Healthcare Trusts vs Private Medical Insurance
Private Medical Insurance (PMI) is a well-established way for employers to provide access to private healthcare. For many organisations, it remains a familiar and effective part of a broader reward and benefits strategy
Against a backdrop of rising healthcare costs, insurance premium tax (IPT), pressure on services, changing workforce expectations and evolving health and wellbeing strategies, businesses across a wide range of sectors are increasingly turning to healthcare trusts as a viable business funded alternative to PMI.
What is a healthcare trust?
Healthcare trusts are essentially a means of your business funding corporate healthcare; rather than paying a premium to an insurer you create a trust for your claims which a trust administrator then uses to pay for healthcare as and when it’s needed.
Before you compare the two models, here's a short video that explains how a healthcare trust works in practice.
At a glance comparison:
| Healthcare Trust | Private Medical Insurance (PMI) | |
| How it's funded | You pay for the cost of your healthcare plus a transparent admin fee. You agree how much to place in your claims fund based on your claims history and benefit design, then your administrator manages the fund, arranging treatment and paying invoices, in accordance with your scheme.. | You pay a premium for the benefits included in your policy and transfer risk to an insurer, ensuring all authorised benefits are funded. Premium levels can be influenced by wider market conditions as well as claims experience and insurer profit margins. Claims are paid directly by the insurer on the employee’s behalf. |
| Cost & savings | Typically around 10% savings vs corporate PMI premiums; employer keeps any surplus in their fund if claims are lower than forecast. | Premiums reflect insurer pricing and claims experience; savings flow to the insurer, not the employer fund. |
| Flexibility | Employer sets benefit rules and decides when the fund pays out. | Benefits and rules are largely set by the insurer's standard terms. |
| Control | High level of control over cover and spend, with bespoke admin and managed care support. | Less direct control; the insurer governs how the scheme operates. |
| Risk | Employer retains more of the financial risk, which can be capped with a 100% stop-loss facility | Financial risk is transferred to insurer. |
| Employee experience | Can mirror PMI experience, with decisions make quickly and a strong focus on quality and speed of care. | Well-known route to private treatment via insurer networks. |
Explore the full findings
Choosing the right healthcare model is a significant decision for any organisation. Our comprehensive report gives HR professionals the detail they need to confidently evaluate both options.
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