In sickness and in health, going private could be remedy

Conal Gregory looks at private medical insurance

Health care has become a political football with the different parties vying to provide the most efficient system. Increasingly individuals accept that they wish to ‘top up’ the state system, notably for acute conditions.

Despite the enormous sums expended by the NHS – rising 5. 70 per cent annually in real terms (above inflation) – from 1997/98-2010/11, there will always be demand that cannot be met. Research by Saga last month revealed 39 per cent of over 50s questioned believe the NHS is likely to be worse or much worse within five years despite the Government’s proposed radical reforms.

Sign up to our Business newsletter

Sign up to our Business newsletter

This age group is a heavy user of the NHS and so its experience counts at a time when hospital waiting lists have hit a three-year high, according to The King’s Fund.

‘Acute conditions’ covered by private medical insurance (or PMI for short) mean a disease, illness or injury that is likely to respond quickly to treatment. Cancer and chronic (long-term) conditions may also be covered.

Most PMI is taken out for:

n reassurance, knowing that treatment will be available quickly if illness or injury occurs;

n choice of location, specialist and time of treatment;

n privacy of en-suite room and some home comforts.

Medical treatment, even private care, usually starts with a referral from your GP or a specialist. It’s vital to call your insurer to check that the treatment will be covered and to stay in contact at each stage.

PMI is not designed to replace the NHS but to work alongside it. Some services – notably accident and emergency – are not available at most private hospitals.

Start by asking your employer if they offer PMI. If it is available, check if the policy is comprehensive and price competitive. If buying your own, price should not be the key element as you may end up with a low cost policy but with very little cover.

Consider those factors that are important to you including access to good quality hospitals located close to your home. Ask if there is any limit on the maximum benefit in any one year, if the plan pays for diagnosis and if out-patient consultations are included.

Medical insurance can be complicated and the best option is to ask an experienced independent financial adviser. As an example, AWD Chase de Vere in Leeds (0113 242 4446) research the market for the financial strength of providers, range of hospitals covered and key product features.

Currently, it positively likes Aviva Healthcare, AXA PPP Healthcare, Bupa and PruHealth. Among the factors it considers are no claims discount, option to extend available hospitals and if world-wide repatriation is covered.

A disability will not invalidate PMI. As with other pre-existing conditions, advise the insurer who may not include cover for that treatment.

There are ways to reduce the premium, including:

n level of excess (the first part of any claim paid by the policyholder);

n co-insurance where you agree to pay a set percentage of any claim and the insurer pays the balance until you have paid an agreed annual amount;

n a commitment to health including regularly exercise and stopping smoking;

n having initial treatment on the NHS (such as for the first six to 12 weeks from diagnosis).

Bupa is the UK’s largest PMI provider, employing 52,000 and with sales of almost £7.6bn last year. It serves more than 11m customers, many in staff schemes (020 7506 2000).

Aviva is the in-house provider for AWD Chase de Vere, one of whose advisers, Elizabeth Hastings, 33, pays around £120 monthly for a family policy. This covers her husband and two children, aged three years and 10 months. She took out PMI eight years ago to “provide security” and gain medical advice as fast as possible.

Health cash plans provide another way forward. They were developed in the 19th century to help people budget for their health care and today an estimated 6.9 per cent of the population contributes to such a scheme. By paying a regular sum, a cash plan will pay for overnight hospital accommodation or attending for day care, all your dental and optical costs and often up to 75 per cent of such specialist treatments as physiotherapy and homeopathy.

On the treatment side, the plan will cover fillings, new glasses, contact lenses and dentures. Usually the insured pays and forwards a completed claim form and receipt for treatment to the provider.

Simplyhealth offers policies from £10.20 monthly and pays out 16,000 claims every working day (0800 9807895). Its selected hospitals in Yorkshire are Park Hill (Doncaster), Duchy (Harrogate), The Huddersfield (Huddersfield), Thornbury (Sheffield) and Nuffield Health (York).

Its policies include for up to four resident children under 18 years to be covered without charge. This might mean a youngster having a free white filling rather than a standard amalgam one. Simplyhealth offer four levels of cover. For the highest £30.60 monthly premium, a diagnostic consultation up to £400 is included and acupuncture or physiotherapy up to £200 annually.

Saga offers both PMI and a cash plan. The latter costs from £16.75-£32.50 for 50-64 year-olds, £19.75-£38.50 for 65-69 year-olds and £22.75-£42.00 for those aged 70-plus. The cash plan enables up to 75 per cent of healthcare bills to be claimed back. If new spectacles cost £100, Saga would reimburse £75 and under its upper level cash plan, you would still have £115 available to claim within the year.

To see the benefit of taking £100 excess, the Saga PMI for a 65-year-old on their ‘support’ level costs £69.71 but with no excess £73.38, in both cases paid by direct debit with the same rate for male and female. With this arrangement, there is no annual maximum as an in-patient for hospital charges, consultations or specialist fees.

Saga’s ‘super’ level additionally offers more out-patient cover, no maximum for chemotherapy and radiotherapy treatment, and complementary practitioner charges up to £1,500 annually. For a 65-year-old, the rate is £159.89 (or £151.90 with £100 excess).

Currently, several PMI providers have special offers. AXA PPP Healthcare is offering 20 per cent discount until August 31 (0800 3897633) whilst Saga offers three months’ free cover for the first year.