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How Does Health Insurance Work?

Dec 24, 2019 | Insurance

How Does Health Insurance Work

Most UK residents choose to use health insurance offered by the state, which is the NHS system. NHS offers comprehensive care for everyone, regardless if they can pay or not. However, some people choose to buy private medical insurance coverage.


What is Private Health Insurance?

Private health insurance is a type of insurance coverage that pays for private healthcare including treatments, tests and surgeries, whether you become ill or are injured in an accident. Health insurance policies are generally written to cover acute conditions that are short-term and easily cured.

You’ll need to pay monthly premium to pay for the private insurance policy. In addition, private health insurance policies vary, so it’s necessary to choose the type of policy and the level of coverage you desire.

This type of insurance coverage is popular with some because it offers quicker access to medical treatment. In addition, the private healthcare system provides a wider choice of doctors, hospitals and treatments, unlike NHS. However, the private coverage is designed to work alongside NHS.

In addition to faster treatment, private health coverage offers the following benefits:

  • You can choose where to receive treatment
  • Private facilities are sometimes better, and you may opt to have a private room (in hospital)
  • Private coverage also offers more options for prescription medications and treatment types

Some businesses offer private health care insurance to their staff, while other people choose to buy this type of coverage on their own.

About 13% of people in the UK purchase private medical insurance, with the average premium costing about £1,435 a year.


What Does Private Health Insurance Cover?

Health insurance generally covers the following:

  • Inpatient treatment: when you need to stay in the hospital, usually includes tests and surgery.
  • Outpatient: when you can receive treatment on an outpatient basis (when you don’t need to stay in hospital), usually covers doctor consultations, diagnosis and treatment.
  • Day patient: when you don’t need to stay overnight, generally covers regular appointments


What isn’t Covered?

As with other types of insurance, you’ll find that there are some exclusions to most private health care insurance policies. Exclusions will vary by policy and by insurance provider, so it’s always a good idea to talk with a knowledgeable professional who specializes in this type of coverage.

Here’s a list of things that may not be covered under private policies:

  • Pre-existing medical conditions (medical conditions you have before purchasing the policy)
  • Organ transplants
  • Normal pregnancy and childbirth costs
  • Injuries related to dangerous sports or from war (or war-like hostilities)
  • Cosmetic surgery to improve your appearance
  • Chronic illnesses (such as HIV/AIDs-related illnesses, diabetes, epilepsy, high blood pressure, etc.)
  • Fertility treatments
  • Emergency treatments (ambulances and A&E departments at hospitals are generally run by NHS)
  • Treatment for drug addiction
  • Treatment while traveling abroad

Depending on the policy, it may be possible to find coverage for mental health, sports injuries, etc. You’ll need to learn about exactly what is and is no covered by the specific policies you’re interested in.

However, there are other types of health insurance policies that will allow you to pick what is covered. The options may include some of the following:

Treatment for specific conditions (such as cancer)

  • Psychiatric treatment
  • Dental treatment
  • Physiotherapy
  • Optical treatments


Coverage Limits

Private health insurance works similar to other types of insurance and places a limit on how much you can claim. Limits may be annual and can include:

  • How much you can claim per condition
  • How much can be claimed for inpatient and outpatient treatment
  • How much can be claimed per type of treatment (such as physiotherapy)
  • There may also be a limit on the total amount you can claim

In addition, some policies will only pay for private treatment if there’s a long wait for treatment from NHS, such as a wait time of six month or more.


Types of Private Health Care Insurance Available

Private health insurance offers a wide variety of choices, including who can be covered. You can buy a policy for:

  • Yourself
  • You and a partner (under a joint policy)
  • Your entire family
  • Your child

You’ll also find that comprehensive health insurance offers a wide range of treatment options and you can buy policies for specific health issues such as:

  • Dental coverage
  • Cancer
  • Pregnancy medical care
  • Optician costs (check-up or new glasses)

It’s also possible to get a policy based on your age, for instance:

  • Over 50
  • Over 65
  • Over 70

Private health insurance offers a wide range of coverage, giving more options when it comes to health care, you who’d like to cover, etc.


How Much Does It Cost?

The price of your health insurance premium will vary, depending on the following:

  • Your age
  • Your medical history (if you have pre-existing conditions)
  • Your family’s medical history
  • Your lifestyle (if you smoke or are overweight, premiums may be higher)
  • What you choose to cover (specific conditions, types of treatment, etc.)

Premiums will vary depending on the type of insurance and the options you choose to include. As noted earlier, you may not be able to buy certain types of health insurance depending on pre-existing conditions. This will from provider to provider.


How to Lower Your Health Insurance Premium

There are a few things you can do to help lower the cost of your insurance premium:

  • Choose a no claims discount: if you make no claims, your premium could become cheaper.
  • Choose a higher excess: the amount you’ll have to pay out of pocket when you make a claim. The higher excess may lower your monthly premium. However, keep in mind that you must pay out the amount of excess you choose, before the insurance will begin to pay.
  • Use nominated hospitals: premiums may be cheaper if you choose to use only hospitals/surgeries that are approved for the policy.
  • Improve your health: your premium could be lowered if you quit smoking or regularly visit the gym to stay in shape.

We’ve covered a lot of information here—this is what you can generally expect from a private health insurance policy. Be sure to contact a professional for specific questions on the choice of policy, etc. to get the best premium and coverage for you and your family.


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