2.2.5 Private Medical Insurance (PMI)
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The purpose of PMI is to cover the cost of medical expenses and
to reduce waiting time for treatment.
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Cover may be taken out by individuals in their private capacity,
or may be provided as a part of the employment package, in particular
management jobs, where the market tends to be status driven. Given
that conditions may be treated more quickly using private treatment,
it is a useful business protection.
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It may be argued that such cover is unnecessary given a comprehensive
National Health Service; indeed, in an emergency, few would disagree
that the NHS provides a service that is able to respond with an
appropriate level of speed.
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Private healthcare should be seen, rather, as complementary to
the NHS services. Primary care from GPs, accident and emergency
cover, and the treatment of long term chronic conditions are almost
exclusively provided by the NHS.
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In the UK around 80% of PMI cover is provided by non profit making
provident associations such as BUPA, Private Patients Plan (PPP),
and Western Provident Association (WPA). The remainder is covered
by a number of commercial insurers.
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Most providers offer policies which, up to stated limits (which
may be a full refund of cost), provide benefits covering the following:-
- In-patient hospital charges
- In-patient surgical and medical fees
- Outpatient charges
- Home nursing charges for a maximum period of perhaps 26 weeks
per year.
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Depending on the provider, there may be a simple full recovery
of fees or a maximum expense ceiling that may be claimed in a policy
year.
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In addition there are plans which offer cover only if treatment
is not available under the NHS within, say, 6 weeks, as well as
budget plans offering more restricted levels of cover and allowing
accommodation only in cheaper hospitals.
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Generally, cover is available from age 18 and up to age 70 or 75,
with options to cover the policy holder alone, or together with
his/her spouse and any children.
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Cover is often available world-wide, and may include the costs
of the necessary repatriation to the UK when medically necessary.
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Where cover is offered only where the NHS is unable to offer treatment
within 6 weeks, or where a policy excess applies, cover is correspondingly
cheaper.
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Where cover is sought by an individual, perhaps to include his
family, a detailed proposal questionnaire will need to be completed
in respect of each family member to be covered; the underwriter
may seek additional evidence from the proposer's own or any other
doctor, and may require a medical examination to take place before
offering cover.
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The premiums charged for individual contracts will depend on the
level and range of cover being provided and the age of the individuals
being covered.
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Under group schemes the costing structure will depend additionally
on the size of the group being covered; with small groups the total
cost may be a simple accumulation of the premiums per individual,
but with a discount to reflect reduced administrative costs.
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With larger groups the age structure of the scheme may be looked
at as a whole with a uniform rate of premium being charged in respect
of each member, member's spouse (often the same rate), and a reduced
rate in respect of any children to be covered. A similar approach
can be adopted with regard to voluntary groups provided a minimum
level of membership is achieved.
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In addition to the PMI covers above, schemes are also available
that cover hospital cash benefits. Such schemes tend to be restrictive
in terms of the levels of cover they are able to provide and will
give a daily or weekly benefit in the event of hospitalisation.
Such schemes are designed to cover additional domestic costs which
may be incurred as a result of such a hospitalisation, rather than
to cover the cost of private medical care.
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In addition, there are also schemes available to cover the expense
of dental treatment. Such schemes are generally marketed through
dental practices and will not generally fall into the remit of a
typical financial adviser, but should be borne in mind as part of
general expenditure now that many dentists are converting to private
work covered by such policies e.g. DenPlan
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