Private medical insurance (PMI) for contractors

Contractors looking to cover themselves and any dependents for specialist and hospital treatment costs may be interested in find out more about private medical (health) insurance.

Although the National Health Service is “free” to use, many individuals find it hard to book appointments at convenient times, and delays are commonplace.

Additionally, many medical treatments are limited in scope on the NHS, and you may have to wait an age before being provided with operation dates.

In the private sector, you are free to choose the service and treatment you would like to receive, and importantly when you receive it. You will have access to many services and treatments not fully provided in the state sector. You will also have access to wards in private hospitals. The obvious downside is that you have to pay for the privilege of being treated privately.

So what is Private Medical Health Insurance?

With PMI, you sign up for an annual insurance policy to cover you and your family.

Once a medical problem has been identified, you will be referred for specialist treatment by your NHS or private GP, at which stage you contact your insurance provider.

Once you have been recommended a specialist to visit, medical tests of hospital treatment will be arranged with the help of your insurance provider.

The amount/scope of the cover you receive will depend on the the PMI provider you sign up with, and the package you are covered under.

The key benefits of PMI

  • You will be able to see a specialist quickly. No NHS waiting lists.
  • You will have a private room to recover following treatment.
  • You will have choice over treatment types and consultants, with timings to suit you

Buy personally or via your limited company

Although the benefits of taking out private health cover are clear, one question which contractors often ask is – is it more tax efficient to pay for the cover personally, or via my company?

As PMI is clearly a personal expenses – your company cannot claim tax relief on the cost. However, despite this, you may be better off paying for the cover via your company. It all depends on your circumstances, and the cost of the cover.

If your company pays the premium, it must pay Employers’ NI on the cost, plus the recipient (the contractor) pays income tax on the same value – as it is a ‘benefit in kind’.

If you pay for the premium personally, this will be out of income that has already been taxed.

In some cases, PMI providers provide cover at better rates to corporate customers, so this may outweigh the extra costs.

If you’re not a higher rate tax payer, you may find that overall it is cheaper for your company to pay the premiums.

We recommend you ask your accountant which is the most tax-efficient route before making the committment.

Get a health insurance quote / find out more

To see what options are available to you, our recommended partners at Broadbench will carefully compare the leading health insurance providers on your behalf. Simply fill in the form below.

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Last updated: 13th September 2018