What is the difference between private health insurance and health cash plan?

I have been looking to take out private medical insurance and in doing my research I keep coming across Health Cash Plans as well, what is the difference between the two?

Question asked by Joan Cooper
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Answered by Andrew Jenkinson

This is a very common question and it is important to understand the benefits and limitations of each when selecting the most appropriate product for your situation.

What is Private Health Insurance?

Designed to cover the cost of receiving treatment for acute medical conditions in a private environment enabling the policyholder to bypass NHS waiting lists. Where a health cash plan will cover your everyday healthcare costs such as routine dental check-ups, private medical insurance will cover the cost of receiving treatment for more serious conditions where a stay in hospital is required.

Depending on the level of cover provided on your health insurance policy you may also be covered for outpatient treatment such as scans and specialist consultations.

It is most common with health insurance for the insurer to liaise with the healthcare provider directly to settle the medical bill, this differs from cash plans where given the frequent nature of claims and the small sums involved the policyholder settles the cost and is then reimbursed by the insurer.

What are Health Cash Plans?

Designed to cover your everyday healthcare costs such as dental check-ups. The products are designed with a benefit limit for certain costs such as routine dental treatment or optical costs, the insured can then claim back their costs up to the relevant limits.

Dependent upon the product you can receive anywhere from 50%-100% of the cost of your treatment up to a fixed annual limit. Health cash plans are designed to cover the healthcare costs you routinely incur, the policies are not designed to cover treatment for more serious conditions.

Cash plans can be set-up on an individual basis or as a group contract. Another important factor to consider when selecting a health cash plan is the policy terms regarding pre-existing medical conditions, many set-up on a personal basis will have some form of pre-existing medical condition clause.

Example

The two policies are not mutually exclusive, they are designed to cover very different risks. Many individuals take out both a private health plan and a health cash plan, the first to cover the cost of receiving treatment privately for more serious conditions and the cash plan to cover their everyday healthcare costs such as prescription glasses and eye tests. Let us suppose that you have taken out both options and have no pre-existing medical conditions.

A couple of years down the road you get told by your GP you need a hip replacement, the cost to have the hip replaced privately is likely to be covered in full on your private medical insurance. Should you only have a health cash plan you would not have the option to have the hip replaced privately and would have to wait on the NHS.

Each and every year you go to your private dentist for check-ups and a clean, such costs are not generally covered under a private medical insurance plan however if you have a health cash plan in place you can claim these costs back from your cash plan provider.

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This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
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