Yahoo Finance 'I lost £135,000 – because I failed to read the insurer's small print'
We’ve all been guilty of skimming over the small print in insurance policies but few have suffered such costly consequences as John Paine: he is £135,000 poorer as a result of the private medical treatment he received in the mistaken belief that his policy would cover the cost.
When Mr Paine, now 82, fell seriously ill with a liver abscess in October last year his GP, who knew that he had private medical cover, suggested he be taken by ambulance to the private Lister Hospital in Chelsea. At this point no one contacted the insurer.
Two days after his admission he was moved to intensive care, where he said it was “touch and go”.
Vitality, his insurer, was contacted a few days later, by which point Mr Paine’s medical costs had reached £70,000. But Vitality refused to meet the costs because it, in common with other private health insurers, doesn’t cover emergency treatment.
After two weeks Mr Paine’s condition stabilised and he was moved out of intensive care, although he remained in hospital.
Vitality refused to cover my emergency treatment but once I was out of intensive care it didn’t step in. How does it define ‘emergency care’
John Paine
In total he said his medical bill exceeded £135,000, which included emergency treatment, his five-week hospital stay, follow-up appointments and care after he was discharged.
Mr Paine, who lives in Kensington, south-west London, took out the policy in 2013 and was paying more than £430 a month to cover both himself and his wife.
He said: “Vitality refused to cover my emergency treatment but once I was out of intensive care it didn’t step in. How does it define ‘emergency care’?”
In late November, about seven weeks after his admission to hospital, he cancelled the joint policy.
He complained to the Financial Ombudsman Service about Vitality’s refusal to pay but it ruled in Vitality’s favour in September this year and concluded it had acted fairly. Mr Paine appealed and the case is now under review.
Policyholders quit in droves as prices rocket
Mr Paine is far from the only one to ditch his private medical insurance policy. Nearly 200,000 policyholders have cancelled their contracts in the past three years, according to research by the Centre for Economics and Business Research for Bupa, the healthcare group.
Rising costs are among the reasons. Experts estimate that for the past 20 years policyholders have faced annual price increases of around 10pc. In addition insurance premium tax has doubled from 6pc to 12pc in the past two years.
Five years ago, a comprehensive plan with a £250 excess for a 30-year-old living in the Home Counties would have cost about £50 a month, according to Brian Walters, principal of Regency Health, a private medical insurance broker in Cheltenham. Today the monthly premiums range from £52 to £75, with an average of around £60.
Mr Walters said if a 30-year-old had stayed with the same policy for the past five years they would probably be paying in the region of £80 a month at age 35, depending on claims history and other factors.
But as numbers of policyholders continue to fall, complaints about private medical insurance are on the rise. The ombudsman has received 1,147 complaints so far this year, almost 50pc more than in 2014-15. In 2012-13 there were just 513 cases.
‘All treatment must be preauthorised’
Martyn James of Resolver, a complaints service, said private medical insurance policies were getting more complicated, containing “so many terms, conditions and exclusions” that customers were often caught out.
He said he expected contracts to continue to get longer as more people make claims.
Mr Walters said emergency care was a “standard exclusion” in private medical insurance but acknowledged that there was “often a fine line between what constitutes a medical emergency and what doesn’t”.
He said the most important consideration was the “claims authorisation procedure”.
He said: “All treatment must be pre-authorised, it’s as simple as that. At a basic level the insurer needs to be informed so it can check that the consultant is recognised and the hospital is on the member’s list.
"In some cases customers can get retrospective authorisation but this is at the insurer’s discretion.”
Vitality said it sympathised with Mr Paine’s situation but added that private medical insurance was designed to cover “pre-planned, pre-authorised medical treatment”, not emergency care.
On page 26 of its terms and conditions the firm states that it will not pay for any treatment that requires customers to be admitted to hospital urgently, and “all immediate care associated with such an emergency admission until the condition has been stabilised”.
Matthew Dijkstra, service director at VitalityHealth, said such policies were “typically structured to complement the services of the NHS, rather than replace them, and commonly have several general exclusions within their terms”.
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Vitality defined emergency treatments as “a visit to A&E or other emergency care centres, admission to hospital in an emergency, or urgent admission following an unscheduled outpatient appointment”.
