Health Insurance Guide

Waiting times for NHS outpatient appointments in the UK are on average around seven weeks.  Although perceptions of the NHS have improved in recent years, there are still concerns over sanitation and the spread of MRSA in state-run hospitals, as well as worries about the quality and speed of many NHS services. It is no surprise that many people choose to take out a private health insurance policy which can cover the cost of having private medical treatment for short-term and curable conditions.

Private health insurance provides policyholders with immediate access to private treatment should they be struck by illness or injury. This provides reassurance to the individual that they will not have to pay out large medical expenses, and also that they may seek the right medical treatment for their condition and within an acceptable period of time.

Though health insurance provides fast access to private medical treatment it should not be regarded as an alternative to the National Health Service - the majority of private hospitals do no not have Accident & Emergency facilities. It does, however, open up a significant range of healthcare options to the individual and reduces the overall wait time for surgery should it be required.

How much does health insurance cost?
This depends on the insurer that you choose, the plan that you decide to take out and the number of people the cover is intended for.  You then need to consider that the policy will be more expensive the larger the scale of cover. For example, if you choose to be treated in the very best private hospitals or therapy centres then the policy will be more expensive.

To keep the costs lower you will need to think about reducing the scale of cover or benefit on the policy.  This can be done by agreeing to attend a reduced choice of hospitals or by agreeing to sacrifice certain areas of benefit. Some insurers also offer no-claims benefit which can be used to help reduce your overall premiums.

You may find that your employer will also offer private medical insurance as an employee benefit. Sometimes your medical insurance can be included as part of your job and when you retire you will need to examine your options with the insurer, given that people over 60 do not get tax relief on medicals benefits any longer.

Do I really need health insurance?
In reality when we are well we begrudge paying for health insurance. The fact is that you never know what lies around the corner and health insurance premiums increase as you get older. Most insurers will consider applications from customers of any age category but some insurers do restrict those who can apply.
The likelihood is that as people get older they are more likely to want and require medical treatment, which increases the premiums associated with that age group.

Young individuals and couples often do not consider health insurance as a priority, when top of their list is their mortgage and repaying car loans or student loans. But, taking out health insurance should not be left until you get older as when you get married you can apply to some insurers who offer special 'couples plans' or insurance for the whole family, should you have children. It means that should you become ill or suffer an injury then you will have more chance of quick recovery with reduced wait times and a larger range of available treatments.

If you intend to go abroad for any extended period then it is well worth considering a health insurance policy to cover your health whilst on your journey.

What type of health insurance should I choose?
Choosing a health insurance policy is a challenge and you need to carefully consider all the available options. UK insurers offer a wide range of private health insurance products and can include access to different hospitals.  It is worth spending some time researching the available hospitals included in your policy and the insurer's selection method. Overall you need to choose an insurer and a policy that suits your health requirements, rather than the cheapest private medical insurance policy available.

How can I reduce my overall premium?
There are ways in which to reduce your monthly premium and some good examples are choosing to pay an excess charge or taking out cover only for hospital stays and treatment. But it is recommended that the insurance policy covers all inpatient treatment to ensure you don't get any nasty surprises. 

Including an excess on your policy can help to reduce the cost of your subscriptions. It means you will have to pay for part of your treatment, up to the amount of excess you have chosen. The excess amount applies annually to each person included in your membership.

The excess starts at the beginning of each new membership year even if treatment is ongoing. So, the excess could apply twice to a single course of treatment if your treatment begins in one membership year and continues into the next membership year.

How can I pay for my health insurance policy?
You can usually pay your subscriptions in one go via debit / credit card or monthly by direct debit. Payment is due on the date the cover is to begin and every agreed period thereafter. Some insurers offer fixed price options, whereby you can take out cover with fixed payments over a set period.

What different types of health insurance are available?
Health insurance in the UK is available under a number of different types of plan:

Private Medical Insurance
Private medical insurance can provide financial cover for consultation appointments, tests and any operations recommended by the overseeing consultant.  When you are seen by a consultant you will have the benefit of no waiting lists and you can choose when and where you are seen, all in the comfort of a private room.

Typically a PMI plan is offered on a yearly contract and through a range of various payment options. You can take out PMI policies out as an individual, a married or unmarried couple, a single parent or a family. Payments will increase yearly as medical inflation increases and as you get older.

Critical Illness
Critical illness insurance will cover you if you are suddenly diagnosed with a severe illness. Insurers will typically provide a tax-free lump sum of money to be used by the patient as they see fit. They generally pay a tax-free lump sum of money that can then be used by the patient according to his or her wishes. This money can be used for almost anything and will help you pay any debts or loans.

Income Protection
If you lose your income because of sickness or because of an accident how will you pay for all those financial commitments whilst you find another source of income or recuperate? If you’d rather be safe than sorry it may make sense to get yourself some payment protection insurance. Income protection insurance (also known as payment protection insurance or accident, sickness and unemployment insurance) is a safeguard against the risks of losing your job and thus your income.
If you have an income protection policy, the plan will pay for up to 65 per cent of your gross income should you find yourself unable to work due to accident or sickness. Premiums will typically be calculated depending on your type of work and the speed with which you want benefits paid out.

When you return to work or are fit enough to continue until you retirement age the payments will stop.

Cash Plans - General
Cash plans are often cheaper than standard health insurance policies, but they do not speed up treatment in general, or allow access to better health insurance facilities. Cash plans are generally low-cost health insurance plans that will provide cash for the policyholder's medical expenses. Cash Plans are available for both individuals and families.

Cash plans require the policyholder to make a monthly payment to the insurer. The insurer then holds or invests this capital into a central reserve of money or a trust fund. If a policyholder has to spend time in hospital, the policy will provide a cash payout that the policyholder can choose how to spend.

Depending on the plan, other medical costs may be included such as treatment, dental care, optical care, NHS prescriptions and complementary medicines this depends on how comprehensive the cover is. Conditions that you suffered from before you took out the policy will almost certainly be excluded.

Some insurers will not allow you to make claims until you have had the policy for a set period of time. Insurers may also cap the limits that they pay out, meaning that you may have to pay some level of medical costs even though you are covered. Some insurers will also cap the maximum hospital stay covered, and will not pay out after a certain length of time. Furthermore, some cash plans are only effective for a single claim, and others cover nothing beyond hospital fees. Some cash plans also have high excess fees.

Cash Plans - The 6 Week Plan
Six-week plans, also known as six-week waiting plans, are a type of cash plan that will only provide private treatment if an NHS waiting list exceeds six weeks. There are a variety of different types of policy that operate in a similar way, and they are often very competitively priced. As with any health insurance plan, it is crucial to know exactly what you are covered for before taking out the policy. Some plans have been criticised for misleading advertising so check carefully which conditions are excluded.

The Health Trust Fund
This is a more recent package designed to replace traditional health insurance schemes. This type of plan uses the UK trust fund laws that permit low cost cover, comprehensive access to medical facilities, no excess payments, no automatic premium increases and no age loading. But beware, the Financial Services Authority does not yet regulate health trust funds.

Expat Insurance
Expat insurance is aimed at people who are working or living abroad for an extended period of time. This type of plan is generally paid annually in advance and the cover can then be reduced depending on budget. Repatriation or emergency evacuation benefit is a common feature of expat insurance' policies, although some insurers will only provide this cover if the country in which the policyholder has fallen ill/been injured does not have the facilities for treatment.

Exclusions
Unfortunately, some conditions will exclude patients from holding health insurance in almost all cases. In some cases, the insurer will deny insurance altogether, in others (e.g. asthma) they will refuse to pay for any treatment of or related to the condition.

The Association of British Insurers include the following: 'Drug abuse, self-inflicted injuries, out-patient drugs and dressings, HIV/AIDS, infertility, normal pregnancy, cosmetic surgery, gender reassignment (also known as sex change), preventive treatment, kidney dialysis, mobility aids, experimental treatment, experimental drugs, organ transplant, war risks, injuries arising from dangerous hobbies (often called 'hazardous pursuits').'

'Pre-existing conditions' refers to a medical condition affecting the would-be policyholder that has already been diagnosed before taking out health insurance. Usually, the insurer will exclude cover for any condition (or complication resulting from it) that the policyholder has had in the last five years. Although some insurers will cover some conditions if the policyholder is found to be free of them, incurable diseases are likely to always remain excluded.

Other Catches
Depending on the type and comprehensiveness of policy that you have, insurers may well impose a limit on the level they will pay out for each type of medical treatment. For instance, they may pay for a set number of hospital nights or a set number of physiotherapy sessions, and when this number is exceeded they will no longer pay out. Higher premiums generally provide higher limits or unlimited cover.

How to Claim
It is important to know the individual claim process favoured by your insurer. Generally, this will mean establishing your problem or condition, and obtaining a quote for treatment in advance. At this point check whether or not your insurer is willing to pay the costs of treatment at the outset. Some insurers will prefer you to make the payment and claim the money back from them.