NHS England figures, released in June 2020, showed that more people than ever before were waiting longer than 18 weeks for planned hospital surgery. The impact from the pandemic has seen a huge surge in interest in private health insurance policies and self-funding options. GlobalData’s 2019 Insurance Consumer Survey¹ indicated that 29% of private health insurance customers had purchased a policy due to concerns regarding waiting times; an increase of 15% compared to 2018.

So, what are options when it comes to accessing private healthcare?

1. Self-Pay, Self-Funded or Pay as You Go

There are lots of private healthcare providers who provide quick and easy access to private medical care, which do not require any pre-purchased form of insurance policy or contract.

Whether labelled as ‘Self-Pay’, ‘Self-Funded’ or ‘Pay as You Go’, all of these terms mean exactly the same thing - payment on or prior to receipt of any care or procedure. Payment is made directly by the client, and is not subsidised or rebated by an insurance policy. 

These options are found most often within private dental practices, private GP services and private hospitals as well as well as many other disciplines, including physiotherapy and counselling.  Most private providers will not require a referral from your GP or other healthcare professional; leaving access to care firmly in your control. Each clinic or private provider will work differently in terms of pricing and some may even offer payment plans to assist with affordability.

With the client being in total control of funding their treatment, they may find that a number of treatment options are available; which may equally vary in cost.  Self-funding allows the client to choose their preferred provider, clinician and not be tied to a specific company, leaving them in total control of the cost and type of treatment received.

2. Group Private Medical insurance

An employer may offer a group private medical insurance policy (PMI), as part of their staff benefits package, which employees may be invited to join after serving either a probationary period or a set number of years employment. 

This type of medical insurance, which covers a group of individuals under one policy, spreads the ‘risk’ of potential claims during the insurance period. In some cases, an employer will also allow employees to add family members to their policy, with subsequent PAYE deductions to cover premium costs for any additional members.

Group schemes will often incorporate a diverse group of people covered by one policy, which is how the level of risk is spread over different ages and occupations. Some policies may require additional underwriting for specific members, if risk is deemed to be higher or if a set type of cover is offered.

Group PMI policies will vary between employers, so understanding what is covered by the policy and the joining requirements is essential for anyone considering this type of cover.  It is also important to note that some policies may require an excess fee to be paid by the employee, which is paid up front prior to claiming on the insurance; similar to how car insurance policies work.

Some policies will allow a set number of claims whereas others will provide a set limit of reimbursement, for any specific type of claim.  For example, a policy may allow a member to reimburse the cost of a pair of new reading glasses, with a limit of £100.00 per claim.  Therefore, if the total cost is over £100.00, they will be expected to pay the remaining amount themselves.  It does however, not allow them to claim the difference back if the total expenditure is below the £100.00 threshold.

It is also crucial to understand that not all group PMI contracts will cover all areas of health or all disciplines and most will not cover direct members or other insured persons on the policy for pre-existing conditions.  Some will also have various benchmarking in terms of time frames which conditions may be classed as ‘pre-existing’.

Group Private Medical Insurance policies can offer very good basic cover for a low investment, however being fully aware of what is and isn’t covered is of paramount importance when understanding these options.

3. Private Health Insurance

Private Health Insurance policies are personalised plans which can provide individual (just one person), couples or family cover. These policies typically cover a range of acute conditions (health conditions that come on suddenly and have a limited treatment term) as opposed to chronic conditions, such as diabetes or arthritis.

Before a policy goes ‘on risk’ or live, the client will be required to share, via their application to an insurance company, details surrounding their health and that of their close extended family, such as parents and/or siblings.  The cost of the policy will be determined by many factors, including the type of cover required, age of applicant, employment type, geographic location, lifestyle choices, family history and past times. For example, if the applicant is a smoker or has a hazardous occupation, their premiums may be higher than that of a non-smoker who is office based. Equally, applicants will be asked to declare lifestyle choices, for example units of alcohol consumed each week or whether there is a history of recreational drug use.

All of these factors will apply a ‘weighting’ to the policy, which in turn decides the premium amount which can be paid either monthly or annually via premiums. Again, similar to the group PMI, an excess may need to be paid by the insured person, prior to payments being released by the insurance company at the time of a claim.

Although the applicant may be asked to supply information regarding pre-existing conditions, most new insurance policies are written on a ‘moratorium’ basis, meaning that pre-existing conditions which the applicant may have received advice, treatment or follow-up in the past five years, will automatically be excluded from the policy.  They may be asked to provide information when applying for the policy, however in the respect of a claim, the insurance company will deal directly with the policy holder’s GP to clarify details as to whether the condition was there before the policy start date. Therefore, it is crucial to be fully transparent during the application process and understand exactly what is and isn’t covered prior to the policy starting, or a situation may arise where private premiums are paid on a policy that later becomes void at the time of claim due to misinformation. 

As with Group PMI policies, a private health insurance policy may be subject to ‘underwriting’ which may place set conditions or restrictions on a policy and therefore any potential claim with regard to certain health issues.

Age plays a significant role in determining private health insurance costs; working on the premise that as we get older, the more likely we are to require health services.  In October 2020, myTribe provided typical costings for comprehensive cover across a number of age groups, assuming an excess of £100 and that the insured was a non-smoker:

Although generally the cost of private health insurance will increase with both age and inflation, there are ways in which policy holders may be able to reduce their premiums. Opting for a higher excess fee, limiting the number of hospitals or clinics available or even adding a waiting period to the policy may reduce premium costs.

According to statistics from Finder, in July 2020 approximately 8 million people in the UK had an active private healthcare insurance policy, which equated to around 13% of the British population. At that same time, around 53% of respondents in their survey admitted they would pay for private healthcare treatment.

Private insurance can certainly provide fast access to a wide range of treatments whilst bypassing crippling NHS waiting times and getting individuals back on their feet quicker. However, the key to finding the right policy or funding option is understanding affordability, policy details or restrictions and choosing a policy that can provide comprehensive cover for specific individual circumstances.  It is also important to review policies regularly to ensure that they remain suitable for the policy holder’s needs and seek expert financial advice.

References:

1. GlobalData - 2019 Insurance Consumer Survey

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