Lower premiums (or free cover) isn't the only advantage of taking out private medical insurance through your work, there are other benefits as well.

For most people, private medical insurance is a luxury they have to go without. The idea of being whisked into a private hospital might be appealing, but the reality of paying hefty premiums month in month means it’s out of reach. That’s why medical insurance offered as a benefit through work is so appealing. The most obvious benefit is the fact it’s cheaper (and may be free) and the cover is normally better than on individual policies. But some employers are looking to cut the cost of medical insurance by offering cheaper policies.

Types of work-based medical insurance
There are different types of medical insurance that you may be offered through your work, with pros and cons to each.

• Private medical insurance (PMI): This is the traditional policy that most of us think of and it’s a great perk to have through work. The main advantages are that you’ll get a discount (often a significant one) and that you can normally be covered no matter what your medical history is.

SAVVY TIP: There’s another benefit which is that medical insurance policies that you buy individually often have very limited cover for stress and psychiatric illnesses compared to employee-based PMI. With an employee policy, you’re often covered for inpatient and outpatient treatment and there’s a higher limit on treatment costs.

• Corporate healthcare trusts: Here, employers set up a trust into which they make payments, with money from the trust being used to pay claims. Some employers prefer these because they can be cheaper to run than traditional PMI schemes, but there can be advantages to employees if there’s a larger list of hospitals and/or consultants for you to choose from.

SAVVY TIP: With both PMI and healthcare trust plans you pay tax on the benefit in kind through your P11D tax form. There’s information about private medical insurance and tax on the Which? website and a guide to how benefits are taxed through your tax code on the government's Directgov website.

• Cash plans: Typically, these pay for outpatient diagnosis (which means you can find out what is wrong without having to wait for an NHS appointment), dental treatment and eye tests and sometimes physiotherapy and osteopathy.

SAVVY TIP: Some plans will pay towards the cost of hospital stays, but not all do. There’s information on health cash plans on the independent Moneymadeclear website.

Private medical insurance options
Even within the category of medical insurance (as opposed to cash plans), there is quite a lot of variation between the different schemes. It will often come down to your employer’s budget and the extent to which they see medical insurance as a good way of retaining and motivating staff.

You may be offered:

• Overseas cover: If your employer has offices outside the UK, it’s useful to know that workers will be covered.

• Family benefit: Some companies cover husbands/wives/civil partners for free, others will charge a premium, which is usually subsidised.

• Travel insurance: Not to be confused with overseas cover, some policies will include worldwide travel cover.

Leaving your employer
If you leave the company you may be able to take your PMI policy with you (the bad news is you’ll have to pay for it).

• Contact your private medical insurance company: They will tell you whether or not you can switch to a ‘follow on’ policy.

SAVVY TIP: The advantage of a follow on policy compared to buying one from another provider is that you can keep the same or similar benefits to those provided through your employer. But you will pay a lot more for it (expect the premiums to rise by 40% or more).

• Some insurers won’t let you take out a follow on policy. They will insist that you go to a broker (and all the paperwork has to be filled in by them).

SAVVY HELP: Penny O’Nions, who’s a former doctor and independent financial adviser, is one of SavvyWoman’s panel of experts. Why not ask Penny a question by clicking here?