Norwich: 01603 760866
Ipswich: 01473 255948
Employer funded access to healthcare is an area in growing demand from employees. Typically, employers will find two options appear frequently: Health Cash Plans and Private Medical Insurance.
There’s often confusion about the difference between the two; however, they both work very differently. Crucially though, they’re not an either/or but can be used together, as they address different problems and can work together to help your workforce health and wellbeing, provide cost controls and coverage.
At a glance: the core differences
|
Feature |
Health Cash Plan |
Private Medical Insurance |
|
Primary purpose |
Everyday healthcare costs (dental, optical, physio, routine checks) via reimbursements (up to set limits). |
Diagnosis and treatment of acute medical conditions in private facilities. |
|
Speed of access |
Fast access to routine services you arrange yourself. |
Fast access to specialists, diagnostics, and private hospitals (varies by pathway and authorisation). |
|
Cover structure |
Annual allowances per benefit (e.g., £X for dental, £Y for physio). |
Limits by policy sections (in/out-patient), hospital lists, excesses. |
|
Claims process |
Member seeks and pays for treatment, then claims online for provider to reimburse. |
Member obtains GP referral and then contacts provider to get authorisation and list of suitable facilities /consultants. |
|
Pre-existing conditions |
Often allowed (plan rules apply). |
Typically excluded unless on Medical History Disregarded (MHD) group terms. |
|
Cost |
Lower per-employee cost; scalable for all staff. |
Higher per-employee cost; often targeted or tiered. |
|
Typical extras |
Virtual GP, EAP, retail discounts, health checks. |
Cancer pathways, Direct Access without GP referral, Menopause support, NHS cash benefits. |
|
Business impact |
More predictable spend, boosts day-to-day wellbeing & prevention. |
Opportunity for quicker diagnosis/treatment and therefore less impact to business on absence. |
|
Tax considerations |
Treated as a Benefit in Kind, which means staff will pay Income Tax and the employer will pay Employer NI on the value of the premium. |
Treated as a Benefit in Kind, which means staff will pay Income Tax and the employer will pay Employer NI on the value of the premium. |
What each product actually does?
Health Cash Plans
How they work: Employees pay for approved everyday healthcare and claim back up to a set annual allowance (e.g., dental, optical, physio, routine screenings). Encourages staff to seek preventative treatment that can prevent future long-term issues.
Strengths: Inclusive for all ages, prevention-focused, easy to understand, and lower more predictable cost.
Limits: Not designed for major acute treatment or surgery; allowances can be used up.
Private Medical Insurance
How it works: Funds private consultations, diagnostics and treatment for acute conditions, with hospital networks and clinical pathways.
Strengths: Cuts waiting times, supports complex treatment, strong perceived value.
Limits: Higher cost to employer and heavily impacted by claims performance, pre-existing conditions commonly excluded and chronic conditions not typically covered.
They’re different but they can complement each other
Used together, Health Cash Plans and Private Medical Insurance can provide a broad coverage for staff.
- Address different problems:
-
- Health Cash Plans covers frequent, low-cost, preventative needs (dental/optical/physio).
- Private Medical Insurance covers infrequent, high-impact acute illnesses/injuries, minimising downtime.
- Control total cost of care:
-
- Health Cash Plans can absorb routine out-patient spend (e.g., physio sessions, eye care), which can reduce Private Medical Insurance out-patient claims frequency or prevent issues becoming Private Medical Insurance claims.
Example setups
- Health Cash Plans for everyone (foundation), Private Medical Insurance for key roles (targeted).
- Health Cash Plans as an entry-level health benefit when budgets are tighter or as a step towards Private Medical Insurance.
- Private Medical Insurance for fast-growth or operationally critical teams where downtime is costly.
- Both together when you want inclusive wellbeing and risk protection.
As employee benefit consultants, we’ll:
- Analyse your workforce objectives.
- Identify options available within your current and future budget.
- Run a market tender, negotiate terms, and recommend most suitable provider(s).
- Manage onboarding and produce staff comms.
Get in touch to discuss healthcare options for your team
Both Health Cash Plans and Private Medical Insurance are good options if you wish to provide your team with affordable access to healthcare - and can be rolled out individually or in tandem.
With state healthcare becoming more difficult to access, employer funded options have become extremely valuable to employees.
To find out more about your options, or to discuss your existing employee benefit arrangements, get in touch today.
The information provided is for general guidance only and is not advice. Benefits, eligibility and tax treatment depend on your circumstances and the insurer/provider’s policy wording and schedule, which should be reviewed in full.
Back to News