Glossary

Please find below some of the terms used in a Corporate Healthcare Trust:

Administration Fee
This is an amount which is payable each year to the administrator of the healthcare scheme for an agreed level of service and is typically subject to Value Added Tax.
Benefits/Rules
Within a Corporate Healthcare Trust, your company has complete control over the benefits which are to be provided. Typically, a detailed benefit schedule and rule book is provided by the administrator following consultation with your company; this should be included as a Schedule to the Trust Deed. The benefits/rules are typically reviewed annually, although can be amended more regularly in conjunction with an appropriately constructed Trust Deed.
Captive
A Captive is an insurance company usually set up by a large non-insurance group, such as a multinational organisation, and which aims to provide cheaper insurance coverage than is available in the general market. Captives are often set-up in offshore markets, such as the Channel Islands, with a favourable tax and regulatory framework. They insure the group's operations and seek insurance/reinsurance externally whenever appropriate.
Claims Fund
The predicted/actual value of claims within a benefit year.
Claims Management
The Claims Fund forms the most significant part of the costs within a Corporate Healthcare Trust and as such should be managed carefully. The administrator should provide standard cost control measures such as Hospital Agreements and Fee Schedules in addition to options such as Shared Responsibility, excesses and self-pay claims.
Corporate Healthcare Trust
A Corporate Healthcare Trust is an arrangement through which companies can provide healthcare benefits (i.e. the payment of private medical expenses) for their employees without taking out a full insurance policy. A Stop Loss insurance policy is chosen by some companies choosing to protect themselves from a high claiming year.

Instead of insuring the medical expenses, a trust is set up by the employer and funds paid into a trust bank account. An appointed administrator utilises these funds to pay for eligible medical expenses.
Corporate/Individual Trustees
A company is required to establish either Corporate or Individual Trustees for the Trust company. Simpler than a Pension Trustee, their main aim is to review the performance of the Trust, the Administrator and the Stop Loss provider; this is typically undertaken at Trustee meetings which are held at regular intervals.

The administration and Stop Loss companies should provide detailed management information in order for the Trustee to decide on the appointment for the next benefit year.
Hospital Agreements
Protocol has agreements in place with hospitals representing over 96% of our total hospital spend. These agreements include rules and charging levels for accommodation, theatre fees, drugs, prostheses, physiotherapy, ancillary pathology and radiology services along with scans and other aspects of treatment.

Through WPA, Protocol has agreements in many cases incorporate fixed price in-patient, day-case and out-patient packages thereby providing cost certainty across a wide range of services. Our agreements are negotiated in advance, either on a one, two or three year term.

Tightly negotiated Hospital Agreements are critical to ensuring effective cost control for the healthcare scheme.
Insurance Charge
Should a company decide to utilise a Stop Loss, this element is an insurance policy and a charge is made by the provider accordingly. Such fees are subject to IPT.
IPT
Insurance Premium Tax is a tax payable on certain insurance premiums where the risk is located within the United Kingdom.
Medical inflation
Medical inflation is often spoken about in the context of the year-on-year increases in medical insurance premiums and the market has experienced a long-term increase of some 10% per annum, though WPA's rolling medical inflation is a little under 5%. Premium increases are driven through 2 factors:
  • the increased costs of claims following advances in medical treatment/equipment and increasing medical fees;
  • the administrator's own cost increases through wage price inflation and increased costs of regulation.
Risk Element
Within a traditional insurance policy, the insurer will calculate the total annual fee as the predicted Claims Fund, the Administration Fee, IPT and a Risk Element to recognise that the insurer is liable to a degree of risk as the claims may not perform as predicted.

However, companies providing healthcare as a benefit to over 500 employees typically experience a broadly consistent Claims Fund year-on-year and as such the risk level is significantly reduced. For such companies, the risk element charged within a traditional insurance policy can be an unnecessary cost.
Self Pay Claims
For certain operations/procedures, if an individual states that they are paying for the treatment themselves rather than through their company (via the Trust arrangement), the total cost is often reduced.

To recognise the saving the individual is making for the Trust, it can be agreed that the Trust will pay the treatment costs and in addition pay the employee 50% of the saving they have made.
Shared Responsibility
Shared Responsibility allows your company to save money on claims costs yet still provide valuable healthcare to your employees. We believe Shared Responsibility is a crucial element in controlling costs by working in partnership with the customer.

In essence, the following steps are taken:
  • You or your employees choose the percentage and personal annual limit of Shared Responsibility, for example 10% and £100;
  • Your Corporate Healthcare Trust will pay the appropriate percentage of all eligible claims;
  • Your employees pay the remaining percentage;
  • Once your employee has reached their personal annual limit, your Trust will pay 100% of all eligible claims up until the next annual renewal date.
Stop Loss
A Stop Loss is a concept designed to protect your company from a high claiming year. Your company buys an insurance policy which will cover the liability of the claims should they go beyond an agreed point in a benefit year.

For example, where the Claims Fund is predicted at £1,000,000 and a Stop Loss policy is bought at 125% of the Claims Fund, the liability for payment of claims would switch to the insurer once the claims reached £1,250,000.
Trust Deed
A Trust Deed is a legal document for setting up a trust and is best produced by lawyers who can use precedents from soundly based company, employee, trust and tax law. The Trust Deed should be compliant with guidelines set down by HM Revenue & Customs and should cover such areas as eligibility, benefits and appointment of the administrator.


WPA Protocol Plc is a wholly owned subsidiary of and Appointed Representative of WPA. WPA is a registered service mark of Western Provident Association Limited.
WPA is authorised and regulated by the Financial Services Authority (FSA). The FSA website may be checked at www.fsa.gov.uk/register for WPA number 202608.