BUPA's revised package will not affect existing contracts

THE announcement last week by BUPA that it is to revise its health insurance package after consultation with the Department of Health does not affect people who have already bought a BUPA contract these contracts, which may or may not include the controversial cash plans, will be honoured by the company until the renewal date when the customer will be offered a policy from the new range expected out in a few months time.

Central to its dispute with the Department of Health, which acts not only as BUPA's regulator but its main competitor through the VHI, was the question of whether the cash plans had broken the community rating regulations under the 1995 Health Insurance Act. The cash plans, which were separate from the basic `Essentials' health insurance scheme, were priced according to age, with older policyholders paying more than younger ones. The purpose of the BUPA cash plans were to allow the policyholder to buy a level of semi private and private accommodation in various private hospitals or to use the cash for other non hospital purposes, such as an income supplement, to pay for home nursing, etc.

By unbundling the hospital health care from the accommodation, BUPA was leaving it to the customers to decide whether they wanted ordered a higher standard of accommodation or preferred to take the cash, something the VHI does not permit with its all in one, take it or leave it plans. Ironically, the extra cost for an older person buying the nearest BUPA `Essentials' and cash plan scheme equivalent to VHI's Plan B was only about £30.

This amount would have been easily recouped by the higher value benefits offered by the BUPA scheme or by opting to take a cash refund for just one night of a hospital stay rather than upgrading accommodation for that night.

Had the BUPA cash plans not been age related, this storm is unlikely to have erupted and it will be very interesting to see if the company will be able to abandon age related pricing and keep the spirit of its product relatively intact.

If anything positive has emerged from this debacle it must be the increased interest being reported in the cash plans being offered by the likes of the Hospital Savings Association and Hospital Saturday Fund. These two long established British charitable trusts offer excellent cash benefits to plan holders and their families for a modest single weekly or monthly charge that is not age related.

Aside from paying out for every night of a hospital stay they also pay out for consultant's visits, physiotherapy and other therapies, dental and optical charges, ambulance service and even lump sums for maternity events.

HSF, the longer established scheme in Ireland, has recently launched to higher value cash plans which cost £4 and £5 a week, but have lost their tax relief status, which they received just two years ago. The loss of the tax relief on premiums did not auger well for BUPA which had applied for tax relief on its cash plans. Without the relief, BUPA's `Essentials' scheme plus a higher value cash plan scheme was not particularly good value - against the equivalent VHI scheme.

Undoubtedly the company will be taking the need to secure full tax relief into account when it launches its revised range of products.