The vast majority of employers will be hit with the full force of the insurance premium tax (IPT) rise by health insurers, COVER's sister title WSB can exclusively reveal.
Chancellor George Osborne announced the 53% IPT rise in the Summer Budget with the Office of Budget Responsibility predicting the increase would raise the government an estimated £1.58bn annually by 2020-21.
Axa PPP, Bupa, Simplyhealth, Westfield Health and WPA all told WSB that they would not absorb the increase from 6% to 9.5%, while Aviva and HSF said they were still undecided.
Health Shield was the only insurance provider to confirm it would be absorbing the impact of the IPT rise, which takes effect on November 1.
The last IPT rise in 2011 was from 5% to the current 6%, which some health insurance providers decided to absorb. However from November it will hit 9.5%.
Health Shield chief executive Jonathan Burton said premiums would not be impacted for at least the next 17 months until the end of 2016, adding that it was the right thing to do for its members.
Burton said: "While we cannot comment on any future changes the government may make in regards to IPT, our members and brokers can be confident knowing that we will continue to do all we can to treat our members fairly."
Westfield Health was one insurer to absorb the earlier increase. However executive director Paul Shires said it was unable to do so this time.
Shires said: "While we absorbed the full increase in 2011, we're unable to do the same this time. We're currently reviewing how the changes will affect our products and we want to ensure that we continue to provide the best possible value and service to our customers."
Other industry representatives have warned that further rises are likely in this government as Osborne noted that Britain's IPT remains lower than most other EU countries and well below the 19% rate in Germany.
Private medical insurance is one of several insurance areas affected by the IPT rise. Life insurance and other protection insurances will remain unaffected and schemes such as healthcare trusts could become more attractive to employers due to their tax exempt nature.
Some insurers have pledged to mitigate the impact for corporations whose policies are due for renewal before the November increase - with the intention of charging only the 6% rate where allowed.
From March 2016 all premiums received by insurers will be taxed at the new rate of 9.5%, regardless of when the policy was entered into.
Alex Perry, UK general manager at Bupa said: "If we can increase the number of people accessing private healthcare we can take some pressure off an already overloaded NHS. Raising IPT on health insurance is a step in the opposite direction."
Romana Abdin, chief executive of Simplyhealth said: "The increase in IPT will mean that the price of all types of insurance products will rise. This is going to put more pressure on household budgets and may mean that health cover will become unaffordable for some.
"This could result in people putting off their everyday health needs, storing up greater problems and costs in the medium term, and putting even more pressure on the NHS."
Further reading:
PMI needs IPT increase ‘like a hole on the head' - LaingBuisson
The IPT earthquake sending shockwaves to PMI sector
Jelf urges employers to ‘act now' following IPT increase
A fifth 'more likely' to want private healthcare after election
