Aviva is introducing an excess healthcare trust option to its corporate private medical insurance offering.
The Corporate Excess policy applies to its Optimum PMI scheme and allows businesses to save the cost of insurance premium tax on around 80% of their claims fund.
Companies choosing the new option will have the excess set on the policy, from which employee claims are paid.
This is generally around 80 per cent of the predicted claims fund and is held in trust by Aviva, with a claims reserve calculated on the remaining claim fund which will be used to pay claims if the excess is used in full.
The excess amount does not attract insurance premium tax, instead, companies only pay IPT on the claims reserve, (typically 20% of the claim fund), plus administration and insurance risk charges.
HMRC have confirmed that employee taxes are charged on the average annual cost of the product per employee, where the corporate excess is held in trust and is not refundable.
The option is available to businesses with over 250 employees taking out Optimum PMI cover.
Aviva UK Health head of PMI Nick Reynolds, said: "We're pleased that a wider range of employers can benefit from the same cost efficiencies that our larger corporate healthcare customers enjoy.
"We know from our corporate customers that they place a high value on providing health cover for employees, but with economic challenges they increasingly require flexibility in how their scheme is funded, as well as the level of cover offered.
"The new Corporate Excess funding option has been introduced to help many more companies control their health insurance costs."
WPA,the only other provider with this type of produc, Corporate Deductable, recently defended the tax treatment of these trusts against insustry sceptics.
Commenting on Aviva's move, Charlie MacEwan, director of communications at WPA, said: "This is one of those occasions when we absolutely welcome another competitor to the market, as it gives a real choice to the consumer.
"We are also pleased that this means our concept for this type of product has been endorsed."
