Private medical insurance and health cash plans

Although we all receive free treatment on the NHS, offering private medical insurance as an employee benefit has tangible benefits for both employees and employers. Private medical insurance (PMI), sometimes called private health insurance (PHI), pays for private medical care as an alternative to the NHS.

A less expensive employee benefit – although not a straight like-for-like alternative to private medical insurance – are health cash plans (HCP) which are designed to help members spread the cost of everyday healthcare such as eye tests, dental treatment and physiotherapy. Health cash plans can be used either as a low-cost alternative to private medical insurance or be used to complement it, often as a voluntary benefit paid for by the employee.

Private medical insurance (PMI)

‘Going private’ has a number of advantages for anyone needing medical treatment: it allows the person to choose when, where and who they see, pays for a private room should in-patient treatment be required, can pay for specialist drugs that may not be available on the NHS and makes ‘being ill’ slightly less unpleasant. Treatment is also provided much more quickly than via the NHS: an advantage for both the employee, who receives medical treatment more quickly, and their employer, who suffers less disruption from the effects of their employee’s illness.

Buying private medical insurance as an individual can be extremely expensive so employees perceive it as a high-value benefit. Cover pays for the private treatment of acute conditions; illnesses that are short-term and curable rather than chronic conditions which are invariably long-term and may not be curable. It usually covers only unforeseen illnesses so will not cover ‘pre-existing conditions: it’s quite usual for employees to have to provide details of their medical history and, sometimes, have a medical test as a prerequisite to joining the scheme.

As with any insurance policy, you only get what you pay for. Basic private medical insurance may pay for the cost of most in-patient treatments; choosing additional features will increase the level of cover but at a higher premium. No policy will cover all medical eventualities; apart from long-term, chronic illnesses such as AIDS/HIV, diabetes, asthma and epilepsy, there’s usually a list of exclusions including routine checks and GP visits, A&E treatment, normal pregnancy and childbirth, cosmetic surgery, self-inflicted injury and injuries received whilst taking part in ‘dangerous sports’.

A range of other services such as health assessments, flu vaccinations, dental care and health cash plans are often available either as optional extras or as standalone services.

Health cash plans (HCP)

Health cash plans predate the NHS by almost a century; by 1930 health cash plans covered nearly 10 million people but were made effectively obsolete with the introduction of National Insurance in 1948. They’re now enjoying resurgent popularity as a method of offsetting rising day-to-day costs in healthcare.

A health cash plan allows its members to claim back money for day-to-day healthcare services that are either not covered by private medical insurance, such as eye tests and laser eye treatment, or for services that may not be included, such as dental care. Unlike private medical insurance, members don’t need to be referred by their GP and plans do cover pre-existing conditions.

The plan works by paying a regular monthly premium; the size of the premium being determined by the number of employees and the level of services covered. When an employee uses a service they can claim a fixed amount back from the plan; the greater the monthly premium paid, the greater the level of reimbursement.

As they are designed to cover everyday healthcare bills, health cash plans can be used to complement private medical insurance, providing an element of financial cover for those services excluded by private medical insurance. Health cash plans also lend themselves to being an optional or voluntary ‘benefit’ paid for by an individual employee either by a fixed deduction from their wages or salary, or as part of a ‘health and wellness’ package.

How can One Financial Solutions help you?

As a firm of independent financial advisers we can provide you with impartial advice to help you design and create an employee benefits’ package with a competitive edge; one that can make a real difference both to who you recruit and who you retain.

We’ll help you plan an appropriate strategy, recommend the best products from across the whole of the financial services’ market and help build and develop the package you need. If you already have an employee benefits’ package, we’ll review it and recommend changes we think could turn it into something hard to refuse. We can provide an annual review to ensure your employee benefits’ package remains fresh and competitive, grows in value as your employees’ careers develop and stays within your budget.

So, if you’re looking for help with any aspect of your employee benefits’ package, please call us on 020 3714 9565 or ask us to call you by sending an email to admin@onefinancialsolutions.co.uk.