Implications of Insurance Premium Tax increase
In the budget on 8 July, the Government announced plans to increase Insurance Premium Tax (IPT) from 6% to 9.5% from November 2015.
Insurance premiums are not subject to Value Added Tax (VAT). Instead IPT is applied to all general insurance premiums, including health insurance. It therefore applies to the private medical insurance, health cash plans, dental plans and accident plans that we offer.
While we understand that the Government faces financial challenges to meet the costs of the NHS and other important public services, we’re disappointed in the approach it’s taking.
We know that our customers want to be in control of their healthcare and understand the importance of taking personal responsibility for their health. However, the increase in IPT will mean that the price of all types of insurance products will increase. This is going to put more pressure on household budgets and may mean that health cover will become unaffordable for some. This could result in people putting off their everyday health needs, storing up greater problems and costs in the medium term, and putting even more pressure on the NHS.
We are now writing to all our individual customers to inform them that the full increase in IPT will be included in their premiums from 1 November.
The full increase will also be reflected in the majority of our corporate customers’ premiums from 1 November or when their policy renews, depending on our existing agreement with them.
However, we’ve decided to not pass on the increase to corporate customers with our new company paid cash plan until 2016. Launched in January, this plan has been very well received. It includes features like online servicing and claims which also help us reduce our operating costs and pass on the savings to our customers. We will of course make sure that customers with earlier company paid plans can switch to the new plan if they wish.
Simplyhealth company paid cash plan
Our company paid Simply Cash Plan covers employees for a wide range of everyday healthcare treatments, such as dental check-ups or visits to the physiotherapist. It also includes our new online health and wellbeing service myWellbeing, which gives employees access to a GP consultation over the phone or web, as well as support services such as face to face counselling. They can also get prescriptions delivered to their home or work and access reliable, medically validated health information. It’s available from £1 a week, per employee.