Guide to health insurance for self-employed people
- Health insurance can help self-employed people access fast, reliable treatment in addition to what's available on the NHS
- The policies can reduce wait time for surgery and other oversubscribed treatments, which might mean getting back to work quicker
- Note that health insurance won't pay cash for time off work, so you'll still need a contingency plan for income lost to sickness
According to 2013 research by auditor PwC, sick leave costs UK business £29 billion a year.†
However, there are 4.75 million self-employed workers in the UK who won’t receive statutory sick pay (SSP) to keep them afloat.
This means that independent workers are often under great pressure to get well and back to work as quickly as possible, which is where private health insurance can help.
Reasons to take health insurance if you're self-employed
A health insurance policy, also known as private medical insurance (PMI) supports the services you'll receive on the NHS and offers more choice when selecting:
- A specialist doctor or consultant, and;
- The hospital which administers the aid
It’s particularly useful for fast-tracking surgery, and consultant or referral appointments, which can be invaluable if you want the minimum of disruption to your working schedule.
Brian Walters is a member of the Chartered Insurance Institute and former vice-chair of the Association of Medical Insurers and Intermediaries.
“Private medical insurance usually meets an emotional need, rather than a financial one," he said.
“Consumers may buy PMI to allay fears over NHS waiting lists, shared wards, hospital-acquired infections, and the availability of cancer drugs.
“For the self-employed, though, who rely on their health for their income and are not eligible for statutory sick pay, PMI can form part of prudent financial planning alongside income protection insurance.
“The main benefit of PMI in this context is to reduce downtime by providing prompt access to diagnosis and, where required, treatment.”
Choosing the right health insurance
Not all health insurance policies are created equal and if you're your your own boss, cost might be a primary consideration.
“As with most things in life, the cheapest policy is rarely best, but it doesn't follow that the most expensive policy will necessarily offer the most comprehensive cover,” says Walters.
When you get a health insurance quote through Gocompare.com, you'll be able to order your results from our partner, ActiveQuote, by price.
Look out for quotes with an 'Options' button. These ‘adaptable policies’, which you can tailor to suit your own needs and budget, may be particularly appealing to self-employed people.
You'll be able to choose exactly the cover you need, without paying for what you don't.
Be aware of how your own situation may also raise the costs, says Walters: “Having no excess, full out-patient cover and, with some insurers, even cover for central London hospitals will increase the price of the policy.”
Think carefully about how you want health insurance to support your working life, then read the policy documents thoroughly to ensure you’re investing in the right level of cover.
The difference between PMI and healthcare cash plans
Whether you need an individual or a family policy, self-employed workers may either take out health insurance or a healthcare cash plan - but be aware that the two products work very differently and that cash plans are not available through Gocompare.com.
“There is little crossover between the two products,” advises Walters “and cash plans are certainly not a replacement for PMI.”
If you’re hospitalised unexpectedly, need regular clinic treatment, or require more expensive treatment, PMI puts you in front of a specialist, fast.
Certain ailments and practitioners may not be covered and will need to be added as additional optional cover, which is why you might be tempted by a cash plan instead.
A cash plan covers the cost of visiting a range of professionals, such as the optician, dentist, psychiatrist, physiotherapist or a chiropractor.
Similar to an insurance policy, cash plans ask for a monthly payment, and give you cash back up to a specified annual limit to recoup the cost of everyday healthcare appointments.
Always read the small print to ensure you understand what you're eligible for before signing up for one service or the other.
Advantages of PMI for the self-employed
Self-employed workers need some room to manoeuvre within their PMI cover.
If you’re hospitalised unexpectedly, need regular clinic treatment, or require more expensive treatment, PMI puts you in front of a specialist, fast
For instance, it’s an expensive business if you’re based in Portsmouth but the insurer’s nearest approved hospital is in London…
A good policy - particularly for freelancers - will flex for the wishes of the patient, offering a choice of appointment times and locations, practitioners and healthcare facilities.
But, that flexibility must be represented in your policy upon purchase, so choose carefully.
“Most policies are based on a hospital list,” says Walters; “and insurers have not traditionally controlled which specialists their members see, but this is starting to be introduced on some cheaper plans.”
As always, check the policy terms for wiggle room before purchasing.
Five things every self-employed worker should know about health insurance
Although there'll be no difference between the policies available for self-employed and employed people, there are a few extra things for freelancers to look out for with their cover.
Sick days aren't covered
PMI doesn't provide a financial benefit for primary care, or care at GP level, except in the most expensive plans.
In other words, if the flu knocks you out for a couple of days, you'll still be able to get treatment from your GP, but it's unlikely your health insurance will pay out for anything.
Because of this, it's particularly important that self-employed people have a rainy-day fund to help with these occasions.
Most policies have exclusions
There are some conditions that are specified as standard exclusions in policy wordings, such as deafness, eyesight and developmental issues, which might be important to you if your line of work is likely to trigger specific conditions.
Other standard exclusions include accident and emergency treatment, cosmetic treatment, and HIV or AIDS.
You may also find that transplants, sports injuries, pregnancy, childbirth and pre-existing medical conditions are also excluded from the cover - but remember, you will still receive treatment on the NHS, you just won't get any enhanced benefit from your private healthcare.
Treatment costs may be capped
A monetary cap placed on certain illness is a rarity, but should nonetheless be considered if it's applicable to your needs.
You might find that certain types of treatment are capped in the policy wording, for instance heart and cancer treatment limited to £50,000 per condition for the life of the policy, or a £10,000 lifetime limit on palliative cancer care.
You might be able to take a pick 'n' mix approach to treatment
Some plans - known as major medical expenses plans, but often marketed as PMI - provides a fixed monetary amount for you to source your own treatment.
This might offer a level of flexibility that'll appeal to any savvy self-employed person.
Cover might be limited for chronic conditions
If a condition enters a 'chronic' phase, i.e. it becomes a permanent feature of your health, insurers will not usually cover the routine monitoring and maintenance costs.
Again, this might be a major consideration for self-employed people who are at risk of particular conditions with their line of work.
Income protection versus health insurance
Remember, health insurance is very different to income protection insurance.
While it will put treatment and care in place to get you back to work as soon as possible, it won’t give you a salary if your health prevents you from working for a longer period of time.
This is where income protection insurance can be invaluable.
There are a range of policies to protect your income and mortgage, which might pair well with a robust health insurance policy.
By Amanda Bathory