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18 October 2017
The MDU's Transitional Benefits are launched not a moment too soon. They have been welcomed by GPs as an answer to the unaffordability of indemnity which has been deterring them from clinical practice. Indemnity costs are deterring GPs from working the sessions they wish to, deterring young doctors from entering general practice and making others take early retirement.
In response to the Department of Health's comments on the MDU's transitional membership benefits in the addendum to its announcement of the Government's intention to introduce a state-backed indemnity scheme for GPs, the MDU is able to reassure its GP members:
If they leave the MDU before this time, the annual cost of Extended Benefit Rights will be between £500 and £1,500 rising slightly over time. The number of years such payments would have to be made would depend on the detailed arrangements for the state-backed scheme but the total subscription collected over a small number of years will not exceed that necessary to pay claims arising from the transitional period. The advantage for members is that the MDU will not collect more up front than it eventually needs.
The background to this is that a retrospective change to the discount rate caused a massive increase in the damages paid in GP claims. For example, with a GP claim that would have settled at £8.4m at a 2.5% discount rate, we would now expect to settle at £17.5m and £20m is no longer unthinkable. Following the catastrophic change in the discount rate, initially the MDU decided not to increase its subscriptions for its standard membership benefits.
We did this because GPs simply cannot afford to pay any more for indemnity - it is not a problem of their making and we don't think GPs should foot the bill. Also, there was a commitment by the Lord Chancellor who said: 'The Department of Health will work closely with GPs and the medical defence organisations to ensure [our emphasis] that appropriate funding is available to meet additional costs to GPs, recognising the crucial role they play in the delivery of the NHS.'
However, we could not continue with this stance indefinitely since it would result in claims being underfunded. It took the DoH over eight months to reach the position where it could make its announcement on 12 October, and the DoH envisages it will take at least 12-18 months to introduce a state backed scheme. As a result we had to take action to ensure that our GP members could afford indemnity and that claims would be correctly funded pending the introduction of a state backed scheme.
The options were:
If an occurrence subscription rate does not fully take account of the massive increase in damages paid in GP claims, with retrospective effect, caused as a result of the 3.25% reduction in the discount rate, it is too low to provide the funding needed for those GP claims (ie, it is underfunded). An underfunded occurrence membership can only continue on the assumption that the Government will provide a solution that meets both future and existing unpaid claims. If the Government scheme, details of which are unclear, were to leave GPs to meet any such claims, an underfunded rate would mean that insufficient subscriptions had been collected from members to fund these.
The MDU's transitional benefits provide an excellent basis now from which to deliver a solution to the problem posed by the Lord Chancellor's decision on the discount rate and the current uncertainty over the introduction of a state-backed indemnity scheme for GPs.
This guidance was correct at publication 18/10/2017. It is intended as general guidance for members only. If you are a member and need specific advice relating to your own circumstances, please contact one of our advisers.
I am 59 and plan to retire and start taking my pension at 60on the 4th Feb 2019. I have pain an awful lot of money over the years.My annual subs are up for renewal in May 18 and I am horrified to discover that on my retirement I will have to continue paying into the MDU to cover a claim from May18-Feb19 .How long and how much - otherwise I might choose to retire in May of this year - children can claim up to the age of 18 ie potentially 18 yrs to pay in .
Dear Dr WardThere is further information, including a video, on extended benefits rights here:https://www.themdu.com/my-membership/transitional-member-benefits/extended-benefit-rights-explainedHowever, if you would like further information on your own circumstances, please could you ring our membership team on 0800 716376
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