Healthcare Trust Plans

Some companies who employ a large number of staff operate their own health insurance plan, as opposed to purchasing health cover from an independent insurance company. These plans are known as self insured private medical schemes or healthcare trust schemes/plans and can be a really cost-effective way for companies to provide good healthcare benefits to their members of staff.

How do healthcare trust schemes work?

Instead of insuring the cost of all private medical expenses, healthcare trust schemes allow companies to actually fund those expenses for eligible employees. The risk involved is transferred from the insurance company to the employer, giving the employer more control and flexibility over their healthcare cover and thus allowing them to manage the costs more effectively.

However, the insurance company is still required to administer the healthcare benefits and treatment.

What are the benefits of these schemes?

The main benefit of a healthcare trust plan is that it gives large employers more direct influence over the provision of medical benefits to their staff.  Companies take on the risk of claims (up to a certain level) and therefore have the freedom of tailoring the schemes (types of benefit, benefit levels, excess charges, etc) to suit their organisation and budget. For example, a business can ensure that hospital charges, diagnostic tests, maternity benefit and cancer cover are all covered, if required.

Some schemes also offer staff incentives to help improve their health, which in turn could result in less claims being made and potentially lower private medical insurance costs for businesses.

Furthermore, companies that operate a trust facility can also save the profit margin that an insurance company builds into its premium, and significantly reduce their insurance premium tax.

Are they proving popular?

The number of firms who have switched to self-insuring their medical expenses via a healthcare trust plan has increased dramatically over the last few years, as more and more businesses strive to make their staff healthier in the most cost-effective way possible.

Growing popularity of healthcare plans

The growing popularity of healthcare trust plans is highlighted by figures from two of the UK’s largest healthcare players.

BUPA estimates that 20% to 30% of its large group business is written via trusts, while AXA PPP healthcare puts the figure between 30% and 40%.