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Spend & Save

How to take control of your medical treatments

NHS top-ups are now allowed, so check your insurance.

The Government has finally agreed to allow NHS patients to top up their healthcare in the private market last week, a decision that should give thousands more people access to the best drugs available – even those the NHS is unwilling to pay for. Over the past few years, many of the newest drugs have been excluded from the list that NHS practitioners are allowed to prescribe – simply because they cost too much. Some courses of the latest cancer drugs can cost more than £100,000 – and the NHS generally won't pay for anything costing more than £30,000 a year.

Before the rules changed, patients who chose to pay for the best drugs themselves would then be excluded from the NHS system altogether. So, for example, if you were diagnosed with breast cancer and decided you wanted to pay privately for a drug that the NHS would not prescribe, you then had to pay for all other areas of your cancer treatment as well – turning a bill of £50,000 into a bill for several hundred thousand pounds. From now on, however, it will be possible to receive NHS treatment and pay privately for additional drugs – although only on the condition that the treatment is administered outside an NHS hospital, so as not to rile the patients who cannot afford to pay a top-up.

But while coughing up for a £50,000 drug bill may seem beyond the reach of all but the super-rich – there are ways to reduce the costs. Although private medical insurance policies are expensive, the industry has been working hard to make its products more affordable over the past few years, so that even those on more modest incomes can afford cover.

Healthcare on a budget

If it's missing out on the most expensive drugs that you're worried about – or not receiving adequate treatment when you're diagnosed with a severe illness – there are a number of cost-effective options open to you.

Critical Illness Cover will pay you a lump sum in the event that you're diagnosed with one of a number of severe illnesses – although it's important to check exactly what these are before you sign up. Some CIC policies have now withdrawn many types of cancer from the list of illnesses that they'll pay out for. Typically, CIC policies will pay between £100,000 and £250,000 once you're diagnosed with an illness, and can cost less than £10 a month. The price is dependent on your age, whether you smoke and how healthy you are.

Another option is to go for one of the cheaper health insurance policies, which are designed to pay out only when the NHS lets you down. WPA's health top-up plan, for example, offers a core basic package that pays out a small sum whenever you have to pay any NHS charges – such as dental care or prescription fees. It then also offers you the chance to add up to five bolt-on options to your policy – including a cancer drugs option, which pays out if you find yourself refused any cancer drugs by the NHS due to the expense.

The basic WPA Health Top-Up policy costs £15 a month, while the bolt-ons are a few extra pounds each per month. See www.wpa.org.uk for details. At the moment, WPA is one of the only companies to offer anything like this, but others will probably follow suit over the coming year. Bupa has already expressed an interest in participating in the top-up market.

The cheapest healthcare policies are so-called "cash plans", which pay out a small lump sum whenever you visit the optician or dentist, or have to pay for treatments such as physiotherapy or chiropody. These plans are designed to take the pressure off when NHS patients find themselves facing a cost for their healthcare – and prices start from as little as £1 a month (although there can be small limits on payouts).

Fully comprehensive

If you'd prefer to use the private sector for all aspects of your healthcare, you'll need to have deep pockets. A simple consultation with a private doctor is likely to set you back at least £100, while in-patient stays and treatments can easily run to five figures. Consequently, fully comprehensive medical insurance policies – which pay for treatment in the private sector, whatever your need – are also very pricey. You can expect to pay at least £1,000 a year for the most comprehensive ones.

However, if you're willing to pick up some of each claim yourself, the price can come down dramatically. You can do this either by accepting an excess on your policy, or by agreeing to pay a percentage of any claim.

Exeter Friendly Society, for example, is launching a new product this weekend, which gives customers the option to pay for 10, 25 or 50 per cent of any claims they make, although the maximum customer payouts are capped. So, a 45-year-old non-smoking healthy woman would pay premiums of around £94 a month with Exeter, if she opted for a plan which paid 100 per cent of her claims. However, if she agreed to pay 10 per cent of any claim, this would drop to £83, and if she paid 25 or 50 per cent of every claim, her monthly premiums would fall to £67 or £41 respectively. Exeter gives further discounts for people with a body mass index (BMI) of between 18.5 and 25. WPA is another company that offers a number of co-payment plans.

However, many other insurers reduce customer premiums by increasing their excess. So if your policy has an excess of £1,000 – it won't pay out for any claims less than this. If claims are greater than £1,000 – you'll be on the hook for the first £1,000 – but the insurer will pay for everything thereafter. Another way of reducing the long-term cost of medical insurance is to consider a policy that allows you to reclaim some of your premiums if you don't claim.

National Deposit – a small friendly society – has been offering a plan like this for many years. Its plans start from just £20 a month, of which half is paid as a premium for your policy, and the other half is paid into a deposit account. If you make a claim, your deposit account will pay a percentage of the sum, depending on your age, while the insurer will pay the rest – up to a certain limit. Any money in your deposit account remains accessible to you – although the less money you have, the less you are likely to be able to claim from your insurance policy.

A new company, HealthFund, launched a similar product to this last week. Like the National Deposit, customers build up a deposit account, which they have free access to, while also paying a reduced insurance premium. Customers must then accept a large excess of £1,500, £3,500 or £5,000 – and agree to pay for any claims below this threshold from their deposit account. If the claim is bigger than this, the insurance policy will kick in to cover the rest.

Take advice

Finally, if you are thinking of buying health insurance, it's worth seeking professional advice. One unfortunate side-effect of insurers' attempts to reduce the cost of cover is that policies now vary considerably – and it's easy to end up buying a policy that doesn't do everything you think it might.

Mike Izzard, the chairman of the Association of Medical Insurance Intermediaries, says you will also usually save money buying through a broker. Although the broker will receive a commission for selling you a policy, this will not increase your premiums. Izzard adds that consumers also have greater protection if they buy from a broker. "If you buy from a broker, then in the unlikely case that you're given bad advice, the broker will be insured and can compensate you."

AMII's website www.amii.org.uk allows you to search for a broker in your area. Alternatively, if you're interested in buying critical illness cover, or any other protection, you could consider a broker such as lifesearch.co.uk.

Exclusions What does your policy cover?

You must be very careful to check what is covered and what isn't when you're preparing to buy a private medical insurance policy.

No insurer will cover you for any condition that you already had before you took out the policy, and most of them will not cover chronic conditions either, with the possible exception of any initial treatments. Psychiatric care is also a common exclusion from many health insurance policies.

Some policies won't pay for a private ambulance – and some of those that do will only pay up to a certain amount, which could leave you footing the rest of the bill following an emergency.

Finally, check when your cover actually kicks in. A common clause in many policies is that payments will only be made if an NHS treatment is not administered within six weeks of diagnosis. This can help reduce premiums, but will not be suitable for those in search of a fully comprehensive policy that covers private treatment from the beginning.