What’s the best way to pay for private healthcare when you’re retired?

One way for retirees to manage the cost of private healthcare is by taking out a private health insurance policy. Private health insurance covers the cost of necessary medical treatment in private hospitals or clinics. That means that if you’re sick or injured and need tests, surgery or other types of treatment, your insurer should cover the bill (depending on the cover options you have chosen and your medical history).

Cover varies between policies. However, most comprehensive plans will cover day patient and inpatient treatment including surgery, cancer care and access to some mental health support.

Some policies will also offer optional extras like complementary therapies (such as physiotherapy or osteopathy), enhanced mental health cover or access to a broader range of hospitals.

However, it’s important to note that health insurance doesn’t cover emergency treatment, chronic conditions (for example, high blood pressure or angina), as well as any pre-existing medical conditions that you may have.

How much does private health insurance cost once you’re retired?

As we get older we typically need to pay more for health insurance as the risk of major health problems increases. However, the amount you pay for your private health insurance will depend on a range of factors, including:

• Your age
• Your medical history
• Where you live
• Your lifestyle, including whether you smoke
• The level of cover and options you choose
• The excess you agree to pay towards any claims
•  The number of hospitals you want access to

As a rough guide, our health insurance cost research shows that the average private health insurance premium for a 70-year-old is £137 a month for inpatient only cover, rising to £201 for a policy that includes outpatient cover as well. That’s more than double the cost of a 50-year-old, who would typically pay £61 or £91 a month for the same levels of cover.

These costs mean it’s important to do your research and shop around before you buy health insurance. Speaking to a regulated broker can help you tailor cover to suit your needs and your budget.

By stripping out less important benefits or increasing your excess, it may be possible to reduce costs further.

Can I keep my workplace health insurance when I retire?

You can sometimes remain with the provider of your employer’s health insurance policy when you retire, through a continuation option. However, you will have to take responsibility for paying the premiums yourself, and this individual policy is likely to be more expensive. Cover terms and benefits may also differ from those under your corporate scheme, so discussing your options with an expert broker can be a wise move.

The main advantage of staying with your existing insurance company is that you may be covered for any recent or pre-existing medical conditions that would likely be excluded from any new policy. However, terms will vary between insurers, so it’s important to check first.

If you decide to stay with your current insurer, it’s a good idea to let them know before you retire and your current policy ends (although some providers will let you take out continuous cover for a limited period after you have left the scheme).

The following are some of the main advantages and disadvantages of having private health insurance in retirement for you to consider:

If you don’t want to pay for private health insurance or can’t afford the long-term cost commitment, you can simply pay for treatment yourself, as and when you need it. This self-pay option might be helpful when you’re particularly worried or there is a lengthy wait on the NHS. 

Getting an appointment should be straightforward, you just need to contact your chosen provider and let them know which consultant you would like to see.

Private hospitals usually have helpful websites detailing the consultants they work with. You may also be able to search for consultants based on the medical specialty you require. Alternatively, your GP may be able to recommend a relevant specialist.

You’ll normally have to pay for the first consultation straightaway and, if further treatment is required, you should get a quotation detailing the cost you can expect to pay before you decide whether or not to proceed. Many private hospitals will offer flexible payment plans to help you spread the cost.

To make the most of initial appointments, be sure to check what details the consultant will need, including existing test results and doctors’ letters.

Can I go back to the NHS if I get a private consultation first?

Lots of people worry that if they pay to see a consultant privately, they will need to commit to paying for all their treatment. However, it is possible to pay for initial consultations or diagnostic tests to be conducted privately and then go back to the NHS for treatment.

If, for example, you require surgery or have had a cancer diagnosis, your private consultant can refer you back to the NHS for treatment if you wish. You shouldn’t lose your place in the NHS queue, but may move up if you’re given an urgent referral.

The NHS and private services must be kept entirely separate, however. You cannot, for example, ask for surgery to be completed on the NHS, but pay extra for materials or services that would normally only be offered to private patients.

You can find out more by reading the NHS guidance here.

How much will self-paying for private healthcare cost me?

Our research into the cost of private medical treatment shows how much you can typically expect to pay for surgery and other procedures in a private hospital. Some example costs include:

• Hip replacement: £14,412
• Knee replacement: £15,138
• Lumbar decompression: £9,769
• Bunion surgery: £5,260
• Hernia repair: £3,870
• Varicose vein stripping in one leg: £3,489
• Cataract surgery: £2,953
• Carpal tunnel release: £2,427
• Colonoscopy: £2,421

For initial (and follow-up) consultations with specialists you can expect to pay: 

• Cardiologist: £200 (£150)
• Oncologist: £200 (£120)
• Gastroenterologist: £200 (£125)
• Urologist: £200 (£140)
• Rheumatologist £220 (£145)
• Physiotherapist: £67 (£50)

However, where you live can have a significant impact on costs. For instance, the priciest part of the UK to consult a private cardiologist is London, where the average cost of an initial consultation is £250, compared to £200 in Manchester and £175 in Cardiff, Newcastle and Northern Ireland.

There are several different ways to self-fund private treatment once you have retired.

Some retirees choose to ‘self-insure’ by paying a fixed amount each month into an easy access savings account that they can call on in an emergency. If you’re organised, you can start building your pot while you’re still earning and able to save larger amounts.

The plus side of this approach is that you still have the money if you don’t need it. However, the catch is that you may not have enough for the treatment you require – especially if you need to call on it sooner than you expect.

Another option is to take lump sums out of other savings or investment accounts you might already have.

You may also be able to take lump sums out of your pensions. Pension rules allow you to take 25% of your retirement savings as a tax-free lump sum.

Unless you have a defined benefit pension that pays you a guaranteed income (such as a public sector final salary or career average scheme), you will also be able to take further lump sums from your pot.

However, it’s important to note that any pension withdrawals you make beyond your tax-free cash amount will be taxed. This means that you’ll need to take out more than the cost of your treatment to account for the tax that will be deducted.

Whether you take money out of a pension or any other pot, it’s important to give careful consideration to your wider finances and whether it could have a detrimental impact on your standard of living as your retirement progresses.

If you aren’t sure whether you can afford to raid savings, it may be a good idea to consult an independent financial planner. They will be able to analyse your retirement finances and use cashflow modelling to help you work out what you can afford and the impact your withdrawal would have on your future income. 

If you decide to self-pay, they can also offer advice on which pot the money should come from, to ensure you’re managing your finances in the most tax-effective way. 

Unless your private healthcare provider offers interest-free finance (and you can fully pay for the cost of treatment in the required time), it’s usually best to avoid taking out medical loans once you have retired. 

Before deciding whether self-paying for private healthcare in retirement may be the right option consider the following advantages and disadvantages of going down this route:

The right approach for you in retirement will vary hugely according to your finances and your health, not to mention your priorities and concerns. It’s a very personal decision.

If you have had private health insurance throughout your working life, you might, for example, be less willing to go without it than someone who isn’t used to getting private medical treatment. 

However, many retirees will be happy to use the NHS for the bulk of their health concerns, and self-pay for private consultations or treatments as a back-up when they need it or their finances allow.

The key for most retirees will be determining how far their retirement income stretches and whether they can afford to commit to the monthly cost of health insurance, or if self-paying will leave them with enough funds to enjoy the rest of their retirement.