Coping financially with long term sickness

Authors: Elizabeth Howard 

Publication date:  11 Sep 2004

Elizabeth Howard takes us through the minefield of benefits and insurance

I went on sick leave just over a year ago. I was breathless at rest, refluxing, and waking repeatedly at night despite 30 mg/day prednisolone, a chest consultant and every asthma drug in the BNF. I was communicating with my patients by writing on bits of paper and could not be understood on the telephone. I could not go on.

There was a one in 100 000 chance of me having non-Hodgkin's lymphoma. I had an inflammatory mediastinal mass—a life threatening 18 cm × 10 cm at diagnosis. It worsened my asthma and then put pressure on my recurrent laryngeal nerve and superior vena cava.

A year later with thanks to my general practitioner; ear, nose, and throat consultant; the Brompton Hospital; and the Royal Marsden Hospital, I am very alive. Three regimens of chemotherapy, and I am much better. My voice is mostly back, and I've just had high dose chemotherapy with stem cell transplant. I am hoping to go back to work.

I am, or was, a salaried general practitioner, working three quarter time with a singlehanded general practitioner. My sick pay is finished, and I am currently living on permanent health insurance.

I have had to do a lot of research into what I am financially entitled to, and here is what I have found out (all information is correct at the time of writing—August 2004).

NHS sick pay

Your sick pay will depend on your contract. Hospital practitioners can expect Whitley council six months' full pay, six months' half pay. With general practitioners, it depends on your contract. You have to be seriously ill or disabled to go past a year and so are stuck if you have no insurance.

State benefits

To apply for state benefits or for information, look on the net, contact your local social services (local directory or [Link] ), visit your local Jobcentre, or ring the benefits inquiry line on 0800 882200 (text phones 0800 243355).

On [Link] there is an A-Z guide to benefits. This website will tell you what you can claim and whether the benefit is limited by your savings. It also contains downloadable claim forms in pdf format. Links lead to [Link] which deals with incapacity and other benefits.

Statutory sick pay

I will concentrate on the under 65s.

Statutory sick pay is £66.15 per week for 28 weeks. It is paid to your employer to pass on to you. If you are receiving sick pay this will go toward paying you and you will not notice it.

Incapacity benefit

This is paid after statutory sick pay has ended or if you are not entitled to it—for example, if you're self employed. There are three levels, from £54.40 per week for short term incapacity to £72.15 per week for long term incapacity (after a year). There is an additional £7.60-£15 per week if you are under 45. Terminally ill people go straight to the long term rate.

Income support

If you are under 60 and on a low income, you will not get this if you have a partner working more than 24 hours a week or if your savings are more than £8000.

Housing benefit

This is if you are on a low income and paying rent. The rates are variable. There are deductions for income, and a lower rate for savings of £3000-£16 000. Savings over £16 000 disqualify you.

Council tax benefit

This is if you are on a low income and paying council tax and can be worth up to £6.95 per week. There are lower rates if you have savings between £3000 and £16 000 (which disqualifies you).

Get insurance while you are healthy and the premiums are lower

Disability living allowance

This is paid if you need help looking after yourself. There are two components, care and mobility. Savings or income does not affect the benefit.

Care component is £15.55-£58.80 per week; mobility allowance is £15.55-£41.05 per week.

The higher mobility allowance can be traded for a Motability car.

Private insurance policies

These are the only way to protect your lifestyle properly, especially if you are young. (I believed this even before I married my husband, who works in the financial industry.)

Financial advisers either work for one company and their products or are independent, not linked to a particular company but working as a broker, taking a commission on the sales. They will tell you which type they are.

It is easy to look for your own products on the internet, but make sure that you are comparing like with like. Is the cheaper policy limited in some way? Is the company reputable; is it likely to fold?

Critical illness

This is a single lump sum payable on diagnosis of a range of critical illnesses. Companies are reducing the list of what is critical, so check the details. It tides you over until permanent health insurance kicks in or may pay off the mortgage.

Income protection or permanent health insurance

This kicks in after a waiting period of being ill, called the deferred period: 4, 13, 26, or 52 weeks are usual. Life offices differ in their definition of disability. It is important to review the level of income regularly so that you are not underinsured or overinsured. A shorter deferred period is appropriate for locums and will cost more. Once you are claiming you will be asked for medical reports at intervals. It yields a maximum 75% of your income, untaxed. I am living on this at the moment, with no worries.

Accident and sickness insurance

This is generally inferior to income protection and overlaps it.

Term assurance: “life insurance.”

This is a single lump sum on death. Putting it in trust avoids it being subject to inheritance tax.

Locum insurance

This is very important for practice harmony. It takes away the guilt from the ill doctor and the resentment from the others. General practitioners, don't forget to cover your salaried doctors too.

Medical insurance

The NHS still looks after its own in the event of serious illness such as mine. It's the elective procedures and routine outpatient waits where insurance makes the most difference. For example, I am insured through my husband's scheme at work, so we pay tax only on the benefit in kind. Some insurers do discounts for doctors. Watch the level of cover, inclusions, and exclusions.

NHS superannuation—retirement due to ill health

This is not well covered by the standard pension booklet. Neither is it covered well on the website ( [Link] ). You are told to ring to request the special booklet, but the telephone is never answered.

Retirement due to ill health will be approved if a doctor is permanently incapable of carrying out his or her duties as a result of illness of mind or body. Permanent means until the normal scheme retirement age of 60; this may rise to 65. Application forms are available from your employer or primary care trust. You must also submit medical evidence. There is a fast track approach for people with a terminal illness, which can be dealt with in 24 hours.

You must have had at least two years' service to claim. If you are young remember the retirements scheme is 1/80th of your final salary. Even when enhanced it is only a fraction of your current income. Even 20 years' service after enhancement will only give you 25% of your normal salary.

Length of service and enhancement

Less than five years: Nothing

Five to 10 years: Doubled

10-20 years: Increased to 20 or if better +six

20+ years: +six

If you are in service when you retire due to ill health, your pension may be enhanced up to a maximum of 40 years' service, including any added years (see box).

If you are a locum general practitioner you are in service while you are in a contract with an NHS client and paying superannuation on your work. This means that between locum contracts you are not in service. So don't get permanently ill in the evening or between practices.

If you leave NHS service through ill health make sure this is properly supported by a medical or ill health dismissal at the end of the post if there is the slightest chance of you needing to take ill health retirement because of the illness. If you cannot prove it you will not be able to claim enhancement.

A return to work is possible but only in a reduced or different role: that is, not the role prevented by the permanent incapacity. You can re-join the scheme if you are still younger than 50.

If a doctor dies while a member of the scheme, a tax free lump sum equal to twice actual annual salary is payable to the spouse or nominated person. Spouses and children's pensions are also enhanced. Locum general practitioners contributing to the superannuation scheme don't get “death in service” benefits.

My advice to you

Today you may discover a lump or have a road crash. Get insurance while you are healthy and the premiums are lower, or at least while you still can (unlike me).

Further information

  • [Link] —A-Z of benefits and links to Jobcentre and Inland Revenue

  • [Link] —Disability access to work and tax credits

  • [Link] —Everything except ill health retirement

  • BMA membership guidance—The NHS pension a general guide (you have to be a member to access this, likewise with the Cameron Charity Fund)

  • The Royal Medical Benevolent Fund, [Link] —Provides “charitable relief by means of financial assistance or otherwise to needy persons who have been members of the medical profession, their widows, wives, children and dependants.” (The fund will be giving sessions at this years' BMJ Careers medical careers fair, [Link] )

  • Financial planning certificate books or files available commercially (I used my husband's from work)

Elizabeth Howard general practitioner Hornchurch, London

Cite this as BMJ Careers ; doi: