Advice and representation for individuals
Permanent Health Insurance and Group Income Protection
If you are experiencing a period of long-term ill-health and have exhausted your company sick pay, you may be entitled to benefits under a “permanent health insurance” benefit offered by your employer.
We can help you understand the terms of the insurance policy and your potential entitlement under it. We can work with your employer to support an application or appeal made on your behalf. In the event that your employment terminates, and you lose your entitlement under such a scheme, we can advise whether you are able to claim compensation for the lost benefit. We can also advise you on other connected claims, for example, disability discrimination.
We appreciate just how distressing it is to be unwell and absent from work on a long-term basis. We will be there to support you through the process, and at the same time fight your corner to get the best possible outcome for you.
What is permanent health insurance (PHI)?
Permanent Health Insurance (PHI) is an insured benefit that provides income to an individual if they are unable to work due to illness or injury for more than a minimum period. Your employer or organisation may call it income protection, group income protection, long-term disability (LTD) or salary continuance. Employers usually have a policy of insurance with an insurer to cover the risk of employees becoming incapacitated for work which provides a replacement income in those circumstances.
How do I know if I have the benefit of group income protection?
Not all organisations provide this benefit, and some will only provide it to certain staff. Check your employment contract, employee handbook, intranet or wherever your benefits are listed. Employers usually provide employees with a short brochure outlining the terms of any policy, when it applies and what an individual may be entitled to. While many of the policies are similar, an individual’s entitlement will always depend upon what the policy says.
What does permanent heath insurance benefit usually entail?
If you satisfy the medical and other eligibility criteria, you will be entitled to receive a fixed percentage of your usual salary (usually between 50% and 75%) for a certain period set out in the policy. This is often:
- until you are fit to return to work whether in your previous role or another one; or,
- until retirement age (or death if earlier); or,
- for a fixed number of years e.g. two or five years.
Most group income protection policies (although not all) require an employee to remain in employment in order to continue receiving the benefit.
The percentage of pay you receive may be calculated on basic salary only or on your total earnings (e.g. including commission and bonuses) and there is often a cap. The amount you receive may be fixed or may increase with inflation.
How do I qualify for group income protection insurance?
This all depends on what the policy states but many require that:
- you meet eligibility criteria (for example, certain medical conditions may be excluded, including pre-existing conditions); and/or
- you have been on sick leave for a specific period – usually 6 months – (the deferred period) before the benefit will apply; and/or
- your employer has considered and made any reasonable adjustments to facilitate your return to work; and/or
- you have satisfied the insurer’s medical assessment that you are incapable of carrying out the material and substantial duties of your insured occupation (usually the role you were carrying out when you became ill or were injured) due to your illness or injury.
Your employer should cooperate with you by providing you with an application form in good time if you are absent from work on long-term sick leave and do not appear well enough to return to work.
What does going onto permanent health insurance (PHI) mean for me?
- You will usually be required to remain in employment in order to continue receiving the health insurance benefit. Therefore it is very important to take specialist advice before making a decision about resigning or accepting a termination package if you are unwell.
- You usually cannot undertake any other employment (whether paid or unpaid) while in receipt of permanent health insurance (PHI). Some policies will provide partial benefit if you can only work part-time or in a lesser role. Most will allow for some form of therapeutic or rehabilitative work.
- You will usually be subject to regular reviews by the insurer’s medical adviser to assess whether you continue to meet their eligibility criteria.
What if the insurer refuses to provide the permanent health insurance benefit? What are my options?
Where permanent health insurance (PHI) benefit cover forms part of the employee benefits package, it is usually funded by the employer taking out an income protection insurance policy with a third-party insurer. In this situation there will be a contract between the employer and the insurer, but not between the insurer and you as the employee.
If the insurer refuses to provide the health insurance benefit, you will have a right of appeal which your employer will usually have to submit on your behalf. If the benefit is still refused, you may make a complaint to the Financial Ombudsman Service who will review your case and make a decision. If this does not resolve matters to your satisfaction, you may need to take legal action.
What if I am dismissed?
If you are dismissed by your employer and you lose the right to your permanent health insurance (PHI) benefit as a result, you may be able to take legal action to claim compensation for the loss of the benefit. It will be important to take specialist legal advice. We can assist you if this happens.
Do permanent health insurance (PHI) policies cover mental health problems?
PHI provides for individuals who are incapable of working due to physical or mental illness or incapacity. We regularly advise individuals on such benefits to those who are experiencing mental health problems.
At all stages, there will be time limits that are relevant to your ability to pursue your claim so if you do have concerns it is important to take advice promptly.
How can BDBF help with a PHI / GIP claim?
BDBF is a niche employment law firm which focuses on employment law for executives, senior management, and highly skilled professionals. Our lawyers have experience of making applications under PHI and GIP policies, appealing decisions from insurers and achieving favourable settlement outcomes for those who no longer wish to be tied to a long-term illness policy. We also have in-depth knowledge of the financial, insurance, legal, health and technology sectors, and how PHI related and disability discrimination claims can be brought in these sectors.
Our solicitors will support you throughout the life of any application, settlement and subsequent appeal or claim, providing confidence that you always have an intelligent, skilled and tenacious team on your side.
