The Government is to provide increased tax relief for private health insurance premiums for everyone aged 50 years and older, in a move that will affect 2.2m people.
But a levy of €160 a year will be applied to all health insurance companies for each adult they have on their books and €53 for each child, which may be passed on to customers.
It is part of a series of measures to make health insurance more affordable for older people.
The tiered tax relief will be €200 a year for those aged 50-59 years, €500 for those aged 60-69 years, €950 for those aged 70-79 years and €1,175 for people aged 80 years and older.
The existing 20% tax relief will apply to everyone with private health insurance.
However, regulations are to be introduced to penalise those who wish to take out health insurance for the first time, late in life.
It will mean those who seek health cover for the first time in their 40s or 50s will pay a higher charge.
The Department of Health says this is an interim solution for around three years while a new risk equalisation scheme is devised.
Minister for Health Mary Harney said without the changes, there was a real risk that older people would effectively face significantly higher premiums.
The measures are subject to the approval of the European Commission.
'Not in the interest of consumers'
Quinn Healthcare says it is extemely disappointed by the changes, claiming that they merely reinforce the dominant position of VHI.
In a statement, Quinn Healthcare says the measures were not in the interests of consumers.
The company says it is particularly concerned about the €160 levy.
It says the charge will be due for every policy holders, regardless of their level of cover, and is totally unfair.
Quinn Healthcare said it would be seeking legal advice on the measures.
Hibernian Health says it makes it more difficult for insurers to provide value for consumers.
The company's Chief Executive, Jim Dowdall, accused the VHI of using older customers as pawns in an effort to scaremonger and strong arm the Minister into making the changes.
Mr Dowdall also said he was worried that 'lower socio-economic groups' may not be able to afford cover as a result of the levy.
However, the Health Insurance Authority has welcomed the interim measures.
In a statement it says the measures are necessary to support the basis on which health insurance is provided at the same cost to all individuals regardless of age or health status.
Supreme Court case
The measures are aimed at dealing with substantial increases in premium charges expected shortly from the VHI.
The rises are down to the Government's loss of a Supreme Court case to protect risk equalisation, the Budget decision to increase charges for private beds by 20% and medical inflation.
Currently everyone with private health insurance receives tax relief of 20% on their health insurance subscription charges.
The relief is granted at source by their private health insurance firm.
The Government has sought approval for the new system from the European Commission, as it raises issues with regard to possible State aid for the VHI, which will be the main beneficiary of the changes, given its large profile of older members.
