Private health insurance

Private medical policies provide cover for the costs of private medical treatment for curable, short-term medical conditions. Essentially, it allows you to jump long National Health Service queues for minor, non life-threatening conditions.

It is not an alternative to the NHS; private hospitals do not have casualty departments, for example. Neither do you necessarily get better care - but you do get it more quickly and at a time and place to suit you.

What types of private health cover are there?

There are lots of different types of private health insurance policy. For most people it is cost that determines which type of policy they go for.
 
The insurance companies who provide private medical cover tend to differentiate between:

•  in patient treatment (ie treatment which requires you to stay in hospital for one or more nights)

• day patient treatment (ie treatment which requires a period of medically supervised recuperation but does not involve an overnight stay in hospital)

• out patient treatment (ie other forms of treatment)

Obviously the first category is the most expensive and the last the least expensive. However, another key component of cost is the type of hospital you are entitled to receive treatment in. Hospitals are basically like hotels in this respect. A '5 star' hospital  - as it were - is obviously more expensive than a '3 star'.  

Who and what is covered

Private medical insurance will cover the cost of specialists, surgery, accommodation and nursing bills in a private hospital, or in a private ward in an NHS hospital, drugs and X-rays. You will get better facilities, tastier food and a private room, often with a phone and television.

Generally, policies do not cover the treatment of long-term illnesses that cannot be cured, such as asthma, diabetes or multiple sclerosis, or pre-existing medical conditions. This means you can't buy medical insurance today for an operation you know you will need in a few months.

Policies generally refuse to pay for treating conditions like alcoholism/drug abuse, dental treatment (although this is sold separately), HIV/AIDS, infertility, normal pregnancy or cosmetic surgery.

Some insurers will accept new customers at any age, others have an age limit. But the older you are, the more expensive it is. This means it tends to price people out of the product just when they need it most.

The cost

Costs depend on what type of plan you choose and whether other family members are included. The more comprehensive the range of treatments covered, the more expensive it is. Also, if you want to be treated in top private hospitals or the London teaching hospitals, it will cost you more.

Many policies come in three classes, depending largely on your choice of hospital. Remember that premiums for private health insurance tend to rise faster than inflation.

If you want to save money you should consider a Budget policy, which applies only if the treatment you need is not available on the NHS within a set period.

Other ways of keeping costs down include paying a larger portion of the claim than normal, or by agreeing to accept a restricted choice of hospitals.

Some policies offer no-claims bonuses that can help limit the increase in your premium. This gives you an incentive not to make minor claims, which always account for the majority of claims.

You could also try to persuade your employer to offer it as a perk. That way, administration costs are kept to a minimum and the employer may well be able to negotiate bulk discounts or more generous terms.

Around half the people with private medical insurance get it as a perk. Bosses prefer it because it means that performance of key staff is not hit by nagging conditions that could be quickly treated.

Private medical insurance is taxed as a perk if you earn above a certain amount a year.

If your private medical insurance is included as part of your employment contract and you retire you will have to renegotiate your policy, but you are likely to qualify for discounts. Bear in mind that the over 60s no longer get tax relief on private medical insurance.

Medical history

You do not necessarily have to reveal your medical history but some policies might ask you to fill in a form with the details of past illnesses and operations. Others may write to your doctor for more information. Make sure this form is accurate and you've given all the information requested. Otherwise the insurer might not pay your claim.

If you have a medical condition that could recur, the insurer will probably take you on but will normally exclude that condition. With others, you will not be asked about your medical history. Instead, the insurer excludes cover for any medical condition or a related one that existed in the last (usually) five years.

These conditions become eligible for cover only when you remain free of symptoms, treatment, tests or medication for that condition for a period after your policy starts. Remember that recurring, incurable symptoms are unlikely to ever be covered because they will always require regular treatment or tests.

Claiming

When your GP has told you that you need treatment, he will arrange a private appointment with a consultant. Get a quote for this and then contact your insurer. But make sure that the insurer will pay all the costs, and do not start treatment until you know where you stand.

Some policies, for example, have limits on how much they will pay for specific forms of treatment. Some insurers settle bills direct with the hospital rather than requiring you to pay and claim money back.

(I considered going for Private Health Insurance with one of the major companies - for both me and my wife- with some pre-existing conditions I was quoted around £400 per month.  It looks like I will have to stick with the NHS!)