The chancellor must make healthcare insurance products exempt from the new insurance premium tax if the protection gap is to be closed, according to Sue Weir, chief executive of UK healthcare cash plan provider Medicash.
Ms Weir said that the massive 58 per cent increase in the rate of IPT was endangering protection provision in the UK.
Chancellor George Osborne announced a hike in IPT in the July Budget, and the price rise – from 6 per cent to 9.5 per cent – came into effect on 1 November.
However, Ms Weir warned that this “unprecedented hike could substantially damage healthcare in the UK”.
“There are approximately 6.5m people with health cash plans and private medical insurance”, she said. “If individuals and companies are driven away from making their own healthcare arrangements due to rising and uncertain tax levels there will be greater demand on the already cash and resource-strapped NHS.”
Although the government has said it is looking to improve productivity rates within businesses, she called the increase “a complete anomaly”.
She added:“Businesses should be encouraged to offer healthcare insurance to their employees, not put off from doing so by adding a tax uplift. Business productivity across the UK will be affected as absenteeism increases due to health issues having a negative effect on the long-term economic well-being of the nation”, she added.
Earlier this month, Elliott Hurst, director of health for Axa PPP Healthcare, called the IPT hike “unwelcome news for companies that provide private medical insurance to employees”. He said the news was especially undesirable given that employee health and well-being were high on the performance and productivity agenda, and pressure on the NHS continued to mount.
Adviser view
Elliott Silk, head of employee benefits for national adviser Sanlam UK, said: “Private Medical Insurance policyholders will bear the brunt of price rises due to the fact that the cost of this benefit is higher.
“With this in mind, employers urgently need to assess the options that are available to them. Self-insurance or setting up a Healthcare Trust to mitigate any price rise could be an option, but they need to take advice before making alternative plans.”
