Need to know:
- Healthcare trusts can provide an alternative to private medical insurance (PMI) where the employer is in control of the benefits schedule.
- A trust can be part of an overall health and wellbeing strategy, encompassing benefits such as employee assistance programmes (EAPs) and health screening.
- Healthcare trusts may become more attractive with the increase in insurance premium tax from 6% to 9.5%.
Private medical insurance (PMI) is a premium product and recognised as such, but healthcare trusts can deliver access to the same care alongside some other potential benefits.
Under a healthcare trust, employers can provide a bespoke medical scheme, which, to all intents and purposes, operates like PMI. While employees experience the same type of service and access to the same or similar healthcare, the benefits schedule is defined by the employer rather than the insurer. This can sometimes leave the employer financially better off and with a scheme tailored to its needs.
Rise in popularity
LaingBuisson’s Health cover UK market report 2014, published in July 2014, suggests the popularity of healthcare trusts is growing. It found a rise of 37,000 policies on self-insured medical expenses schemes, which includes trusts, compared with a decline in employer-paid insurance policies of 21,000.
Rachel Riley, managing director of WPA Protocol, believes this is set to heighten with November’s insurance premium tax (IPT) increase from 6% to 9.5% because, as a non-insured product, healthcare trusts do not attract IPT. Stop-loss insurance, however, which can be used to protect trusts against large claims, does attract IPT.
Michael O’Roarke, director of First Health Trusts, says: “I think a lot of businesses are slightly cautious of trusts, although as IPT increases it might become more attractive.”
Besides administration and concern over large claims, another barrier can be concern around how employees will perceive a trust. Simon Chapman, operations manager at General and Medical incorporating ProAmica, says: “From an employee’s point of view there is very little difference [to PMI]. Whether it is an insured benefit or not, the end result is the same: they will get access to treatment.”
A trust can be used to make healthcare benefits more integrated. Richard Saunders, sales director at Healix, says: “Usually everything is tailored to the [employer], so the booklet would be branded and the telephone line would be answered with the [employer’s] name.”
WPA’s Riley adds that because a trust can be branded, it can boost engagement among employees.
Benefits such as employee assistance programmes (EAP) and health screening can also be brought within the trust as part of a health and wellbeing strategy. “We have schemes that have health screening and critical illness provision and access to an EAP; [employers] can be quite creative with what is in the benefits schedule,” says Saunders. “With a healthcare trust [employers] can bespoke the provision: that could be putting chronic cover in the benefits schedule, it could be that [it] navigates certain claims into other provisions [such as] the EAP, so the trust is the hub of where benefits come from.”
Under a trust, employers can also cover dependants and spouses or allow employees to buy this via the payroll or through flex. They can also have different levels of benefit provision set out for various levels of employee.
Employers looking to implement a healthcare trust should ask their benefits broker to include a trust provider in its annual review, for example. As Saunders says: “It is no more difficult switching to a trust than it is switching from one insurer to another.”