This story was first published in the Irish Mail on Sunday on 04/03/2012
By: Michael O’Farrell
Investigations Editor
THE State-owned VHI is to spend €23m on free health cover for staff past and present, including bosses who retired with massive pensions.
As thousands of ordinary people are forced to give up their VHI cover thanks to soaring premiums, the insurer admitted that anyone who joined the firm before 2002 will get free cover for life.
A VHI spokesman said the €23.7m represented an actuarial calculation ‘of the total future costs for providing this cover for the remainder of the retirees’ lives’.
Among those who qualify for the lavish benefit are ex-chief executive Vincent Sheridan, who had a salary of €455,000 for the last year of his tenure at the semi-state firm he led from 2001 to 2008.
Other executives who should qualify include all but one of VHI’s current senior management, most of whom are understood to earn over €200,000.
These include acting CEO Declan Moran, medical director Bernadette Carr, claims director John Creedon, corporate business director Tony McSweeney and HR director Michael Owens.
Both Mr Sheridan and VHI refuse to say who exactly received the lavish perk, or whether it also extends to their families.
For ordinary punters, VHI premiums are soaring: the cost of putting a family of two adults and two children onto its most popular plan, the One+ Plan, will be €2,250 per annum when the latest increase kicks in this month.
VHI has also started cutting a variety of procedures from many of its plans, including changing its criteria for allowing members access to Pet/CT scans used in the treatment of cancer.
Recent figures show that 65,000 people dropped their health insurance in 2011 – most of them, it is believed, due to soaring premiums. This weekend, VHI admitted that such concerns do not apply to current or retired permanent staff who began before June 2002.
Irish Mail on Sunday finance columnist Colm Rapple said the perk was ‘very unusual’. Many bluechip firms do provide health insurance cover for employees during their working lives but it is virtually unknown for the benefit to continue into retirement.
Since VHI’s retirement perk is ‘unfunded’, it is not provided for in the company’s pension fund and must be paid from VHI’s current operating expenses each year.
This means that millions of euro that otherwise might be available to help shore up the company’s reserves will instead go to well-off retirees.
The Government is studying a recent EU ruling which means it faces the prospect of contributing as much as €300m from the taxpayer to bring VHI’s cash reserves up to the level required of its competitors.
But the company, which is not subject to the Freedom of Information Act despite being entirely State-owned, refused to provide information that would have allowed the MoS to obtain an independent actuarial estimate. The information sought included the number of living employees qualifying for the benefit, the specific plans they are entitled to and whether spouses and families of retiring staff receive the perk too.
Former chief executive Vincent Sheridan refused to comment or indicate whether he was now in receipt of free health insurance.
‘I think that question should be answered by the company, not by me,’ he said when asked if he was in receipt of the perk.
VHI has dominated the supply of health insurance for decades and has 1.3m customers, more than half of all health insurance policy holders in the country.
While incomes are plummeting yet another VHI price hike of a further 9% will hit customers from the middle of this month. The cumulative increases mean that €300 has been added to the cost of insuring a family of two adults and two children since January 2011.
Price hikes aside, VHI has also been criticised for implementing a range of new punitive measures.
The firm now penalises people who cancel their policy midway through the year by charging a €50 administration fee and a percentage of that year’s insurance levy. Those who have chosen to stay with VHI but want to downgrade their policies also face new penalties.
VHI treats these clients as new customers – something that significantly reduces the level of cover for up to five years.
CEO Mr Moran said he was ‘acutely aware’ of the pressures facing customers but that the price hikes were essential to ‘ensure the organisation is sustainable’.
