VHI subscriptions are to rise by 6.25 per cent from February 1st. The increase will be implemented as members renew their subscriptions.
Yesterday's announcement follows intense negotiations between the VHI and the Department of Health and Children. At one point the VHI is believed to have warned that it might have to limit the cover provided to members unless it received an increase.
An earlier application for a 9 per cent rise to apply from September 1st was rejected as part of the Government's anti-inflation strategy. The postponement of an increase until February will give a substantial number of subscribers a "holiday" until they renew their subscriptions.
The VHI claims that medical costs rise by 8 to 12 per cent a year.
Unlike its smaller rival, BUPA Ireland, the VHI must get ministerial sanction for subscription increases.
When its application was turned down, it is believed to have argued that it might have to limit cover by not extending it to the newest technologies or that it might have to eat into its reserves.
Limiting cover would have placed it at a disadvantage with BUPA Ireland.
The VHI's reserves are lower than the industry norm and the company has been trying to build them up.
The typical VHI member is in a group scheme on Plan B. For such a member the annual subscription will rise by £15.09 to £256.58 after tax relief, the VHI says.
The company is also planning to introduce a scheme to reimburse part of the cost of visiting a GP. However, that scheme will be separate from its main plans. People wishing to join it will have to pay an extra premium.
The implementation of the GP scheme awaits the passage of legislation through the Oireachtas.