Setting Up Healthcare Trusts

To satisfy requirements from HM Revenue and Customs, a Healthcare Trust has to meet these main conditions:

• Payments into the Trust must be linked in a structured way, to each member.
• Each member must have the right to a specified benefit.
• Trustees have no powers of discretion over a benefit after it has been declared to be available to members.
• Payments made into the Trust must remain beyond the control of the payer.
• The Trust may not be wound up until all obligations to pay eligible benefits have been met.

A Trust that meets these conditions is not considered to be a form of insurance and so there is no liability for Insurance Premium Tax (IPT).

The administration and legal services provided by General & Medical Solutions are subject to VAT. But medical costs are not normally subject to VAT, so, under normal circumstances, the Trust will buy those services free of VAT.

The Trust is established in such a way that it is unlikely to give rise to an Inheritance Tax liability if employees are not making contributions themselves.

Your payments into the Trust are allowable as a normal business expense and are subject to National Insurance Contributions, similar to the way in which premiums for Private Medical Insurance are treated. This is based on our understanding of current tax law which may, of course, change in the future.

The deed and rules is a legal document in the name of the Trust which details the powers and duties of the Trustees, benefit levels, eligibility and funding levels. General & Medical Solutions has standard Trust documentation, prepared by specialist lawyers. We will advise you on how to structure the Trust for your own needs and how to appoint Trustees.

The Rules of the Trust govern the benefit levels available to members. The benefit levels chosen will have a significant impact on the size of the claims fund needed. General & Medical Solutions will work with you to define the benefit levels best suited to your needs and budget.

We will recommend appropriate funding levels and suggest options for keeping costs down. You have the freedom to choose your own benefit levels. Whatever you decide, we will be able recommend appropriate funding levels to cover the cost of potential claims.

A minimum of two Trustees are appointed. Provided General & Medical Solutions is appointed as the specialist administrator, the responsibilities of the Trustees are minimal and largely confined to ensuring that funding is received into the Trust Bank Account, which is set up to hold the funds that are usually transferred into it monthly from the parent company or association.

There is an initial fee for establishing a new trust, which will vary depending upon the complexity and time involved in setting up the trust. Of course, this does not apply if you already have a Trust in place and you are simply appointing General & Medical Solutions as your specialist administrator.

The only other fee payable to General & Medical Solutions is a monthly fee to cover the day to day costs of administering the Trust. This is usually a flat fee for each adult member of the Trust. Each Trust is different so the monthly fee will vary from client to client.

As a client of General & Medical Solutions you will have continuous access to management information, through a secure online log-in. As well as itemising details of members covered, it allows you to view payments made to providers of service.

General & Medical Solutions can produce company branded information packs for distribution to Trust members. We also recommend a presence on your intranet or company website so that your employees have round the clock access to full details of their healthcare arrangements.