiums for the older people for the plans most suitable for their needs.

whitefeather

hi all, my husband rang the vhi yesterday to cancel a policy that we have been struggling to pay since he lost his job two years ago. he has a condition which is dormant at the moment but nonetheless we wanted to stay in vhi for him. but things got too hard to pay and we decided we had to cancel. kids going into secondary school etc costs up through the roof so we no longer have funds for vhi. our policy was renewed in july and i know in hindsight we should have cancelled then but we were trying to keep it. Now they want a cancellation fee of €560 euro plus extras which will bring it up to around 600 for cancelling policy. when my husband told the girl from vhi on phone that we wouldnt have the funds in the account she then went into legal mode and sprouted off a load of rules etc , the main one being they will take legal action against us if we dont pay the severence penalty. He then asked her if we could come down to a cheaper policy because the one we were on has gone from €180 to €220 monthly. She said no, because we had made a claim of €250 for doctors visits etc throughout the year. He asked her what are people supposed to do if their circumstances change, like ours did, she then went into legal mode again. He said he would ring her back and let her know for sure.
I rang my bank then to see if i could cancel the direct debit to the vhi and the lady i spoke to was sympathetic, she said they are all but blackmailing people to stay in vhi and she would cancel the direct debit immediately so that the vhi cannot withdraw any cash out of our account at all.
We have been with vhi for 15 years. We have never had any serious major claims and always without fail had the funds there to pay their monthly fee. I am sickened, and pretty angry with the whole system. Do we try and get the money from somewhere to pay their penalty or do we just ignore the letters we will probably get threatening legal action from the vhi?

broker2008

My earlier post refers. I have seen loads of these letters go out but have yet to see actual proceeedings issued. If anyone knows differently please post.

Your post refers to so many people, with them years, paid them for years, little or no claims, won't let you switch to lower plan etc. No flexibility. One thing that doesn't sound right is that you havehad 250 euro worth of doctors bills since July - if this is the case offer to take this amount off the refund. Another option is Plan P which allows you have minimum cover and they will waive waiting periods if need arises. This is available at their discretion if you have lost your job recently and supposedly for a year BUT you will be tied into VHI for upto 10 years depending on your age.

Personally, I would ignore the letters.

If you subsequently take out health insurance within 13 weeks of cancelling, there will be no waiting periods.

Let us know how you get on with the V(oluntary) H(ealth) I(nsurance) !

kyetreeohna

I just rang VHI to cancel my Plan B and sign up for their One+ plan. The guy told me there was no way I could do this and because I renewed my contract in June, I would have to pay Plan B till June 2012. Surely there is a way out of this? Has anyone else here cancelled? Should I cancel my direct debit and switch to a different insurer or will they make me pay till June next year? Thanks in advance

bigsaver99

Hi unfortunately you will not be allowed to change unless you pay a cancellation fee to the VHI €50 and a pro rata amount for the government levy.

Their are thousands out their like you who cannot change due to this but most people refuse to pay and leave and join Quinn Healthcars essential choice with a 10% discount online of aviva level 2 hospital but thats expensive.

Whatever about not being able to cancel your policy mid year not being able to change it at all is totally ridiculous

Bigsaver.

broker2008

bigsaver99 wrote: »

Hi unfortunately you will not be allowed to change unless you pay a cancellation fee to the VHI €50 and a pro rata amount for the government levy.

Their are thousands out their like you who cannot change due to this but most people refuse to pay and leave and join Quinn Healthcars essential choice with a 10% discount online of aviva level 2 hospital but thats expensive.

Whatever about not being able to cancel your policy mid year not being able to change it at all is totally ridiculous

Bigsaver.

Essential Choice is not a comparable plan to Plan B, not even close.

broker2008

kyetreeohna wrote: »

I just rang VHI to cancel my Plan B and sign up for their One+ plan. The guy told me there was no way I could do this and because I renewed my contract in June, I would have to pay Plan B till June 2012. Surely there is a way out of this? Has anyone else here cancelled? Should I cancel my direct debit and switch to a different insurer or will they make me pay till June next year? Thanks in advance

Cancel the direct debit and then take out new plan online.

bigsaver99

Sorry meant to say essential health or essential plus was rushing at the time

okiss

To anyone with health insurance I would look up the hia.ie website a few weeks before your insurance is due for renewal to find the best insurance possible for your needs.
This is some information you should know which can keep costs down
Children can be on a different plan to parents - child will not be treated in the mater private ect so why pay for the cover here for them.
be willing to pay an excess
look at a policy with a €1 excess for out patient - ie doctors, a&e, consultant visits ect so you can claim some money back.
Ring your insurance company and ask questions if you don't under the cover for a particular policy. Be aware of policy's which pay 80% cost of certain operations which could leave you with a bill of €0000 to find - get a policy which says you have to pay an excess of €x per night or per visit.
No insurance policy will pay the full cost of going as a private patient for maternity and you have to be insured for a year before you can claim on for maternity.
Also vhi offer a plan P - this only pays the public hospital fees we all pay for a stay in hospital and this is set at a max amount per year. It won't cover consultant fees, private maternity ect. This may be offered to you in the case of unemployment.
If you can't afford health insurance the hsf health plan could be worth looking at as you can claim money back for health costs but it is not health insurance see hsf.ie for more information.

OwenM

I just got a snotty letter from VHI demanding €305 for breach of contract.

I changed jobs in November, my premiums were paid by my employer, and got a couple of letters in the mean time asking me to pay the premium that became due.

I didn't espond because my new employer has a scheme with another company.

As far as I can make out I never signed any contract with VHI, nor did I ever pay them any money so that would mean I don't have a contract with them?

Opinions?

Tks,
Owen.

manbren

I've been getting similar letters, I changed job in December, they won't be getting a penny off me. Court case or legal action threats won't make a difference either.

OwenM

I rang them, they asked if my previous employer had been paying it or if it was subsidised by them, told them they were paying it - which is true and they backed off and said they would send a letter to clarify. So if you are paying any of it then they will try to get this money from you.

The chances of them going legal, for the amounts involved, are slim but they might just simply sell the debt to a debt collector? That would be a pain in the swiss roll. If you are in the same position as me then I would ring them.

broker2008

Not that I would wish it on you but I would love to see them getting debt collectors in and then watch what would happen to their customers.......
VHI is not regulated by the Central Bank for health insurance. They are meant to be voluntarily signed up for the Consumer Protection Code http://www.centralbank.ie/regulation/processes/consumer-protection/Documents/Consumer%20Protection%20Code%202012.pdf

ygaurav

Hi All

I am now in same boat. I have cancelled my direct debit for my Vhi policy and they have send me letters asking for money.

Has anybody been able to resolve this issue? Did you speak to VHI to solve this issue? Do they keep sending letters to your address? (They even rang me twice yesterday)

If there is an way out of this, please let me know !

cheers

evolving_doors

ygaurav wrote: »

Hi All

I am now in same boat. I have cancelled my direct debit for my Vhi policy and they have send me letters asking for money.

Has anybody been able to resolve this issue? Did you speak to VHI to solve this issue? Do they keep sending letters to your address? (They even rang me twice yesterday)

If there is an way out of this, please let me know !

cheers

Any update on this , might be in the same boat myself

chris85

ygaurav wrote: »

Hi All

I am now in same boat. I have cancelled my direct debit for my Vhi policy and they have send me letters asking for money.

Has anybody been able to resolve this issue? Did you speak to VHI to solve this issue? Do they keep sending letters to your address? (They even rang me twice yesterday)

If there is an way out of this, please let me know !

cheers

Cancelling the DD means nothing. That only means you stopped paying for the policy, it doesnt mean the policy was cancelled. You need to cancel the policy directly with VHI to do this as mentioned in their terms and conds.

rickjames16

I signed up to glo in April but never cancelled vhi so just have discovered iv been paying the two ! Spoke to both yesterday and neither seemed willing to cancel .. Both claim to have paid my government levy and neither mentioned a refund ? Any advice ?

timbritnell

Rickjames16
We thought we had cancelled with vhi but we just found out they have been taking out a direct debit for a year. We have called them and they have told us we can't have a refund even though we can show we had another health plan and have been claiming with them! If have managed to resolve your issue please let me know.

caitrionaanne

To be fair, how does the insurer know you want to cancel your policy if you don't tell them!! They aren't under any obligation a give a refund. They have been on risk for the duration of that time and would have provided cover had it been necessary. All outlined in T&C's

rickjames16

To be fair that's fine .. But why try and charge me 250 euro when I'd given 400 already and there will never be a claim as I am with glo

wmpdd3

There could be some serious consequences of this, I think if you are insured by 2 companies that they are both liable for the claims, but only be half. So if GLO find out you were insured by VHI they may claw back some of the claim.

I've only heard of this happening with car insurance though.

caitrionaanne

I think you are correct wmpdd3. There is something with that when a person is dual insured.

Rickjames16 - i think the €250 you mentioned they were charging is probably a breach of contract fee. A friend of mine had a similar issue recently and it was all in the T&C's. I think all the health insurers charge for breach of contract AFAIK. What you paid so far would be towards cover. Its not ideal. I know my friend got shock of their lives with it!