Permanent Health Insurance

Hi,
As far as i am aware, PHI recieved from an employer is taxable and deducted for ESA (CON & IR).
However, if the policy was taken out by an individual and not through their employers then it is tax free and as far as i am aware no monies are deducted ESA(CON) but deducted for ESA(IR).

Radhika.

Hi,

I just thought i would pass on what my dear friend has told me to all you guys who are recieving Permenant Health Insurance and ESA implications.

My friend took out a personal PHI policy some years ago through her financial advisor. Unfortunately due to ill health a few years ago she made a successful claim on her policy.

As she is getting ESA(CON) it is disregarded by DWP, as she took the policy out personally, had she had taken it out through her employers, then monies recieved would have been taken into consideration.It would then be considered as some kind of a pension.

If at some stage she needs to claim EAS(IR), then all her PHI payments would be counted as income.

She recieves her PHI payments Tax Free and is also able to claim Child Tax Credits, as the PHI payments are disregarded, just like DLA.

If she was paid PHI through her employers, then she would not have been able to claim above Tax Credits,as employer PHI policies are Taxed and counted as income!!!!(presumably,some kind of pension).

I hope this is of help. However, each persons circumstances are different, so the above may not apply to all, but may be of help to some.

Radhika.

My understanding is that if you are on an existing long term PHI payment and on ICB then you still qualify for ICB - and would qualify for ESA if you straight onto the support group, I think this is why many long term PHI people are getting transferred straight onto WRAG ESA so that they are able to stop you getting it after a year. My company pays me my PHI and have done for over ten years it is clearly declared by me on my IB50s, tax returns etc and I have clearly stated it on the ESA assessment. In spite of having two independent insurance assessments each year that deem me unfit for any work, and telling them this, offering DWP access to these records and supplying 20 pages of back up material they have moved me to WRAG ESA with no medical assessment. I asked why over the phone and was told "we know you are not fit for work now but you may be in the future". I am going to appeal their decision and also ask them to explain the basis for their decision.

Hi I am new to this forum having just joined the site. I have to say that the help documents are great and I am very glad I joined.

My wife has been disabled and on the highest rate of the care component for over 12 years now and has recently been assessed for ESA without a medical and placed in the work group. As with the other posters previous posts, she is on PHI and unable to work in any capacity, so we have appealed to have her moved to the support group.

I have seen the comments about the CB ESA ceasing after 12 months, whereupon you have to claim the means tested ESA. I think that people on PHI paid by their employer, i.e. with a current contract of employment, should still be able to claim both the means tested ESA and the contribution based ESA and the PHI income should not count. Obviously you would still need to have savings of less than £16,000 and your partner would have to work less than 25 hours a week etc, but I cannot see the PHI income being counted. I say this for a number of reasons:

1. The PHI schemes run by employers are usually based on 50-75% of the last salary less the old incapacity Benefit payment, so if ESA is not to count in future this will have an effect on employers and their PHI schemes.

2. For the means tested ESA, under the ESA 2008 regulations, PART 10 INCOME AND CAPITAL - Chapter 3 employed earners, it states:

(2) “Earnings” are not to include—

(a) subject to paragraph (3), any payment in kind;

(b) any remuneration paid by or on behalf of an employer to the claimant in respect of a period throughout which the claimant is on maternity leave, paternity leave or adoption leave or is absent from work because the claimant is ill;

I would think that the words ‘absent from work because the claimant is ill’ must cover a period on sick leave whilst covered by the PHI scheme.

For the contributions based ESA, WRAG or SG, the PHI income is not counted if you still have a contract of employment as also stated in the 2008 regulations as below:

Permanent health insurance 72.—(1) For the purposes of sections 2(1)(c) and 3 of the Act (deductions from contributory allowance) pension payment is to include a permanent health insurance payment.

(2) In this regulation “permanent health insurance payment” means any periodical payment arranged by an employer under an insurance policy providing benefits in connection with physical or mental illness or disability, in relation to a former employee on the termination of that person’s employment.

I think that the key words above are ‘in relation to a former employee on the termination of that person’s employment’. So if their contract of employment is still in place and they are paying tax and NI on the PHI income as though it was still an employment income, then that should not count towards any assessment for the ESA on the contribution basis. This was always the case under the IB rules, which is why you need to get transferred to the SG if possible as then the PHI income will not count, unless the above statement on it not counting as income are correct.

Any thoughts or other experiences on this issue?