1C6 +

Question 1

What do reinsurers offer?

Answer 1

1. Capital for solvency purposes
2. Stop loss cover
3. Reinsurance of larger risks
4. Help with research, design, underwriting and claims management

Question 2

Why is reinsurance becoming more popular?

Answer 2

Increasing high-value claims

Question 3

Health funds/cash plans

Answer 3

Mutual organisations run for the benefit of their members

Question 4

Why have many smaller cash plans suffered?

Answer 4

Declining or ageing customer base and rising costs

Question 5

How many people are covered by cash plans (as of the start of 2021)?

Answer 5

– Over 2.5m individuals paying
– 3.3m covered
– Over 1m employer contributions

Question 6

Self-insured schemes

Answer 6

Non-insured schemes run by TPAs

Question 7

Self-insured claims payout in 2020

Answer 7

Est. £639m

Question 8

Strengths of TPAs and consultancies

Answer 8

1. Independence
2. Motivation (rewarded for controlling client costs)
3. Flexibility
4. Information

Question 9

How many people covered by PMI?

Answer 9

7.13m – 10.6%

Question 10

Medical insurance market divisions

Answer 10

1. Individual
2. Company paid
3. Voluntary

Question 11

Voluntary schemes

Answer 11

Employees pay premiums entirely themselves, but often at premium discounts.

Question 12

What % PMI is fully company paid?

Answer 12

40%

Question 13

Savings scheme

Answer 13

Employer sets up a savings plan into which it pays estimated costs of healthcare treatment for its employees – stop loss can be used.

Question 14

Tax on self-funded schemes

Answer 14

Employees may have to pay tax on the whole cost of treatment (and NICs too?)

Question 15

Risks of self-insurance

Answer 15

1. Underestimating total costs
2. Costs can add up
3. Unexpected complications

Question 16

PMI taxation

Answer 16

– No VAT
– IPT at 12%
– Premiums deductible for corporate tax purposes

Question 17

Employee PMI taxation

Answer 17

– Subject to P11D benefit-in-kind
– Gross premium added to gross income
– Lower PAYE tax code

Question 18

NICs

Answer 18

– Employers must pay Class 1A NICs at 15.05%

Question 19

PMI taxation for non-limited companies

Answer 19

– Employer pays income tax (rather than corporation tax)
– Insurance premiums offset against taxable income

Question 20

6 ways to minimise PMI tax

Answer 20

1. Obtain most competitive premium
2. Choosing a sustainble insurer
3. Choosing the right level of benefits
4. Excesses
5. Cheaper hospital band
6. Self-funding/trust

Question 21

When did new NHS reforms come into effect?

Answer 21

April 2013 – set out in Health and Social care act 2012