The health insurance sector should change tack in its campaign for cuts to private medical insurance (PMI) tax and instead focus on P11D benefits charges, Health & Protection’s Health Summit has heard.
Emma Snowden, director – health and protection at Punter Southall Aspire, raised the issue when commenting on the chancellor’s failure to cut Insurance Premium Tax (IPT) in this week’s Budget despite significant industry lobbying.
“We have been talking for years about Insurance Premium Tax but nothing seems to get done,” Snowden (pictured right) said.
“But bearing in mind as we heard that IPT on healthcare premiums raises more money for the government than tobacco or beer, I don’t think that’s going to be an option because they are not going to want to lose the income.
“It’s particularly disappointing at the moment because you’ve got lots of companies that provide this fantastic benefit for their employees, yet a lot of their employees opt out because they don’t want to pay P11D tax and that is more of an angle we could use rather than trying to get IPT relief.”
Snowden said she thought companies were trying to do their best with regards employee health and wellbeing but opt-outs were also hurting aims to prevent people getting unwell and needing treatment.
“They are trying to follow the advice of the government but their hands are being tied because not everyone wants the benefit which is just so frustrating,” she continued.
“If you didn’t have P11D tax, people wouldn’t opt out and they could also benefit from some of the preventative aspects of the product, whereas they are just losing out currently.”
Earlier in the Health Summit, Towergate Health & Protection head of specialist consulting Debra Clark also raised the concerning trend of younger employees rejecting health benefits because of the P11D costs.
She urged advisers to put as much emphasis as possible on conveying the added value benefits available with health insurance to help employees understand their worth.
P11D would have much bigger impact
Bill Noakes, healthcare researcher at Healthcare Research UK and finance director at Atlantic Pumps, added he was also “disappointed” but not surprised at the lack of a cut in the Budget.
Noakes agreed that a P11D tax cut would be his preferred tax cut, arguing he expected this would have a much “bigger impact”.
“Anything would be a good start,” Noakes (pictured left) added.
“We actually have to change the narrative. Other countries with very similar health systems such as Canada or Australia actively encourage private health even though they have a comprehensive free of charge health system.
“We actually as a country have traditionally discouraged it and if we can change the narrative, we can work out how to do it. But definitely P11D would figure into that.”
Ultimately, he believed the political will just was not there at the moment despite the current NHS crisis.
“I think the optics right now are quite bad right now for it to be introduced. You have a government that’s behind in the opinion polls and needs to raise tax and is under pressure for what it’s done,” Noakes continued.
“Therefore what can be perceived from the optics of giving a benefit to rich people just wasn’t going to happen.
“I think the argument still needs to be made that this is going to be really good for the health of the nation.”