Though the NHS provides quality free healthcare to everyone in the UK, many people choose private health care. The main benefits are shorter waiting lists, comfort, and personalisation.
Private health insurance costs are determined by your age, where you reside, and your lifestyle choices. Health insurance, like most forms of insurance, does not cost the same price for everyone. However, by making some wise decisions, you may make it more affordable.
To give you an idea, here is an example:
- If you are under 65 years of age, the insurance cost would be around £1,200 per year, split over 12 monthly instalments.
- If you’re over 65 years of age, this annual health care cost may rise to around £2,000.
What makes Private Healthcare so expensive?
The healthcare expense is quite high and may make us wonder if private health insurance is worth it or not. In some cases, such as billing directly for the NHS or private health care, even simple and basic treatments can be unexpectedly costly. For instance, someone wanting a complete knee replacement surgery would be required to pay an average of £11,814. Since this is the average, the prices can be higher than the mentioned amount. So, while calculating rates and other facts, insurers also take hospital costs into account. The discussed case can explain the high private health insurance costs.
Getting private health care insurance is a personal choice in the UK. If you do get it, make sure you have the monthly premium covered in terms of affordability. However, keep in mind that you may narrow down your selections to afford flexible cover.
What are the determinants impacting the cost of private medical insurance in the uk?
Several factors can affect the cost of private medical insurance, and they mainly depend on the hospital charges, your circumstances, and cover levels. Below we list the ten key factors affecting cost:
- Your age: Your age is one of the main factors affecting the cost of private health insurance. Since you are more likely to use medical services as you age, your rates will typically be greater than those of a younger individual.
- Your postcode: Insurers consider the location of a hospital and the average treatment costs in that locality.
- Your health status: This would include lifestyle factors, such as smoking habits.
- Cover levels and limits: This includes the levels and limits you opt for to cover different treatments. They may also include amounts not covered by the base policy.
- Hospital facilities and premises upkeep: This would include facilities like the hospital building, accommodation, other architecture, and safety, available to medical staff members, patients, volunteers, and visitors. The premises’ upkeep would cover the entrance, the parking spaces, the drop-off area, and the street signs.
- Offering effective medicine: This would include personalised medicine and niche drugs used in private treatment by hospitals.
- Hospital Staffing: This includes employing highly trained health care specialists.
- Medical equipment supporting diagnosis and treatment: With the advent of technology, hospitals must keep their medical equipment updated.
- Medical software to secure, store and handle patients’ medical records: This would include Electronic Health Records (EHRs) and software for encrypting data, backups, system access controls, authentication, and identification.
- For-Profit Status: Sometimes, the insurers are ‘for-profit’ businesses. They would include a mark-up fee on their services to operate.
How do previous medical conditions affect your private health insurance choices?
Like that of other insurance products, your premium may be affected by the kind of underwriting offered. When you apply for health insurance, insurers utilize this procedure to figure out your health condition to determine whether to provide you cover, at what price, and with which exclusions or restrictions, if any. The four fundamental kinds are as follows:
You won’t be covered for treatment of any medical conditions you had in the last five years you until:
- You’ve been a member for two consecutive years.
- You’ve gone two consecutive years without experiencing any problems due to that ailment.
You can pick this option if you don’t want to reveal your entire medical history. They inform you if you’re covered when you submit a claim. This is because the insurers won’t look at your medical history. This also means it’s simple to apply, and you’ll be insured sooner than with other forms of moratorium underwriting.
Full Medical Underwriting (FMU)
FMU is the most comprehensive type of underwriting conducted. Health insurers ask for information about your medical history, including any pre-existing conditions. Using these details, they will calculate your cover.
This implies you may be able to receive cover for a pre-existing medical condition that would typically be denied under other circumstances. Even if your pre-existing medical condition isn’t covered, you’ll know what you can and can’t claim right away.
Continued Medical Exclusions (CME)
If you join on a ‘CME’ basis, the insurers will continue to follow your prior health insurer’s exclusions for medical problems.
Medical History Disregarded (MHD)
How do different hospitals influence the cost of private health care?
Different private hospitals in the UK charge you varying fees for treatment. The cost would depend on the equipment used, facilities available, and accommodation provided. Hospitals in major UK cities are often more expensive than hospitals in rural areas, as with many other services. Insurers strive to maintain a level playing field for all involved parties.
To begin, they work with hospitals to guarantee that costs do not spiral out of control by making agreements with hospitals to obtain preferred rates, resulting in cheaper premiums.
Next, the hospitals are divided into groups. For instance, the cheapest hospitals, the costliest, and a middle group. You then pick which of the three sets of hospitals you wish to be treated in, paying extra if you want to be covered at the more expensive ones. This guarantees that those who live near the cheap hospitals pay less for their health insurance.
On the other hand, if you reside in a major city, your nearest hospital could be in your insurer’s most expensive group. This would have an impact on how much you pay.
The decision of which hospitals to obtain coverage from is a personal choice. The primary factors considered for this decision include the location of the nearest covered hospital, the premium connected with acquiring cover for it, and the facilities at that hospital for any specific medical issues you may have.
One example is Vitality health care insurance, where the three hospital levels are:
- Lowest Category – “Local”: This level includes all hospitals in the UK’s biggest hospital groups, BMI Healthcare, Spire Healthcare, Aspen, Nuffield Health, Ramsay Health Care, and the New Victoria Hospital. It does not cover any Central London hospitals.
- Middle-Upper Category – “Countrywide”: This level includes most other private hospitals outside of London, most NHS private patient units outside of London, and some NHS private patient units in London.
- Highest Category – “London Care”: This level includes:
- Major hospital groups in the UK, such as BMI Healthcare, Nuffield Health, Spire Healthcare, and Ramsay Health Care.
- Several local providers, including Aspen Healthcare and the New Victoria Hospital, are available.
- The London Clinic, The Hospital of St John and St Elizabeth, King Edward VII’s Sister Agnes Hospital, and the Royal Marsden Hospital in Central London.
- Many other private hospitals outside of London
- All NHS private patient units outside of London.
- Several NHS private patient units in Central London
Other insurers also provide similar hospital lists, though the exact options may differ. For instance, BUPA health insurance has three levels, Aviva health insurance also provides three hospital levels, and AXA offers two.
What effect does changing your excess have on the cost of private health insurance?
Carrying an excess on your health insurance makes it cheaper. The larger your excess, the cheaper your premiums will be in general. After the original medical insurance limit has been exhausted or used up, excess insurance pays the claim. Similar to other types of insurance, the excess is a payment you must make toward a hospital claim on your health insurance policy.
Private health care insurance policies in the UK use excesses to control claims. The insurer believes that if you have to pay the initial half of a claim, you will be more cautious about filing a claim in the first place and will only do so when necessary. They are concerned that without an excess, people would claim more often.
In the UK, there are generally four options, £0, £250, £500, and £1000 and two payment options for them:
- Per Year Basis: With this option, the excess will have to be paid each year. You will pay the first £250 of claims in any given year. After this payment, no further excess will have to be paid, regardless of the number or amount of claims.
- Per Claim Basis: You will have to pay the first £250 of each claim filed in this option. It often works out to be more expensive than the yearly option.
If your insurer allows, you have the choice of selecting between the per-year and per-claim options. Other types of flexibility are also allowed by insurers.
As mentioned above, the excess is indirectly proportional to the cost of your premiums. However, purchasers should remember that a higher excess means more money to pay when you have a large claim. It also means you are solely responsible for claim amounts up to the excess you pick.
Does changing your underwriting affect the cost of private care?
Before a health insurance policy is issued, the applicant is assessed based on their medical history to determine the policy’s premium amount and whether or not to provide insurance cover in the first place. Before a health or life insurance policy is issued, the applicant is assessed based on their medical history to determine the policy’s premium amount and whether or not to provide coverage.
The financial effect of changing your underwriting on the cost of private health insurance is small. Therefore, instead of price, many buyers select underwriting based on their particular circumstances and the terms and conditions that arise.
In the UK, most insurers define pre-existing conditions as anything you’ve received medical help for in the five years leading up to purchasing a policy, including consultations and medicines. For instance, chronic illnesses that were diagnosed more than five years ago. Insurers may also consider an illness to be pre-existing if you have had symptoms in the previous five years, even though it was diagnosed before that time.
Few UK insurers cover conditions that occurred in the three years before purchasing a cover. Many insurers do not cover chronic diseases that require continued medication, such as diabetes or hypertension.
Other health issues, for instance, dental issues, pregnancy, childbirth, mental health and wellbeing, behavioural problems, vision issues, childbirth, etc., may be excluded from standard health insurance policies. However, they are frequently covered by policy add-ons or specific products.
Moral hazard would be encouraged if there was no medical underwriting. Medical underwriting is essential for an insurer to ensure that customers do not get health insurance when they are already unwell or need medical attention.
What impact does my situation have on the cost of my health insurance?
The answer varies because health insurers charge differently. Your lifestyle choices, such as alcohol intake and, in particular, whether or not you smoke, might affect the cost of your health insurance. Most insurers will ask if you smoke and raise your premiums if you do. However, this is not always the case.
Suppose there are two cases.
- In the first case, the individual has stopped smoking and now uses a vaporizer.
- In the second case, another individual has never smoked.
The premiums for the first case would be higher than the second because most health insurance companies will consider your nicotine intake rather than whether you smoke traditional tobacco products like cigarettes.
Most private medical insurance providers will not accept that you are a non-smoker if you quit smoking last week. Like any other protection product, a smoker is often described as someone who has used tobacco products in the previous 12 months. So, to be classified as a non-smoker, you must have been smoke-free for at least 12 months.
All of the factors that influence premium pricing fall into one of two categories:
- Your personal circumstances
- Your preferred cover level.
While your circumstances, like your age and your postcode, might significantly impact your insurance rates, you are unlikely to modify them. The cover level, on the other hand, is entirely up to you. You may pick and choose the features that are important to you, including which ones fit within your budget.
Is my postcode a deciding factor in the uk prices of health insurance?
The location of your home may have a significant influence on the cost of health insurance. This might be because the hospitals on your hospital list are more expensive or because your insurers have historically experienced higher-than-average claims in your location. Insurers base their rates on previous experience with specific groups of people, which are often characterised by their postcode and age.
Can my age have an impact on the price of my health insurance?
Yes, age is a key factor in determining the cost of your medical care insurance. The premiums increase as age increases. Each of the tables below shows a cost comparison based on the effect of different ages on the cost of health insurance.
Cost Comparison: 25-year-old Smoker
Cost Comparison: 35-year-old Smoker
Cost Comparison: 45-year-old Smoker
Cost Comparison: 55-year-old Smoker
As seen in the tables above, the private health insurance costs for a 55-year-old smoker are double the amount charged from a 25-year old smoker in the UK.
Once you reach the age of 50, the cost of accessing private health insurance increases significantly. This fact is because older people are statistically more likely to file claims for medical treatment and diagnosis.
Since these claims cost the insurance company more money, they charge older clients increased rates. Most premiums are evaluated on an annual basis, leading to a quote increase.
The younger generation does not experience morbidity as much as the older age groups. Risks to health and possibilities for hospitalisations due to diseases, injuries, and other medical issues grow as a person ages. Insurers keep this in mind while calculating private health insurance premiums. For covering age-related health risks, they would set a higher premium on a cover compared to a younger adult opting for the same product.
How much does an individual private health care treatment cost?
The cost for individual private health care treatment will generally be higher. The table below shows the different treatments and their average cost in the UK, according to Privatehealth.co.uk.
|Private health care treatment
|Cardiac pacemaker insertion
|Skin lesion removal
|Gallbladder removal (Laparoscopic)