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Private Medical Insurance: A Buyer’s Guide

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Private Medical Insurance (PMI) is a popular employee benefit, offering staff access to private medical treatment and helping employers to reduce sickness absence. However employers and insurers are looking for ways to keep the cost of cover down in order to keep premiums affordable.

Healthcare analysts Laing and Buisson found in their Health Cover UK Market Report 2012 that the number of employees receiving employer-paid PMI had fallen by 1.3% and that spending on these policies was down by 2.9%, indicating that employers are moving to lower-cost medical insurance policies.

Another way employers are reducing their costs is by introducing excesses into their policies, whereby the employee is liable for the first part of any claim up to a set limit, for example £100. This can reduce costs and deter employees from making smaller claims. A £150 excess can reduce an insurance premium by approximately 3%, whilst an excess of £200 can reduce the premium by 5.5%. There is also an option where the excess is paid by a health cash plan provider, with several providers now offering this type of cover. For example, Medicash offer up to £200 per year towards PMI excesses on a £1 per week plan, and the level of benefit increases to £400 on its £5 per week plan.

Co-insurance is another option for employers looking to reduce their costs. With this policy, rather than paying an excess, the employee pays a set percentage of claims up to an annual total amount. Through a ‘Shared Responsibility’ option, WPA pays 75% of all eligible claims up to the annual limit. So an employee with a £250 annual limit who has a £200 consultation and then has a £2,000 minor operation, pays £50 for the consultation and then £200 towards the cost of the operation. The WPA will then pay all other eligible treatment costs in a given contract year.

Statistics

  • 5%-7%: average annual premium increase
  •   Source: Laing and Buisson Health Cover UK Market Report 2012

  • 10.9%: the percentage of people in the UK with private medical insurance
  •   Source: Laing and Buisson Health Cover UK Market Report 2012

  • 2.5 million: the number of people on NHS waiting lists in England
  •   Source: NHS Consultant-led referral to treatment waiting times statistics for England, 2012 annual report,  Department of Health

  • 8.5 weeks: average wait for admitted treatment in England in 2012
  •   Source: NHS Consultant-led referral to treatment waiting times statistics for England, 2012 annual report,  Department of Health

  • 87%: the percentage of employers with flex schemes that offer private medical insurance
  •   Source: Employee Benefits/Towers Watson Flexible benefits research 2012

  • 28%: the percentage of employers offering private medical insurance as a means to manage long-term absence
  •   Source: CIPD Absence Management Report 2012

Source: www.employeebenefits.co.uk

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