A cure - courtesy of the boss

Employee perks: the benefits of private health are not to be sneezed at
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The Independent Online
BUPA may be a household name but private medical insurance is still largely bought through employers or paid for by them.

Cynics may view this as little more than self interest; a way of repairing workers as quickly as possible so they can be flogged to death again. A more balanced attitude might see it as enlightened self-interest by employers. Simon Marton, of Bupa, says: "Medical insurance can be used to attract and keep quality staff. Employers want their staff back as quickly as possible. An injury such as a cartilage operation could involve a long wait on the NHS. That's where medical insurance can step in. It is also a way of being seen as a caring employer."

Just 10.6 per cent of the population had medical insurance in 1995, compared with a peak of 11.5 per cent in 1990. "There was an increase in private medical insurance in the 1980s. But price rises and the recession have stemmed the increase and both the individual and company markets are flat. Downsizing, which has particularly affected middle-management jobs, has not been beneficial," says William Laing, publisher of the annual Review of Private Healthcare. "But the conditions are now in place to encourage a growth in private medical insurance."

While some people who do not have insurance pay for private treatment on a pay-as-you-go basis, the overwhelming majority continues to rely on the NHS. But should they? Is medical insurance a worthwhile perk of a job? That depends both on the cost and potential benefits to an individual employee and on his or her attitude to the NHS. It is not only die-hard socialists who believe that the NHS is a sacrosanct national institution and that private medicine is inherently wrong. Against that, peace of mind, speed of treatment, more convenience over the timing and place of treatment and choice of specialist are put forward as the advantages of going private.

For the guilt-ridden, it is also worth considering that many of those people who say they are anti-private medicine already hand over money for treatment in the thriving alternative therapy business, pay for jabs at a British Airways clinic prior to an exotic sub-Saharan holiday, or buy expensive non-prescription medicines. Private medical insurance could be seen as an extension of this sort of dabbling. You could continue to use the NHS for most of your health needs, including routine visits to a GP and acute and emergency treatments in hospitals, but use the insurance for treatments where the NHS has long waiting lists. Impacted wisdom teeth, hip replacements, tonsillectomies and dealing with gynaecological problems are among the most common procedures for which Bupa pays out. But insurance is unlikely to be of help with chronic and incurable conditions, psychiatric problems or normal childbirth, for example. These are usually excluded. In addition, there may be limits on the size of a claim and on the hospitals you can use. Some budget policies may be very restrictive in what they offer.

But where an employer is prepared to pay the full cost of insurance, the perk may well seem worthwhile even if the cover is restricted. That said, there will be an extra tax bill (unless you earn less than pounds 8,500 a year or medical insurance is provided while you are working abroad). You will be taxed on the actual cost to your employer. So if the cost to the employer is pounds 500 a year, you are considered to receive an extra pounds 500 of income.

There is also likely to be a cost by way of an excess. If you claim, you pay the first pounds 50, pounds 100 or pounds 250 of treatment. This can be used by an employer as a way of reducing claims by employees and therefore the premiums it pays. Individual policyholders can also opt for an excess in exchange for a reduction in premiums.

In practice, most employers who provide free medical insurance restrict the benefit to middle and higher management, and often cover will include "pre-existing conditions", health problems you had prior to getting insurance. Normally, when you buy insurance yourself, existing conditions are excluded.

A more common employer-based medical insurance scheme involves employees being offered a subsidised or discounted deal. In some cases the employer subsidises the premium and the employee pays tax on the subsidy. But often there is no subsidy. Employees are simply offered private insurance at a discounted rate, based on the insurer agreeing to pass on some economies of scale. Bupa, for example, typically gives a discount of 25 per cent through employee schemes, though the discount is sometimes higher. Bupacare is the core product. For people between 30 and 34 cover is pounds 39.42 a month, but with a typical company scheme discount of 25 per cent that falls to pounds 29.56. For a married couple it is pounds 75.67, or pounds 56.74 with a discount. As you get older, the costs rise.