Health Insurance Guide
Private medical insurance (PMI) covers expenses incurred in the private treatment of acute (short-term, curable) illnesses and injuries.
Apart from specific exclusions, the following are generally not covered:
Pre-existing conditions (except on “moratorium” policies)
Chronic (i.e. incurable) illnesses
Conditions brought about through drug abuse, self-inflicted injuries, war risks and hazardous pursuits
Treatment for HIV/AIDS, infertility and normal pregnancy; sex change (“gender reassignment”), cosmetic surgery, organ transplant, kidney dialysis and experimental treatment and drugs
GP services, accident & emergency admissions, outpatient drugs and dressings and mobility aids.
Kinds of Policies
Policies essentially differ by their premium levels and the breadth of their cover. A standard policy excludes all ailments suffered before the commencement of the current contract, known as “pre-existing conditions”.
Pre-existing conditions can often be barriers to changing insurers, because a new insurer will want to exclude them from the cover either permanently or temporarily.
Moratorium policies cover pre-existing conditions but only after a specified treatment-free period has elapsed (e.g. 2 years), starting from when the policy is first taken out. The definition of “treatment-free” can be strict, but usually means that during the moratorium period:
- There have been no consultations with a doctor concerning the pre-existing or any related condition
- No advice has been sought about the condition, including check-ups.
- No medication or special diets have been prescribed.
Moratorium policies are often criticised on the grounds that they may encourage policyholders to defer necessary medical treatment in order to have the costs met by the insurer.
Benefits and Exclusions
Inpatient Treatment All policies fully cover a common core of inpatient costs for accommodation (“hotel costs”); surgeons, anaesthetists & physicians; drugs and dressings, operating theatres, radiotherapy & chemotherapy, specialist consultations, diagnostic procedures (radiology, pathology etc), physiotherapy and prothesis. Psychiatric treatment and pregnancy complications are the most common exclusions
Outpatient Treatment and Additionals “Comprehensive” policies will cover the costs of most (but not all) outpatient treatment and other “additional” expenses such as home nursing or private ambulance transport. “Budget” policies sometimes (but not universally) exclude outpatient treatment altogether.
By and large, you get the cover that you pay for although policies within the same premium range do not necessarily offer the same breadth of the cover.
PMI is a complicated product and there are some 25 providers offering highly differentiated contracts. Recommendations are the province of professional advisers, but here are some commonsense guidelines:
Use the Net to do your homework and to validate advice received. Similarly priced policies do not necessarily provide consistent breadth of cover.
Go for the widest breadth of cover for the maximum affordable premium level.
Treatment takes priority over hotel quality.
A PMI provider can be hard to dissolve. Today's claims are tomorrow's exclusions to a new insurer, so pick your contract with care.
Don't buy PMI without taking advice.
Keeping premiums down
Private Medical Insurance is an annually renewable contract. The likelihood is that your costs will rise by more than inflation each year because of your age, general demographics, the insurer's claims experience, technological advancement and increasing diagnostic sophistication.
Most of these factors are beyond your control, but there are choices available that can reduce your premiums:
Paying a Voluntary Excess: Many policies allow you to choose to pay a proportion of any claim, in exchange for a lower premium. Premium discounts will vary by insurer, but expect to save around 10% for agreeing to pay the first £100 of any claim.
Hospital Bands: Hospitals are frequently graded into “bands” to reflect such factors as the quality of accommodation available:
Band A: A London NHS postgraduate teaching hospital and the most expensive private hospitals
Band B: Other NHS teaching hospitals, London private hospitals and the more expensive private hospitals outside London
Band C: Medium-size private hospitals and most provincial teaching hospitals
Band D: A pay bed in a hospital ward.
Each PMI policy comes with a list of approved hospitals whose costs are reflected in the premium, depending on where you live and the hospitals where you can choose to receive treatment. Sometimes a hospital will be graded in more than one band (e.g. A and B) to reflect different available hotel standards (e.g. room size, private or shared bathroom etc.).
By choosing a lower band hospital, you can save money on your premiums.
NHS Option: Certain types of policies will meet private medical care costs if you cannot gain admission to an NHS hospital within a given period of time (e.g. 6 or 12 weeks).
Most intermediate and comprehensive policies offer cash payments if you choose to be treated in an NHS hospital instead – usually at a nightly rate up to a cash limit or to a maximum number of nights.
Cash/Treatment Limits: As an alternative to choosing a policy with full cover, you can select one with cash or treatment limits covering a wide range of procedures.