What's the difference between company medical insurance and a cash plan?

Private medical insurance differs from health cash plans in how it provides treatment and the way it pays healthcare costs. Private medical insurance covers treatment for acute conditions and has various coverage levels, so you can choose the options that meet your needs. When your employees claim, your health insurance pays the treatment providers directly. Health cash plans let your employees claim money back after they've arranged and received treatment from their chosen provider.

Whether you choose health insurance or a cash plan, your business can pay the premiums to cover employees, or make it a voluntary scheme where employees can pay to join if they wish.

As we've mentioned, private medical insurance covers your employees for private medical treatment and various support services depending on your chosen insurer and health insurance policy. Here's what you can expect to find with most policies.

Core coverage

Private medical insurance providers vary in the coverage their health insurance policies provide as standard. Every health insurance provider covers in-patient and day-patient treatment, cancer care and some mental health support, along with some out-patient services such as diagnostic tests or minor surgical procedures. Others include more comprehensive coverage, so it's worth seeking professional advice to get the best coverage for your budget.

Policies usually also include access to 24/7 virtual GP appointments, telephone helplines and direct access to treatment without a GP referral for some conditions.

Optional extras

You can add more comprehensive cover to your policy by choosing from a range of optional extras. These vary between insurers but typically let you extend your mental health coverage and provide more comprehensive out-patient treatment. You can also add employee well-being services, such as an employee assistance programme, menopause support or additional cancer care services.

Business services

Employee health insurance typically provides access to health assessments that offer an overview of each employee's current health and support in achieving their well-being goals. While you won't have access to individual assessments, most insurers will provide anonymised data to help you understand your workforce's health needs. Larger companies with 250+ employees can often receive support to develop workplace wellness initiatives.

You can also access various health services, such as workplace flu vaccinations.

Reward programmes

Most insurers offer a member rewards programme that provides discounts on everything from cinema tickets to hotel stays. Some, such as Vitality, let members earn additional rewards through healthy living. These programmes can help your employees save money and reduce your premium costs.

Health cash plans offer cashback on your employees' routine healthcare costs. Coverage varies depending on your chosen health cash plan, but most plans cover routine health expenses such as eye tests, dental check-ups, prescription glasses, contact lenses, and dental care. If an employee receives NHS treatment, they can claim cashback for overnight hospital stays and day-patient care.

Many cash plans also pay cashback for physical therapies, including physiotherapy, osteopathy and chiropractic treatment. Some health cash plans will pay the full cost of treatment, while others pay a percentage. The percentage varies depending on your chosen plan and coverage level. There are usually limits on the number of check-ups and treatments employees can claim per year.

Some business health cash plans offer access to employee assistance programmes or reward schemes, depending on the provider.

Cash plan payments

When you choose a health cash plan, your employees choose their treatment provider, book an appointment and pay their treatment costs upfront. Then they must submit a receipted invoice to your cash plan provider to claim cashback.

There are significant differences in the coverage provided by private medical insurance and health cash plans. As we've mentioned, private health insurance can fund medical treatment upfront, including cancer care, surgery and diagnostic tests. Your employees will typically receive treatment in private hospitals.

By contrast, health cash plans don't cover private hospital stays but pay cashback if an employee receives treatment in an NHS hospital. Instead, they cover routine healthcare expenses such as dental check-ups, eye tests and physiotherapy.

Exclusions

Private health insurance excludes certain treatments and conditions from coverage. Some are standard exclusions, such as treatment for chronic conditions, cosmetic surgery and straightforward pregnancy. Others depend on an employee's medical history, excluding pre-existing medical conditions for which the employee sought treatment before joining the policy.

Health cash plans don't apply any exclusions for pre-existing conditions, often because it's unnecessary. Some team members might receive free eye tests or dental treatment due to their age, benefits status or medical history, but everyone else must pay regardless. Health cash plans can also pay for healthcare costs that insurers would usually exclude, or which their health insurance doesn't cover. These could include NHS hospital stays or physiotherapy for a pre-existing condition.

Private medical insurance gives your employees quick access to private healthcare providers without spending time on an NHS waiting list, meaning they'll likely take less time off work. That's good for your business and their mental health. Health insurance also provides various services that help your employees care for their overall well-being and support your workplace wellness efforts.

The main disadvantage of private medical insurance compared to health cash plans is that comprehensive policies can be costly. There are tax advantages, but it's wise to consult with your financial advisers before proceeding.

Health cash plans can be a cost-effective way of paying your team's everyday health costs. The monthly premium for a health cash plan is typically much lower than that of comprehensive health insurance policies. Some cash plan providers offer access to mental health support, reward programmes and other well-being benefits, which can encourage your team to look after their health.

The main disadvantage of health cash plans is that the onus is on the employee to choose their healthcare providers, book appointments and pay for treatment. Choosing a provider can take time, whereas a health insurance provider will suggest suitable private hospitals and consultants.

By this point, you're probably wondering whether private medical insurance or a health cash plan is the right choice for your business. It depends on your circumstances.

If you have a limited budget, health cash plans offer cost-effective coverage that encourages your staff to maintain their routine health checks. Cash plans don't exclude pre-existing conditions, making it a great choice if your employees have complex medical histories. Cash plans are quick and easy to administer, reducing paperwork time for your HR team.

A comprehensive health insurance policy is a better choice if you want to ensure your employees can access a wide range of medical treatments and support services when they need them. While many people are unfamiliar with health cash plans, health insurance is a popular and highly valued employee benefit that could help you attract the best staff.

At Globacare, we provide you with tailored advice to help you choose the best healthcare coverage for your employees. Contact us today for a comparison quote.