Private Medical Insurance - Implications?

patchyX2

I'm due to start a new job soon and they offer private medical insurance. I've been given a form with the following comment:

"Please indicate on the form below whether you would like to opt in or out of Private Medical Insurance.

Your role in [company name] entitles you to receive single cover private healthcare. This is a taxable benefit and whilst it isn’t deducted from your salary, it will show on your payslip."

I have no idea what a taxable benefit is, so I hopped onto the gov.uk site which says the following in relation to medical insurance:

"You usually pay tax on the cost of the insurance premiums if your employer pays for your medical insurance."

I'm a bit confused. The gov.uk snippet makes it sound like my tax will increase to cover the insurance premium, but the form makes it sound like a freebie?!  Can anyone shed any light on how this works? I have no other information from the company about the policy schedule/coverage/premium.

Dazed_and_C0nfused

Yes you will pay more tax.

Why would you think otherwise?

Your role in [company name] entitles you to receive single cover private healthcare. This is a taxable benefit and whilst it isn’t deducted from your salary, it will show on your payslip."

You need to know the benefit value to understand how much tax.

patchyX2

Dazed_and_C0nfused said:

Yes you will pay more tax.

Why would you think otherwise?

Your role in [company name] entitles you to receive single cover private healthcare. This is a taxable benefit and whilst it isn’t deducted from your salary, it will show on your payslip."

You need to know the benefit value to understand how much tax.

Thanks for clarifying. I guess it was the bit where it said "it isn't deducted from your salary" that threw me. Maybe it's not deducted from from gross salary, but it will have an impact on my take home. I will ask them about the policy to find out how much the benefit value is. Thanks again!

Dazed_and_C0nfused

For most people the tax due will be 20% or 40% of the benefit amount.

But of it moves you from being a basic rate taxpayer to a higher rate one it can be more complicated as some will be taxed at 20% and some at 40%.

The benefit is included in your adjusted net income so can increase any High Income Child Benefit Charge or reduce your Personal Allowance where either of these are relevant.

At the other end of the scale it could impact a tax credits award of UC calculation.

Jeremy535897

You need to judge the tax cost, when you find out what it will be, against the current circumstances where there are already over 6 million people on the  NHS waiting lists and the health secretary has said that the number will go up before it comes down. You should also consider whether your new employer may be unsympathetic if you are unfortunate enough to be off on long term sick leave because you are waiting in an NHS queue for treatment the insurance would have covered.

400ixl

This is typically that the company adds the cost of the Private Medical policy to your gross salary (it can only be used for this purpose), but you still have to pay the tax and NI on that benefit value.

You can turn down the benefit, but must do this formally so that they do not pay the money and therefore you do not get taxed.

silvercar

Would you otherwise take out PMI yourself? In which case it is a big saving as you'll only pay the tax on the (often reduced) cost, rather than paying it all yourself. There are other gains by being part of a company PMI scheme:
1. On claims the insurer quibbles less than on private insurance as they want to safeguard the business.
2. The business will often pay less per person than it would cost you yourself, so you will be paying the tax on a lower amount.

If you wouldn't otherwise take out PMI, then you would now have the benefits of the insurance. Often quicker access to health care, sometimes a private online GP/ nurse available for minor ailments or referrals, private funding for treatments that the NHS either won't provide or have a long waiting list for.

lisyloo

For me 20% is a no brainer.
If your employers doesn’t tax you on it then you’ll get a p11d at the end of the tax year.
Hmrc usually adjust your tax code and then collect it next year by reducing your tax code so you pay 20% on a little more of your income.

if you can’t afford it then tell the employer you don’t want it.
As someone else said this is also a benefit for the employer to get you back to work more quickly, so not having could be a negative for your employment if you are off sick unnecessarily. That’s why the employer pays for it and you only pay 20% (if you’re a basic rate tax payer).

the employers rate is often a lot less than you’d get it privately as there are economies of scale.
some schemes also ignore pre existing conditions are “gold plated”.

unholyangel

PledgeX2 said:

Dazed_and_C0nfused said:

Yes you will pay more tax.

Why would you think otherwise?

Your role in [company name] entitles you to receive single cover private healthcare. This is a taxable benefit and whilst it isn’t deducted from your salary, it will show on your payslip."

You need to know the benefit value to understand how much tax.

Thanks for clarifying. I guess it was the bit where it said "it isn't deducted from your salary" that threw me. Maybe it's not deducted from from gross salary, but it will have an impact on my take home. I will ask them about the policy to find out how much the benefit value is. Thanks again!

I believe your employer is saying that, for example, if the medical benefit is £1000, you won't have the 1k deducted from your salary, but you would pay tax on the 1k. 

littledog70

I would look more into what the medical insurance does and does not cover, to see if it is actually worth getting.

sultan123

What is difference between p11D vs the benefit payment showing up on your payslip.