Health insurers will appreciate the irony of a
major health insurance idea being hidden away in the small print of the recent
Sickness Absence Review.
Some insurers responded joyfully before they had
read the documents, another irony, to early indications that the review had
suggested that employers and employees could obtain tax relief on private
This was never a starter as David Cameron has as
part of his campaign for reform, made a definite promise to the NHS that he
will never allow tax relief on private medical insurance.
What the review actually suggests is a new type
of employer paid health insurance that would get tax relief - ‘Expenditure by
employers targeted at keeping sick employees in work or speeding their return
to work - such as medical treatment or vocational rehabilitation should attract
It would be almost impossible to define what
treatment or health help in a current private medical insurance policy would or
would not fit the tax relief criteria.
Currently, if an employer pays for medical
treatment to help get someone back to work, it is treated as a benefit in kind.
The employee pays tax on the benefit, and the employer pays national insurance
contributions on top.
The solution is for insurers to develop new
vocational rehabilitation insurance plans that would be cheaper than
traditional private medical insurance and could offer services targeted to
particular types of worker.
The report suggested that employers could get
such cover for between £70 and £100 per employee per year – which is all rather
pie in the sky until an insurer develops and prices a product.
Private medical insurance news: 29 November 2011