Private medical insurance (PMI) is a valued benefit for many UK employees, especially as NHS waiting times can be unpredictable—always check the latest NHS England Referral to Treatment data for current figures. But when an employer provides PMI, it usually counts as a taxable benefit-in-kind (BIK), unless a specific exemption applies. This means employees may face extra tax unless they 'make good' some or all of the premium. Getting this right can save money and hassle, but the rules are precise and the evidence you keep matters.
What Does 'Making Good' Mean?
'Making good' is HMRC’s term for when an employee reimburses their employer for all or part of a benefit’s cost—here, the health insurance premium. If you pay your employer the correct amount by the right deadline, your taxable benefit is reduced (sometimes to zero). If you miss the deadline or pay too little, you could be taxed on the full premium, even if you’ve paid most of it back.
Why Timing and Evidence Matter
HMRC sets strict deadlines: for each tax year, you must make your payment to your employer by 6 July following the end of the tax year (5 April). If you pay after this, it won’t reduce your benefit-in-kind for that year. Always get written confirmation from your employer that your payment has been received and recorded as 'making good'.
A Messy, Realistic Example
Imagine you join a company in September. HR tells you that your share of the PMI premium is £40 per month, and you agree to pay this by bank transfer. You make a few payments, but in March you’re off sick and forget to pay for two months. In June, you realise and pay the missing £80. But your employer’s payroll team only records payments received up to 31 May, and your June payment is missed off the P11D. When your P11D arrives, it shows the full annual premium as a taxable benefit. You now face a tax bill on the whole amount, even though you paid most of it back. Sorting this out with payroll and HMRC can be time-consuming, and you’ll need clear evidence of all payments and dates.
Practical Steps for Employees
Confirm the annual premium with HR or payroll. Ask for a breakdown of what the employer pays and what you’re expected to reimburse.
Arrange your payments—ideally by standing order or payroll deduction, so there’s a clear record.
Keep evidence: bank statements, payslips, emails confirming receipt, and any correspondence about the arrangement.
Request written confirmation from your employer that your payment has been recorded as 'making good' for the relevant tax year.
Check your P11D or payslip after the end of the tax year to ensure the benefit value has been reduced appropriately.
Challenge errors promptly—raise issues with HR or payroll, and refer to HMRC guidance if needed.
Questions to Ask
HR/payroll: What is the total annual premium for my policy? How much am I expected to reimburse, and by when?
Insurer or broker: Can I have a copy of the policy schedule and any relevant exclusion lists?
Doctor: If you’re disputing a claim, can you provide supporting letters or medical notes?
Provider Disputes and Exclusions
Even if you’re paying part of your premium, you may still face claim disputes—such as exclusions for pre-existing conditions, or confusion over what’s covered. If you’re unsure, ask your insurer for a written explanation of any denial, and request the specific policy wording they relied on. If you disagree, you can escalate complaints to the Financial Ombudsman, who handles private medical and dental insurance disputes.
How Caira by Unwildered Can Help
If you’re struggling to keep track of payments, policy documents, emails with HR, or medical notes, Caira by Unwildered can help. You can upload your policy documents, letters, screenshots, emails, medical notes and bills. Caira can compare policy wording, organise your evidence, draft questions or emails, and help you understand your next steps—24/7. No question is too basic, and having everything organised can make resolving disputes much easier.
Useful Starting Points
This article is general information, not legal, tax, insurance, financial or medical advice.
