Whether you’re a business owner looking to keep employee downtime to a minimum or an individual hoping to boost your medical care options, it’s important to understand exactly what private health insurance is before signing on the dotted line.
Here, Healthcare and Protection Adviser Alex Mhandu clears up some of the misunderstandings that can often surround this product and provides key advice on finding the right policy for you.
Private health insurance is not a substitute for the NHS
One of the most common misconceptions about private health insurance is that it can completely replace the NHS. In truth, private medical insurance in the UK works to complement the NHS, rather than to take over from it.
“If you’ve got a health problem, you’ve still got to start off by seeing your GP. A private health insurance policy will then step in at the point of referral for specialist consultation and/or treatment, with any subsequent monitoring of a chronic condition then reverting back to the NHS,” Alex explains.
“So, say you’re drinking a lot and you don’t feel well, but your GP is unable to diagnose the problem. They will refer you to a specialist. Your policy is then activated, and a private consultant runs tests and finds that you’ve got diabetes. Having been diagnosed quickly and easily, and put on the correct treatment path, the healthcare policy then steps back and the NHS looks after you for regular diabetes tests. If, a little further down the line, you suffer from an acute issue related to the diabetes, such as poor circulation in your feet, you can activate the policy again and get that sorted.”
The situation is, however, different when it comes to international health insurance policies, covering people who travel to or live in countries without a national health service. “These policies have to pay for GP consultations, dental treatment, maternity costs, emergency cover, etc. – all the things we get automatically in the UK. So people outside of the UK need something totally different to those in the UK,” Alex clarifies.
The scope of healthcare cover is widening
The three main aspects of private health insurance policies are: in-patient cover, where you’re in a bed overnight; day-patient cover, where you’re admitted in the morning, have a procedure and a bed for recovery, and then leave in the evening; and out-patient cover, where you go to see a consultant and have diagnostic tests. But there are many added extras, too.
For starters, additional cover such as dental, optical and mental health is usually available, as well as extra therapies, such as physio. Some policies will also allow you to include travel options; the advantage being that medical history is disregarded, unlike with most standard travel insurance products.
Insurance providers have also been working hard to introduce new technologies and enhance key areas of care to make their services as quick, convenient and relevant as possible for policyholders.
“For example, many policies now offer a virtual GP facility as standard, because very often it’s the GP referral that is the longest part of the process,” says Alex. “So, provided you have the right technology to do so, you can use your phone or tablet to talk to a GP instead of fighting for an appointment at your local surgery.”
Many policies now offer a virtual GP facility as standard
Cancer care, which patients will usually need to call upon for many years following diagnosis, is another important area of focus for healthcare providers. “The NHS simply cannot afford some of the drugs that are available, so they may prescribe drugs A and B, but not C, which could make a difference to the patient. A private policy doesn’t take cost into account, however, so policyholders have access to treatment they perhaps wouldn’t normally be able to get through the NHS.”
The reasons for choosing healthcare cover are many and varied
“People have different reasons for choosing this cover,” says Alex. “They may want to be seen more quickly and at a time that suits them; or to be able to choose their hospital facilities; or to be assured of a private room with en-suite facilities, away from other patients’ germs and snoring! Some also appreciate being able to see the same consultant each time.”
Some [people] appreciate being able to see the same consultant each time
Private health insurance is particularly beneficial for businesses, and, indeed, the majority of Alex’s clients are corporate. “Business owners often choose to take out medical cover for their employees so they can get back to work as quickly as possible, should injury or illness strike. Company owners and directors, too, just can’t afford to be off sick for any length of time, so again the policy is there to step in. They may also need to arrange treatment at a time that’s most convenient for the business – it would be typical if a long-awaited NHS appointment turned out to be right in the middle of a 30-day business trip abroad!”
Private health insurance premiums increase over time
Your car insurance provider may see the passing of time as a factor in your favour, but a private health insurance provider will not! The older we get, the more likely we are to require treatment for acute conditions, such as joint replacements, and so the higher the insurance ‘risk’ we pose.
But this isn’t the only reason why healthcare premiums rise each year. Claims history will have a big effect on the price you pay, as well as medical inflation, which covers the costs associated with providing state-of-the-art new treatments and drugs; and Insurance Premium Tax, which is implemented by the government and currently stands at a hefty 12%.
Alex believes that cost is one of the key considerations for anyone thinking of taking out a private health insurance policy. “It’s important to be sure that you can manage the long-term financial commitment. For some people, that money will be better spent elsewhere. You’ve got to get things in the right order – there’s no point in having a medical insurance policy if you then can’t afford to pay your mortgage!
It’s important to be sure that you can manage the long-term financial commitment
“Someone in their 60s who pays for cover him or herself will likely be looking at a premium of more than £2,000, so it’s not cheap. But for businesses it costs much less per individual because you get a sort of ‘bulk deal’ – and when you take into account the increase in productivity and reduction in sick leave payouts that should follow, these policies can make a big difference to the bottom line.”
Switching provider isn’t necessarily a good thing
In general, we’re positively encouraged to shop around for better deals when it comes time for insurance policy renewal, so you’d be forgiven for thinking the same rule would apply to private health insurance. But Alex cautions against switching provider unless absolutely necessary.
“Premiums are a lot cheaper for brand new policies sold with a pre-existing conditions moratorium than they are with a switch of terms. And if you’ve even so much as received advice on something from your GP during the course of your current policy, it will count as a pre-existing condition from the point of view of any provider you subsequently decide to switch to,” he explains.
“We, therefore, try not to move people if at all possible, but we do get market feedback and then approach the insurance companies to try to get a better price for them.”
How to find private health insurance
As with any insurance product, the key aim is to find a policy that offers everything you need – and at a price you’re happy with. It’s important, therefore, to approach a few different insurance providers to see what they can offer you. You can do this direct, or, as Alex recommends, via an expert broker.
“Look for an adviser who’s a healthcare specialist, with qualifications in private health insurance from the Chartered Insurance Institute. A good place to start is the Association of Medical Insurance Intermediaries’ website, which has a search facility that you can use.
“If possible, try to deal with someone who is reasonably local to you, so that you can have face-to-face meetings if necessary,” he continues. “And above all, choose someone you trust, because you’re going to be talking about personal medical information. At Alan Boswell Group, for example, we have special settings on our computers to keep everything confidential and separate from other areas of the business. We also have a small, specialist team so that clients can always get hold of us.
“Once you’ve chosen someone you feel comfortable with, you can sit back and leave him or her to get on with the job of contacting all of the providers and coming up with a recommendation that’s tailored to your specific requirements.”