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Thread: Income Protection (PHI) and Contribution Based ESA

  1. #1

    Income Protection (PHI) and Contribution Based ESA

    Hi, I'm looking for a bit of advice. I'm on contribution based ESA and in the support group, in this time I've had hell getting my insurance company to pay out income protection I had been paying for privately. To give clarity I paid £45 a month by direct debit to a private company for a policy that would pay £500 a month if I were off sick, there was an exclusion in my policy that I have fight hard to prove that my illness wasn't which is why it's taken a total of 17 months for them to pay out. Now they are about to payout, which is amazing as it will pay off some debts, however I'm not sure if this will affect my CB ESA. Does anyone have any experience of this, the last thing I want is a big bill from the DWP and when I phone them they seem unsure as it wasn't a benefit paid by my employer.

    Thanks

  2. #2
    Senior Member nukecad's Avatar
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    From the decision makers guide, Volume 9, Chapter 48 _
    48006 Unlike ESA(IR), the amount of ESA(Cont) that a claimant receives is not affected by all income. It is affected by
    1. any pension payments and
    2. any PPF periodic payments and
    3. any councillor’s allowances

    which the claimant receives. Guidance on how this affects ESA(Cont) is in DMG Chapter 44.
    So as you are on Contributions Based ESA, and this is an insurance policy not a pension or pension protection fund payment, it should not affect your ESA.
    I don't know everything. - But I'm good at searching for, and finding, stuff.

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  3. #3
    Quote Originally Posted by nukecad View Post
    So as you are on Contributions Based ESA, and this is an insurance policy not a pension or pension protection fund payment, it should not affect your ESA.
    PHIs are classed as pensions

  4. #4
    Senior Member nukecad's Avatar
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    Quote Originally Posted by FredTheFrog View Post
    PHIs are classed as pensions
    I wasn't aware of that, will have another trawl through the decision makers guides to see if I can find any specific mention of PHIs as income.

    Do you have a link to save me some searching?

    This could explain why the DWP can't give sleepyseizures a definitive answer without more information.
    It may well depend on the terms of the policy itself.

    (I do know that in the past my Private Income Protection Insurance did not affect my CB jobseekers when I was made redundant, but that was a long time ago, 1989/90).
    I don't know everything. - But I'm good at searching for, and finding, stuff.

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  5. #5
    Senior Member nukecad's Avatar
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    OK; I've found the reference to this PHI situation in the Decision Makers Guidance, Volume 8, Chapter 44
    https://www.gov.uk/government/upload...70/dmgch44.pdf

    44700 A payment under a permanent health insurance policy is a pension payment for the purposes of ESA(Cont). It means any periodical payment

    1. made to a former employee and
    2. which was arranged by an employer under an insurance policy and
    3. which provides benefits to the former employee in connection with physical or mental illness or disability and
    4. is payable on the termination of employment.
    So reading that,
    If the PHI was arranged by the Employer then it is to be classed as a pension payment for the purposes of CB ESA.

    BUT
    44723 Where the claimant

    1. receives a payment under a permanent health insurance scheme and
    2. had contributed over 50% of the premium

    then the payment is not deducted from ESA(Cont).
    So if this was a private PHI and/or if sleepyseizures contributed more than half of the premium then it is disregarded for CB ESA.


    sleepyseizures,
    Hope that helps clarify your situation, you can point out that clause 44723 to the DWP if it applies in your case, which from what you say it does.

    EDIT
    Of course if at any time your ESA changes to Income Related then the insurance will then be counted as income.

    EDIT2
    And just for clarity, as I assume that there will be a lump sum payment of backdated insurance due.
    Payment of CB ESA is not affected by capital.

    Decision Makers guide again, Volume9, Chapter 52:
    52001 This Chapter gives guidance on capital and its effect on ESA(IR). The ESA(Cont) that claimants may be entitled to is not affected by their capital.
    Last edited by nukecad; 09-11-2015 at 08:07 AM.
    I don't know everything. - But I'm good at searching for, and finding, stuff.

    Migration from ESA to Universal Credit- Click here for information.

  6. #6
    Quote Originally Posted by nukecad View Post
    OK; I've found the reference to this PHI situation in the Decision Makers Guidance, Volume 8, Chapter 44
    https://www.gov.uk/government/upload...70/dmgch44.pdf


    So reading that,
    If the PHI was arranged by the Employer then it is to be classed as a pension payment for the purposes of CB ESA.

    BUT

    So if this was a private PHI and/or if sleepyseizures contributed more than half of the premium then it is disregarded for CB ESA.


    sleepyseizures,
    Hope that helps clarify your situation, you can point out that clause 44723 to the DWP if it applies in your case, which from what you say it does.

    EDIT
    Of course if at any time your ESA changes to Income Related then the insurance will then be counted as income.

    EDIT2
    And just for clarity, as I assume that there will be a lump sum payment of backdated insurance due.
    Payment of CB ESA is not affected by capital.

    Decision Makers guide again, Volume9, Chapter 52:
    Thanks very much for your help, it's such a minefield and the DWP always err on the side of taking money away so I'm nervous speaking to them. I contributed the whole payment, so I should be ok. I always viewed this policy like gambling winnings, as tasteless as that sounds, I bet every month I'd get sick and if I did they'd give me money.

    I have to say though the DWP have been an absolute dream to deal with compared to my insurance company, my policy is own occupation and they have changed the parameters of my job role so many times to fit their opportunity to decline it's been unreal, I literally had to back them into a corner with loads of medical evidence that I was able to get because my partner gets BUPA through work. 17 medical tests to get £500 a month, just so they couldn't squirrel out of it by saying my diagnosis is uncertain. I have critical illness as well, and that's all down to prognosis, but that's a fight for another day!

  7. #7
    Senior Member nukecad's Avatar
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    Insurance companies will always try to find a 'reason' why they should not pay out.

    I love that we can now have access to the Decision Makers guides online, OK its not the legislation (and may not be strictly correct to the current law) and it can be hard to search through correctly, but it lets us know just what they are working to.

    And when you can quote it back at them with Volume, Chapter, and clause, they don't have much of an argument.
    I don't know everything. - But I'm good at searching for, and finding, stuff.

    Migration from ESA to Universal Credit- Click here for information.

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