How does private health insurance work?

We are lucky in the UK to have a National Health Service which is free (at the point of service) if you need medical treatment. The NHS is one of our most celebrated institutions and in the last year it’s repeatedly shown us how much it does, and how useful it is whenever we become unwell.

However, there is also the option of private healthcare which can help you skip waiting lists, choose your hospitals and doctors, and access treatments not covered by the NHS. Private healthcare comes at a cost, however, but private health insurance can cover help this.

Pros and cons of private healthcare

Private healthcare can give you access to a huge range of benefits and services, but it comes at a cost. Here we look at some of the main pros and cons of using it. 

Pros

• Get treatment quicker

• Choose your hospital and doctor

• Your own private room

• Covers treatment not available on the NHS

Cons

• Expensive

• Comes with exclusions

• Usually comes with an excess

• Most treatments are available for free with the NHS

• Private hospitals often have no A&E department

• You might get better care through the NHS

• Your treatment options may not be local

How does private health insurance work?

Also known as private medical insurance (PMI), it pays for private medical treatment, tests and surgery if you are ill or injured during the policy's term. It is usually designed for acute conditions, which are curable and short term.

You usually pay a monthly amount for your health insurance, which is called the premium. Your insurer can then pay if you need treatment that it covers while the policy is active.

It is designed to offer treatment alongside the service provided by the NHS. For example, appointments with your GP would still be through the NHS. But with medical insurance you could get the following benefits:

• You may be able to skip NHS waiting lists 

• A choice of where you get treatment

• A private room

• A wider range of treatment types

Find health insurance policies here

What does it cover?

Every health insurance policy is different and will depend on the insurer, but most policies will include cover for the following: 

• An inpatient: This includes staying in a hospital bed for tests or surgery.

• An outpatient: This includes consultations treatment when you do not need to stay overnight.

• A day-patient: This includes regular appointments but not staying overnight.

There are several options when it comes to health insurance. The cheaper your policy, the fewer elements it will cover. 

Comprehensive health insurance is usually more expensive but this is because it provides the highest level of cover. It will usually cover you for a long list of treatments while cheaper policies may be more limited. 

Some health insurers let you pick exactly what is covered from a range of options like:

• Physiotherapy

• Treatment for specific diseases like cancer

• Psychiatric treatment

• Dental treatment

• Optical appointments

• Mental health treatments

• Medical treatment and nursing at home

What is not covered?

Each policy has different limits and exclusions, but most do not cover the following:

• Chronic illnesses like HIV, including ongoing treatment for long term or incurable conditions

• Elective treatment you choose to have, including cosmetic surgery and fertility treatment

• Emergency treatment, because ambulances and A&E departments at hospitals are usually run by the NHS

• Treatment for drug abuse, e.g. spending time in rehabilitation

• Treatment abroad, but this should be covered by your travel insurance

• Care and treatment during pregnancy, although emergencies and health complications are sometimes covered

Many policies do not cover medical conditions you have already, for example, if you have diabetes. But some policies include some cover for pre-existing conditions.

How to claim on your health insurance

Cover limits

Like other types of insurance, policies come with limits on how much you can claim. These can include annual limits on:

• The total amount you can claim

• How much you can claim per condition

• How much you can claim for inpatient or outpatient treatment

• How much you can claim per type of treatment (e.g. physiotherapy)

Some policies also only pay for private treatment if you have waited six weeks or more for the treatment you need on the NHS.

What types of private health insurance are available?

There are lots of policies on the market and it’s important to find one that suits you and at an affordable price.

For example, you could get a policy designed for:

• Yourself

• You and your partner, with a joint policy

• Your whole family

• Your child

Comprehensive medical insurance covers the widest range of treatments, but there are also more specific policies that can cover specific treatments including for:

• Cancer

• Dental costs

• Optician costs like check-ups or new glasses

• Medical care during pregnancy

The older you are, the more you’ll have to pay for the insurance. This is because the risk of needing treatment increases as you get older.

How to choose a health insurance policy

How much does private health insurance cost?

The cost of your health insurance policy depends on the following factors:

• Your age, as it costs more when you are older

• Your medical history, e.g. if you had cancer, diabetes or high blood pressure

• Your family's history of conditions like heart disease, cancer or strokes

• Your lifestyle could make premiums higher if you smoke or are overweight

• What you choose to cover, as including more conditions and types of treatment costs more

These factors can also affect if you can get some policies. For example, some insurers do not offer cover for pre-existing conditions.

How to cut the cost

Private health insurance doesn’t have to cost the earth, and there are ways to reduce your premiums.

• A no claims discount: Once you have had health insurance for a while, your premiums could get cheaper if you do not make any claims.

• The excess: This is the amount you have to pay towards treatment yourself when you claim. Choosing a higher excess usually makes your premiums lower but makes claiming on the policy more expensive.

• Adding a wait period: This could give you cheaper cover. It means that if the NHS waiting list is less than your wait period (e.g. six weeks), you must get your treatment through the NHS. If the waiting list is longer, your policy pays for private treatment.

• Using nominated hospitals: Your premium could be cheaper if you only choose to be covered at a few hospitals or surgeries. Check the ones you choose are located nearby or offer the specialist treatment or facilities you may need.

• Improving your health: Some insurers reduce your premiums if you do not smoke or regularly use a gym.

Compare health insurance policies here