The Scottish Mail on Sunday


RE­VEALED: Med­i­cal cover in a work scheme costs up to EIGHT TIMES more when you leave, say MoS probe find­ings ex­perts have branded...

- By Sally Hamil­ton

PRI­VATE med­i­cal in­sur­ers are be­ing urged to end a ‘shock­ing’ pre­mium rise trap for those who wish to con­tinue cover once they leave a workplace scheme. Em­ploy­ees who re­tire or are made re­dun­dant are usu­ally al­lowed to keep the health ben­e­fit they en­joyed while work­ing – but only at an eye­wa­ter­ing cost.

Re­search by The Mail on Sun­day has dis­cov­ered that pre­mi­ums of­ten dou­ble, quadru­ple – or even mul­ti­ply eight­fold or more – for for­mer em­ploy­ees who want to main­tain cover with the same provider.

David East (not his real name) took re­dun­dancy last year from his em­ployer, a Lon­don-based multi­na­tional com­pany. He had re­ceived pri­vate health cover for him­self, his wife and three chil­dren for an an­nual pre­mium of about £3,000.

David, from South Lon­don, wanted to con­tinue with the in­sur­ance, in­clud­ing cover for pre-ex­ist­ing med­i­cal con­di­tions, to pro­vide peace of mind as he be­gan his new ca­reer in self-em­ploy­ment.

But the 55-year-old was shocked when he found out the pre­mium in­crease he would have to bear.

He says: ‘I was ut­terly taken aback when the quote came in at £24,000 – eight times the pre­vi­ous rate. I was flab­ber­gasted. There was no way I could af­ford this given my move to a new way of work­ing.’

THE new pre­mium felt all the more out­landish be­cause the cost had pre­vi­ously been met by the com­pany. He only had to pay tax on the perk, less than £1,500 a year. A sim­i­lar shock in­crease in the cost of pri­vate med­i­cal in­sur­ance per­suaded Richard Bar­row to re­think his cover. When he re­tired, his in­surer Bupa told him his an­nual pre­mi­ums would jump from £2,000 to £7,700. In des­per­a­tion he con­tacted med­i­cal in­sur­ance bro­ker Re­gency Health which man­aged to rein in the costs.

Brian Wal­ters, boss of Re­gency Health, says: ‘He could not move away from Bupa due to on­go­ing can­cer treat­ment, so we had to make the best of a bad sit­u­a­tion.’

Wal­ters rec­om­mended Richard agree to a £2,000 ex­cess on the pol­icy which would only be payable once in any year he made a claim. This re­duced the pre­mium to £4,600, sav­ing a net £1,100, tak­ing into ac­count the ex­cess. Richard also agreed to have his out-pa­tient cover capped which re­duced the pre­mium a fur­ther £900. Wal­ters says: ‘The out-pa­tient limit does not ap­ply to can­cer treat­ment or hos­pi­tal scans. The sav­ing was com­pelling.’

Con­sumer groups are out­raged that leavers are be­ing ex­ploited by pri­vate med­i­cal in­sur­ers. James Da­ley, founder of con­sumer cam­paign group Fairer Fi­nance, says it is time providers and the Govern­ment did more to act.

He says: ‘Sales of poli­cies to in­di­vid­u­als are in de­cline. No won­der when pre­mi­ums are so steep, es­pe­cially at a point when peo­ple are likely to need cover most as they get older. If more peo­ple were en­cour­aged rather than hin­dered from tak­ing up cover, prices would fall.’

He called on the Govern­ment to con­sider ac­tion, such as tax in­cen­tives com­bined with more pub­lic­ity about the value of health cover and its sis­ter in­sur­ance, in­come re­place­ment. He adds: ‘Em­ploy­ers need to spell out the ben­e­fits too, even if they do not pay for the cover.’ Just four mil­lion peo­ple have pri­vate health in­sur­ance, three quar­ters through their em­ployer. Sales of in­di­vid­ual plans are fall­ing, with un­der a mil­lion sold each year, ac­cord­ing to con­sul­tancy LaingBuis­son. Sales have not been helped by the re­cent hike in in­sur­ance pre­mium tax. This means a tax of 12 per cent is now ap­plied to pre­mi­ums when some­one re­news cover. The soar­ing cost of cover stems from the fact that em­ploy­ees in group med­i­cal in­sur­ance schemes are viewed dif­fer­ently as soon as they de­part. Re­gency’s Wal­ters says: ‘Those in the mid­dle of treat­ment fare the worst. When they leave an em­ploy­er­spon­sored scheme, their risk is as­sessed in iso­la­tion rather than pooled with other mem­bers.’ He adds: ‘If some­one is re­ceiv­ing ex­pen­sive treat­ment – such as the use of ad­vanced can­cer drugs – the pol­icy will likely be loss-mak­ing for the in­surer, what­ever it charges.’ Any­one who wants to con­tinue with their treat­ment un­der the

terms of the in­sur­ance is stuck with their ex­ist­ing provider. Com­peti­tors would sim­ply ex­clude the con­di­tion from any new cover they of­fered.

Alex Perry, chief ex­ec­u­tive of Bupa In­sur­ance, says that some­one con­tin­u­ing with Bupa af­ter the loss of em­ployer-based cover would not have to go through the un­der­writ­ing process again. This means on­go­ing med­i­cal con­di­tions re­main cov­ered.

He ex­plains: ‘We want to make the process con­ve­nient and keep cover af­ford­able which is why we give cus­tomers the op­tion to con­tinue in­sur­ance if they leave their em­ployer.’

AXA PPP says it of­fers leavers ways to cut their pre­mium, such as a vol­un­tary ex­cess.

Mar­cus Carl­ton, a Lon­don-based fi­nan­cial plan­ner with HFM Columbus, says: ‘Given the ev­i­dent cost sav­ings to the NHS it is sur­pris­ing that more is not done to en­cour­age peo­ple to take out pri­vate med­i­cal cover.’

Penny O’nions is a med­i­cal in­sur­ance spe­cial­ist at the Onion Group. She says: ‘I would like to see em­ployer cover be por­ta­ble. If an em­ployee leaves, they could re­main in the same in­sur­ance scheme with­out penalty for as long as they wish.’

O’nions has helped the for­mer ex­ec­u­tive of a large com­pany beat a three­fold in­crease in med­i­cal in­sur­ance pre­mi­ums to £9,500 when he re­tired in mid-2015. She found a pol­icy for him and his wife that saved them at least £2,000 a year.

Nadeem Farid, health ex­pert at Drew­berry In­sur­ance, says the pre­mium shock hits re­tirees most. He says: ‘The av­er­age age of mem­bers of com­pany schemes is be­tween 35 and 45. But around 40 per cent of the in­di­vid­ual mar­ket is aged over 65 and, ac­cord­ing to in­sur­ers, 98 per cent of the av­er­age 60-year-old’s pre­mi­ums are spent on claims.

‘This ex­plains why in­di­vid­ual cover is at least twice as ex­pen­sive as group cover and is part of the rea­son for the hike peo­ple face mov­ing from group to in­di­vid­ual cover.’

Statis­tics also in­di­cate that in­di­vid­u­als claim on poli­cies far more than group mem­bers. Farid says: ‘The mind­set is no doubt “get­ting your money’s worth”. In re­al­ity, mak­ing small claims will just pump up the pre­mium when it comes to re­newal.’

Some providers of­fer ‘re­tiree plans’ al­low­ing em­ploy­ees of larger com­pa­nies to trans­fer cover on rea­son­able terms, but th­ese are in de­cline. Bupa re­cently closed some of th­ese schemes, end­ing cover for those with poli­cies. Farid says: ‘We ex­pect other larger providers to fol­low suit. This could mean that the cost of a fam­ily’s cover jumps from around £7,000 a year to closer to £12,000.’

Con­tin­u­a­tion plans can be a life­line for a group leaver in the mid­dle of treat­ment, but in­sur­ers are free to in­crease pre­mi­ums and re­duce cover as they see fit.

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 ??  ?? AC­TION: James Da­ley, of Fairer Fi­nance
AC­TION: James Da­ley, of Fairer Fi­nance
 ??  ?? NO ONE’S IM­MUNE: Stu­art Scul­lion’s an­nual pre­mi­ums rose four­fold
NO ONE’S IM­MUNE: Stu­art Scul­lion’s an­nual pre­mi­ums rose four­fold

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