Private healthcare costs have risen by a typical 15 per cent in the past year as the NHS struggles with rising waiting lists that have left more than six million patients in the queue for a vital operation such as a hip replacement.
There are fears Chancellor Rachel Reeves could be plotting a 20 per cent VAT tax raid on the eight million people who take out this cover because they are no longer able to wait – raising £2billion for the Treasury. The cover is currently exempt from the tax.
It could be just the latest blow for the middle classes that saw VAT being added to the cost of private schools at the start of this year.
Despite Whitehall sources telling the Daily Mail it was examining such options, when Health Secretary Wes Streeting was grilled about the potential November budget hike today, he said ‘it’s not happening’.
For those who can afford to pay, gold-plated health insurance has traditionally been a great way to escape the long, depressing queues at struggling NHS hospitals across Britain.
But with rising premiums and fears of a VAT tax raid is private health insurance now just a luxury afforded only by the affluent – or is it a benefit that anyone can still enjoy?
Here we explain exactly what private health insurance can offer you, how much it will cost and advice on how to get it for the cheapest rate possible.
Private healthcare costs have risen by a typical 15 per cent in the past year as the NHS struggles with rising waiting lists
What is private health insurance?
Private health insurance is a policy paid monthly or annually to cover you for private health care outside the NHS.
It includes GP visits, testing and consultations, operations, physiotherapy, mental health care and dental and optician services.
The more benefits a policy holder includes in their insurance, the greater the cost.
As with car insurance, your no claims discount is affected. The more claims you make the more expensive your renewal premiums will be. Your premiums will rise throughout your policy term as you get older.
How many people have private health insurance?
In the UK there are 8million adults who have private medical insurance.
This number has risen by 2million people in the six years since the industry regulator Financial Conduct Authority (FCA) first started its research.
Experts say there are a number of reasons behind the rise – including fears that growing NHS waiting lists are forcing people to look at alternative options.
Brett Hill, head of health and protection at Broadstone, said: ‘The pain of a condition, the cost to salary if a person has to leave the workforce and the long wait for NHS treatment are driving people of all incomes to either self-fund urgent issues or take out private health insurance as a safety net.’
Dale Le Page, medical and life insurance expert at broker Howden, adds: ‘Health insurance used to be a benefit for the incredibly affluent to take out but this has changed very much since the pandemic.
‘Now the average age has dropped from customers in their fifties to those in their high thirties.’
Employers have also expanded their benefits packages to include private health insurance to ensure employees stay healthy.
Why are private healthcare premiums rising?
The NHS crisis is having a knock-on effect with healthcare premiums – as people desperate for an operation give up waiting for months to get treatment that can be offered privately within a few days.
Chris Steele, director of consumer website My Tribe Insurance, says: ‘If you are waiting for something like a knee operation on the NHS for eight weeks you might be willing to remain patient – but when it stretches into several months you might get sick of hobbling around in pain for so long and make a claim on private healthcare.
In the UK there are 8million adults who have private medical insurance. This number has risen by 2million people in the six years
‘Someone with an existing private healthcare who previously saved money by using the NHS is now more willing to take a hike in premiums by claiming and getting their treatment straight away.’
But My Tribe Insurance says when you initially sign up to a private healthcare deal you often benefit from discounted rates for the first year or so – and it is loyal long-standing customers who pay for the rises.
Steele says: ‘A typical 15 per cent rise in premiums this year might be expected. The rising price of medical procedures and equipment is also partly to blame for the rise.’
Healthcare provider Healix states: ‘The NHS crisis has resulted in long waiting lists which means more people are using private healthcare for services that they used to use the NHS for. As a result, premiums are increasing significantly year on year.’
Which insurer is best for you… and always use a broker
There are ten providers in the private health insurance market, although four firms dominate the industry: Bupa, AXA Health, Aviva and Vitality.
Broadstone said smaller insurers such as WPA and The Exeter provide options for customers who want an alternative to the big brands.
Given the complexity of private health insurance and the number of clauses inserted into policies that, if not understood, could mean you are not insured for services, it’s advisable to use a broker.
You will not need to pay the broker a fee, they receive commission from the provider. Or you can use a comparison website to compare premiums and read the terms and conditions on each provider’s website.
You may have to complete a lengthy application form if you are applying for what’s called full medical underwriting.
This means that all your pre-existing medical conditions are investigated and your GP is consulted before you seek cover.
Some pre-existing conditions such as high blood pressure and diabetes could be covered in your policy if your condition has been stable.
Moratorium underwriting
Alternatively, you can go down a quicker route called moratorium underwriting.
This process will give you cover but excludes all pre-existing conditions that have occurred in the last five years for the first two years of the policy.
You can get this cover by filling a short form online. Your provider only contacts your GP when you come to make a claim.
Under most policies, a GP visit is not classed as a claim.
The younger you are, the cheaper the policy
The younger you are when you take out a policy, the cheaper it is.
A policy holder between 25 and 34 years old would pay £423 a year compared to those aged 55 to 64 who would pay £738, according to figures from Howden.
For a family of four where the oldest member is aged between 35 and 44, they would pay a premium of £1,485.
This rises to £1,979 when the oldest family member is aged between 45 and 54.
The policy premium is also affected by any pre-existing health conditions you have and the excess you choose – for example, if you agree to pay the first £500 of cover to keep the premium down. The insurer checks the cost of hospitals in your area and the likelihood of you using them.
What your policy allows for
Under most policies, a GP visit is not classed as a claim. You’ll be given access to a digital GP who will give you an appointment by video call.
If the GP refers you to a consultant you must call your insurer to get the appointment authorised before you attend.
Whether it is approved depends on the level of cover you have. Any other treatment must also be pre-authorised.
Once your treatment is complete, the hospital bills your insurer directly. You do not have to pay anything except your ongoing premiums.
Is everyone eligible?
The majority of people can access private health insurance but some pre-existing health conditions could be excluded from cover.
A spokesman from Vitality said: ‘Where someone has a pre-existing condition, it’s worth talking to the provider or your financial adviser who can take you through what would and wouldn’t be included. You shouldn’t assume that everything would be excluded.’
Some providers also impose age limits. Vitality, for example, covers policy holders aged between 18 and 79. You can get cover up to the age of 99 but it is expensive and comes with many conditions.
How to make your policy cheaper
An initial consultation can cost between £200 and £300, according to broker Vizion
High net worth medical insurance broker Matt Howells, founder of Vizion, says: ‘Insurers have put in place affordable features to make health insurance more affordable.’
Each policy will come with core care which covers treatment in hospital.
To keep your premium as low as possible you can have a £500 excess, a cap on the value of consultations accepted under your policy or agree to self-fund your consultation which means you pay out of your own pocket.
An initial consultation can cost between £200 and £300, according to broker Vizion, while a follow up appointment costs between £150 and £250.
By cutting back the benefits, a policy with limited out-patient services, a cap on consultation fees and a restriction on which hospitals you can use could cost £70 a month.
Can I self-pay for operations?
If you want to skip the NHS waiting list but don’t want to get health insurance you can pay privately for one-off operations.
According to figures from consumer website My Tribe Insurance, the cost of a knee replacement if you paid privately would be £15,357. Bunion removal costs £5,571 and a hysterectomy costs £9,118.
However, there are regional differences. A knee replacement can cost as much as £20,995 in part of London, but £11,195 in another part of the capital.
A hysterectomy can cost £13,160 in London, but a much lower £6,674 in the South West.
What if a treatment goes wrong?
Your first port of call is to complain to your insurer. All private health insurers are regulated by the FCA so have a formal complaints policy.
If the customer cannot resolve their complaint with the insurer they can take their complaint to the Financial Ombudsman Service for independent adjudication.
What do I get for the super-rich cover of £50,000?
Mr Howells says if you want the ‘royal’ treatment, it could cost you up to £50,000 a year for a family of four.
For this price you would get international health insurance, designed to work in countries with no state-run medical services.
Policy holders can use any hospital they choose in or outside the UK as many times as they like.
They do not have to wait for treatment, can have unlimited tests, consultations and operations without having to pre-authorise them with their insurer.
They also have extra services such as on-demand maternity care, dental and eye care and private GP access.
Strip back this policy and reduce the benefits and you are looking at a more affordable price.
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