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My family has private medical insurance through my work.

Customer Question

My family has private medical insurance through my work.
Recently, a family member needed treatment. We went to an nhs hospital and the private medical insurer paid a certain amount to us per-night in lieu of being in a private hospital.
What I can't seem to find out: is this money paid to me by the medical insurer taxable income?
Submitted: 6 months ago.
Category: Tax
Expert:  bigduckontax replied 6 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

This is a highly complex area, but in basic terms the health insurance paid for by your employer is taxable. Your employer will report this benefit in kind annually on a Form P11d and HMRC will adjust your income tax code number accordingly. You need not concern yourself with the sum paid to you for your stay in a private hospital as you will have already been, or are now, or will be in the future taxed through the Form P11d process. Here is the Gov UK advice on private medical insurance paid by an employer:

'Medical insurance

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

Check how your employer works out how much tax to deduct from your pay.

You can get some tax-free health benefits from your employer, eg:

  • medical insurance when you’re working abroad
  • annual check-ups'

If you have time and a wet towel to wrap around your head and the backs of lots of envelopes you can read the full gamut here:

https://www.gov.uk/expenses-and-benefits-medical-treatment/what-to-report-and-pay

I do hope that you have found my reply of assistance.

Customer: replied 6 months ago.
Hi Keith,Many thanks for the response. Just to clarify:
- I assume I am already paying tax via deductions from my pay for my health insurance premiums
- My question is purely about a payment made to me by the insurance because we stayed in an nhs hospital (I.e in lieu of private treatment)Are you saying that this payment (not the premiums) would also be taxed via the P11d process?
Expert:  bigduckontax replied 6 months ago.

Hang on a minute, that is an entirely different scenario. If the cover is being provided by your employer through deductions in your pay to meet premiums it is not a benefit in kind at all. If these deductions are in respect of a reduced tax coding then indeed there is a benefit provided by the employer and is being property taxed.

The premiums would be taxed as I have explained. What is being paid out is an insurance distribution and outside the scope of UK taxation.

I do hope that I have shed some light on the position.

Please be so kind as to rate me before you leave the Just Answer site.

Customer: replied 6 months ago.
Hi Keith,Sorry - I feel I may have confused things.
The scenario is this:
- someone is ill. Usually your health insurer would pay for you to receive private care
- but sometimes a 'private' option isn't available (e.g) the hospital you are already in doesn't have private facilities. So, you are receiving treatment on the nhs even though you have private cover (thus saving the private health insurer money)In these situations, many private health insurance companies will issue payouts directly to the policy holder in lieu or receving private care. E.g £100 a night spent in an nhs hospital or something like that.I have received such a payment - and i want to know if it is considered taxable income for tax purposes
Expert:  bigduckontax replied 6 months ago.

I have a private health insurance just like that; its benefits are outside the scope of UK taxation.

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