The growth of Health Care Trusts
For those schemes with over 500 members, Health Care Trusts have become an established means of delivering company-paid medical benefits. They were virtually unknown 15 years ago, but the introduction of Insurance Premium Tax (IPT) to medical insurance gave employers an incentive to take a hard look at restructuring the company medical plan as a Trust, in order to avoid the new charge.
For a few years, most employers were nervous about going into an arrangement which had no established basis in case law. After five years in which the authorities made no challenge to existing Trusts, however, numbers started to rise rapidly to the point where, according to the market experts, Laing & Buisson, over one million people were enrolled in Trusts in 2004, accounting for 13% of the total market, including insurance.
Trusts are the obvious choice for any large corporate medical plan where the company is prepared to take direct exposure to the claims risk. Indeed, the fact that Health Trusts are so clearly not insured, is probably the main reason that Governments have not sought to levy IPT on them. To do so would almost certainly require primary legislation.
Although Health Trusts are a sensible device for large companies where total claims will be unlikely to fluctuate greatly from year to year, they are still not feasible for smaller plans. Apart from the difficulties of predicting claims from year to year, there are likely to be set-up costs that will deter the great majority of employers.
The information contained in this document is of a general nature only and should not be relied upon as advice in any specific situation.
For further information, please telephone your usual contact at Buck Consultants (Healthcare):
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