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IHC newsletter, Issue 21, December 2016

Editor’s letter

It’s been a busy six months in the sector, with many major changes to the market and more to come. With Brexit continuing to dominate UK news, we are all still waiting to see what the real outcome will be.

In private healthcare, competition has been building up with ever more impressive facilities being built to provide the very best care for patients. London looks set to become home to state-of-the-art sites for Cleveland Clinic and Spire Healthcare, while St Joseph’s Hospital in Newport, Wales, has undergone a £10m investment programme making it a top provider of cutting edge diagnostics and treatment.

There are some challenges in the pipeline, with an increase in insurance premium tax to 12%, and there will no doubt be discussions to be had around the changes to salary sacrifice, both points that were announced in the Chancellor’s Autumn statement.

And we continue to see calls for more emphasis to be placed on employee wellbeing – an area that many companies are recognising to be crucial to their success, but which others are sadly still neglecting. The CIPD says the number of people facing mental health issues while in employment has grown to around one in three, according to its research, underlining a continued need for focus and change in this area.

As ever, any feedback on the newsletter is extremely welcome, and please do get in touch if you would like more information on how these matters might affect you and your business, or to find out how IHC can help.

We hope you will find this newsletter interesting and informative.

Paul Roberts

Industry news

Getting moving on wellbeing
Employers are increasingly taking the health, fitness and wellbeing of staff seriously, and a number of private medical insurers are forging deals with fitness firms to encourage a more active lifestyle.

AXA PPP Healthcare has teamed up with Pure Gym to provide a discount of 50% on gym membership. The offer is available to members of the private healthcare plan (excludes First Healthcare).

People wanting to benefit from the offer can get a discount code by visiting the Membership Servicing Site, then following the link to the Active+ website. Entering a promotional code and AXA membership number gives you access to the 50% discount, which is also available to family members covered on the plan.

Vitality (formerly PruHealth) has a similar deal with Virgin Active gyms, offering 50% off for members.

There was also a shift in the world of fitness this year, with Nuffield Health acquiring 35 former Virgin Active gyms. Nuffield Health said the move was part of its strategy to: “Provide a seamless connected health and wellbeing service across the UK, linking up fitness and wellbeing gyms with clinical services and hospitals.”

The transaction brings the number of Nuffield Health fitness and wellbeing gyms to more than 110, and the group said it would have capacity to offer access to “broader health and wellbeing service” for members and non-members.

Editorial 1 – IPT set to rise
Insurance premium tax (IPT) will increase by 2% from 1 June 2017, the Chancellor Phillip Hammond announced in his Autumn Statement last week. This is the third time in 18 months that the government has decided to increase the tax. It will now be charged at a rate of 12%, up from 10%.

In his speech, the Chancellor said: “Insurance premium tax in this country is lower than in many other European countries, and half the rate of VAT. In order to raise revenue, which is required to fund spending commitments I am making today, it will rise from 10% currently, to 12% from next June.”

IPT applied to premiums on all motor, home, travel and health insurance policies whether personal or business, and cannot be claimed back by business, unlike VAT.

The increase is indeed a big revenue raiser – according to the Association of British Insurers the increase from IPT’s initial 5% to 12% will add some £13bn to the Treasury coffers over five years.

However, the industry, unsurprisingly, did not welcome the news. Director general of the ABI, Huw Evans, said: “UK consumers and businesses already pay relatively high levels of IPT, and the latest increase puts us even closer to the top of the table in Europe. It cannot be right that people are being forced to pay an increasingly high price for doing the responsible thing and buying insurance. Nor can it be fair that insurance customers are bearing the brunt of recent increases while the ‘sin taxes’ like wine, spirits and gambling are unaffected.” Evans said: “Having now increased IPT three times in 18 months, it is time for government to look elsewhere to help meet the formidable fiscal challenges it faces.

Editorial 2 – Salary sacrifice faces tax changes
The Chancellor announced changes in the way in which salary sacrifice schemes are to be taxed in future. From April 2017, most salary sacrifice schemes will be subject to the same tax as cash income. In his speech, the Chancellor said: “The government will take action now to reduce the difference between the treatment of cash earnings and benefits. The majority of employees pay tax on a cash salary. But some are able to sacrifice salary and pay much lower tax on benefits in kind. This is unfair, and so from April 2017 employers and employees who use these schemes will pay the same taxes as everyone else.”

Under salary sacrifice schemes, both employer and employee are able to make a tax saving, as the benefit is taxed at less than salary, or indeed is not taxed at all. The move will have a different impact on different salary sacrifice schemes. Certain benefits will retain their exempt status, such as pensions, pensions advice, childcare, Cycle to Work and ultra-low emission cars.

HMRC said that arrangements that were in place before April 2017 would be protected for up to a year, and arrangements in place before April 2017 for cars, accommodation and school fees will be protected for up to 4 years. Some commentators were relieved that the scope of the change was less broad than had been anticipated. However, the Daily Telegraph reported: “The move will cost employees and employers £85m in 2017/18, rising to an additional £260m by 2020/21. Over the next six years the move will raise just over £1bn in additional tax.”

Health screening, a benefit which has formerly been available through tax-saving salary sacrifice schemes, looks unlikely to be exempt from tax in future. Paul Roberts, consultant at IHC, said: “Salary sacrifice and taxation went to consultation and the decision to make changes is not a great surprise. The chancellor needed to get tax income from somewhere, and this had been signaled as a target.”

However, he adds: “It is a pity that health screening will effectively cost more for employees in future. Increasing health screening costs will in turn increase the barrier to screening, which can be hugely valuable in catching disease early, or indeed preventing its occurrence. The NHS will have to carry the burden.”

Editorial 3 – The online doctor will see you now…

Why wait an age for an appointment at a far too busy GP surgery, then sit for far too long in a waiting room to see an over-booked GP, when there’s an app for that?

Online GPs seem to be a modern solution to a modern problem. With too many people chasing too few appointments, and all trying to juggle looking after their health with a packed working day, it makes sense to try to find an alternative.

Services such as Push Doctor and Babylon Health offer video consultations where patients are ‘face to face’ with doctors through the screen.

Push Doctor allows you to see a UK GP via the screen of your smartphone, tablet or computer with webcam. You can book ahead or ‘wait in line’ with the service’s online waiting room, where on average patients have a six-minute wait. Online GPs can prescribe medicine, provide a sick note or write a referral letter to a specialist, and prices for the first 10-minute consultation start at £5.

Babylon Health offers monthly or annual subscriptions, as well as a pay as you go option, and services include therapy for mental health matters, access to specialist doctors as well as online GP appointments.

Online GP services are unlikely to entirely replace seeing a practitioner in the flesh, as in many cases a physical examination is important. Dr Peter Swinyard, chair of the Family Doctors Association, told the GP’s publication Pulse Today: “Within limits it will be OK but even for something routine like prescribing contraception, I’d like to see a current blood pressure … There may be circumstances in which people will find it convenient – it will be a supplement to general practice but it’s not a replacement for it.”

IHC consultant Paul Roberts said: “Online GP services add an extra dimension and provide a solution at a time when GPs are struggling to meet patient needs. There are situations when it would not be appropriate to substitute a face-to-face appointment with a virtual one, but others where an on-screen consultation is an excellent option.”

A news review of the past six months

It’s been a busy six months for the healthcare sector. We round up some of the stories we have all been talking about.

Call for employers to act as one in three face mental health issues at work
Employers are still not doing enough to tackle mental health issues, in spite of a significant increase in the number of those experiencing problems, according to a CIPD report. The number of people facing mental health issues while in employment has grown to around one in three, according to research. The proportion of people has increased from a quarter to almost third (31%) over the past five years. But most employees say they don’t feel there is enough support in the workplace for those with mental health… find out more

National Friendly: back with mutual benefits
The 150-year-old mutual society National Friendly has reopened its doors to offer a PMI product called Your Health Fund. National Friendly’s Diagnosis Plus product includes private specialist and GP consultations, diagnostic tests such as scans and x-rays, specialist treatments, including physiotherapy, chiropractic treatment, counselling and psychotherapy… find out more

Reducing the stress with Medicash Family Care
Parents frequently find that PMI cover does not cover quite what they expected it to, which can lead to additional stress at a difficult time. Medicash Family Care is aiming to tackle this problem in the form of a product developed in association with Medex Protect. The product offers an alternative, practical benefits package on a company-funded, flex or voluntary basis… find out more

Competition picks up in private healthcare
Competition is beginning to heat up in the London market, with a number of international investors making headway. The Cleveland Clinic, which has a 165-acre campus in Cleveland, Ohio and a number of other facilities in the US, Canada and elsewhere has submitted plans for a 205-bed facility near Buckingham Palace, while Private Healthcare UK reports that Spire Healthcare is thought to have been in talks with a view to opening a 130-bed hospital within two years. The facility would be the group’s first in central London… find out more

St Joseph’s Hospital, Newport aims for the top
St Joseph’s Hospital in Newport, Wales, has undergone a £10m investment programme which it says makes it one of the best-equipped private hospitals in the country… find out more

IHC update: Meet the team

Sandra Vaughan, consultant, Group Protection team
Sandra Vaughan is a consultant working from our London office. She joined IHC nine years ago with a wealth of experience in the insurance industry, having begun her career in financial services as an independent financial adviser (IFA), before working at Zurich and then Unum. “I’ve always enjoyed working within this sector,” she says.

Her first contact with IHC was while she was working at Unum. “IHC was one of the brokers I dealt with,” she explains. She left Unum when her daughter, now 10 years old, was born as she wanted to dedicate time to being a full time mother.

But with her professional approach and her dedication to the job, IHC was keen to stay in contact. “IHC asked for my number when I left Unum and six months later they called to see if I would be interested in working for them.” Sandra felt ready to take on a little work, but was interested in a flexible arrangement where she could work from home on administrative tasks.

“I started when my daughter was one year old. It was perfect, I worked three days a week, working on difficult cases, and at that stage I was not meeting with clients or speaking on the phone, it was all desk-based, so I could work and be a mother as well,” says Sandra. “It was just the right balance.”

Sandra grew her workload, gradually going up to four days a week and then finally taking on a full time role as a consultant with the group risk protection team when her daughter was eight, and so spending more time at school. The move led to more face to face contact with clients and started her career on a different route with new challenges.

In fact, her job has now developed into a management role: “I have recently taken on management responsibilities on the group risk protection side; I now manage the group risk admin team in the London office,” she explains. Sandra now works from home part of the week and spends more time in the London office.

“I am really enjoying it. I get to spend more time with the team – when I was working from home I just had the four walls and the cat to talk to!” she says. “I always had the opportunity to visit the London office but now I come more often. I work with the team once a week and integrate with the other members of IHC.”

“I enjoy meeting the clients, discussing the schemes and the ideas around that, plus I love working more closely with the team.”

IHC in the Channel Islands
Gemma Milford, head of IHC’s offshore team recently wrote an article for the Jersey Evening Post looking at how the team has grown over the last decade to develop a strong reputation for ‘best in class’ advice and support on employee wellbeing in the Channel Islands specifically…. read more

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