Forced to pay out health insurance levy when cancelling policy

crazy 88

I recently started with a new employer who offer health insurance. I rang my current provider (a different insurance company) who said there is no problem cancelling but I am expected to pay out the government health levy for the rest of the year on the policy as they paid the entire health levy on behalf of me up front, even though I have been paying by monthly direct debits.
So even though the health levy will be paid through my new policy, Im still expected to pay it again on a soon to be non existent policy because the government wont give refunds. I was only on the old policy for about 2 months so there will be quite a hefty amount of 10 months of the levy to be paid.
Firstly, Im just wondering can insurance companies legally do this? It seems extremely unfair that consumers are penalised for what is essentially an issue between insurance companies and the government. And I wonder have insurance companies even made a genuine attempt to engage the government on the issue or just left it as a deterrent to stop people trying to switch. I checked my policy document and it does state this condition.
Secondly, my new insurance company has said that if i make any claims with them they will have to verify with my previous insurer that there have been no gaps in my insurance (depending on whether its a new or existing issues). So if I refuse to pay the levy can my previous insurer refuse to acknowledge the policy I had with them, thus making claims with my new insurer very difficult?

BazzaDP

danmci wrote: »

Firstly, Im just wondering can insurance companies legally do this?

Legally they can make you pay the whole amount. You signed a contract.

Allowing you to get out of that just by paying the cost to them is actually quite generous in my opinion.

danmci wrote: »

It seems extremely unfair that consumers are penalised for what is essentially an issue between insurance companies and the government.

Regardless that's what the government has decreed. Surely it's extremely unfair to expect the insurance company to be forced to shoulder the cost of this because, through no fault of theirs, you want to cancel?

crazy 88

BazzaDP wrote: »

Allowing you to get out of that just by paying the cost to them is actually quite generous in my opinion.

So you think its fair for health insurance companies to force people who are switching employer and/or moving out of the country for work or other reasons to pay out their entire contract? I understand they need measures to make sure people dont abuse the system but penalising people under the circumstances I listed above is fundamentally unfair. Are you supposed to wait until your contract period expires until you look for new work or leave the country? Im pretty sure most car insurances companies let you cancel for a reasonable administration fee.

BazzaDP wrote: »

Regardless that's what the government has decreed. Surely it's extremely unfair to expect the insurance company to be forced to shoulder the cost of this because, through no fault of theirs, you want to cancel?

No I dont think its fair that they should shoulder the cost. I think its unfair that they pursue consumers rather than the government for a levy which I'm now going to end up paying twice for the year. But like I said, this probably suits insurance companies to use as a deterrent for people trying to cancel.

hfallada

Well it's a levy from the government. If you cancel your credit card mid year. Would you expect to get back the stamp duty you paid on it? It's just how taxes work.

Maybe explain to your employer your situation and would they pay the remainer of your insurance for the year

crazy 88

hfallada wrote: »

Well it's a levy from the government. If you cancel your credit card mid year. Would you expect to get back the stamp duty you paid on it? It's just how taxes work.

taxes being paid twice? Im not quite sure that's how taxes work.
I could be wrong but i believe if you switch credit cards you dont have to pay the duty on the new credit card, as long as you have proof you paid for that year. And besides, the stamp duty on credit cards is tiny compared to health insurance levy.

Yggr of Asgard

When you purchased your insurance you entered into a contract with the insurer and have agreed to an annual contract. The fact that they might allow you to pay it monthly (either with or without a credit charge) is secondary.

If they now allow you to cancel it earlier than that but just ask you to pay the health levy than they are nice to you and any complain you have is not with the insurance company but the government which has implemented a levy in a way that it does not allow a refund to the insurance company and demands a full year payment even if the policy is not for a year.

As to your credit card example, if you cancel your credit card after the new tax year (even 1 day) you still will be liable for a full year of stamp duty. If you however swap issuer than you will only pay once. If you however don't get a new one than you still have paid the full year.

I would suggest you contact your TD and raise this with him, maybe he can help you, after all he most likely had voted this law in.

GerardKeating

danmci wrote: »

So you think its fair for health insurance companies to force people who are switching employer and/or moving out of the country for work or other reasons to pay out their entire contract? I understand they need measures to make sure people dont abuse the system but penalising people under the circumstances I listed above is fundamentally unfair. Are you supposed to wait until your contract period expires until you look for new work or leave the country? Im pretty sure most car insurances companies let you cancel for a reasonable administration fee.

Wow, they are just like phone companies, you sign a contract, and they expect you to follow the terms of the contract.

viper006

Its actually an exemption in most contracts you can leave an health insurance policy mid year if leaving to join a corporate scheme with an different insurer. I have done this over the years with Laya and VHI and never once had to pay a penalty.

In fact with VHI it was an easy and ringing up and speaking briefly with customer service rep, with Laya i had to email a request to cancel insurance policy.

If your leaving to go onto another work policy i would certainly escalate a complaint to a manager and explain the situation. They may ask for proof from HR in your new job you indeed starting into a corporate policy but as long as your not just leaving as ya cant be bothered with cover anymore you shouldnt have to pay any penalty.

crazy 88

viper006 wrote: »

If your leaving to go onto another work policy i would certainly escalate a complaint to a manager and explain the situation. They may ask for proof from HR in your new job you indeed starting into a corporate policy but as long as your not just leaving as ya cant be bothered with cover anymore you shouldnt have to pay any penalty.

yes that is exactly what I'm doing. My current insurer allows people to leave if joining a new employers policy. maybe this is the law and they have to allow people to leave under these circumstances, Im not sure. They accept Im leaving because of new employment but still insist I pay the levy

Whether you think they are being overly generous or not, the fact is that they are pursuing me for a levy/tax which I will have paid through my new insurer. They should be pursuing the government and not me. If they want to penalise me for leaving then they should be charging me an administration fee, and not trying to get fees from me which the government owe them.