Stuart Scullion: Employers need to mitigate the impact of the insurance premium tax rise 

Stuart AMII

The Budget’s ‘unrealistic and unacceptable’ increase in insurance premium tax (IPT) could represent the final straw for some employers that may now cancel their cover.

While I think many of us expected there to be an increase in the Budget, we are both surprised and disappointed at the size and scale of such an increase, which appears to have been announced without due consideration of the wider impact. The chancellor and his department have shown a distinct lack of consideration about the wider impact of the ‘ill-conceived’ decision.

At a time when the NHS and NHS budgets are under extreme pressure, the increase in IPT, which is estimated will raise £177m in tax revenue, will prove to be an expensive folly. The net impact will be to drive patients to an already stretched NHS adding further pressure both in terms of resource and cost.

Cost is one of the single biggest considerations for both employers and consumers as to whether they continue with their private medical insurance (PMI) cover.

[Employer] purchasers of PMI should consult with an independent intermediary that will be able to advise them of the steps they may take to mitigate the impact of the IPT increase.

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There are three steps buyers of PMI should immediately consider. The first is to consider introducing or increasing a policy excess. A £100 excess applied to all plan members would typically reduce premiums by between 8-10%. Discounts vary from provider to provider based on individual circumstances. Second, employer schemes with more than 100 staff covered should consider a non-insured/self-funded option under a health care trust that does not attract IPT. And finally, consider a corporate deductible product that will offset part of the IPT increase.

Stuart Scullion is chairman of the Association of Medical Insurers and Intermediaries (AMII)