When it comes to managing health costs, there are two popular options – health care cash plans and private medical insurance (PMI). Both support the costs of health care treatments but in different ways and with different benefits. It can be tricky to understand which one is right for you so here’s a handy guide we’ve put together to help:
What is a health care cash plan?
A health care cash plan pays money back towards routine health expenses such as dental check-ups and treatment, glasses, contact lenses, eye tests and physiotherapy. Some also include 24/7 access to a GP service.
Cash plans are unusual in that they are a type of insurance that is designed to be claimed against regularly, not just when things go wrong or for more serious, short term medical conditions.
By helping to make health care treatments more affordable and accessible, cash plans encourage policyholders to seek earlier treatment to keep on top of their everyday health and help prevent more serious conditions developing.
First introduced in the 19th century, cash plans remain popular, with 3.3 million people in the UK covered by a policy at the end of 2021.1
Sovereign Health Care is one of the UK’s leading providers of health care cash plans, offering plans for both individuals and workplaces. Last year alone, Sovereign paid out £7.7m in claims to its customers.
Health care cash plans are relatively low-cost policies and a fraction of the cost of PMI. Cover starts from a few pounds per week, per person. For example, Sovereign Health Care’s Good All Round cash plan starts from £2.28 per adult, per week (or 33p a day) – less than the price of a coffee – and also covers up to four dependent children under the age of 18 at no extra cost. No medical is needed before you take out a policy, and everyone pays the same at each level of cover regardless of age or medical history.
What is Private Medical Insurance?
PMI covers the cost of private medical treatment should you become unwell and is designed to fund the diagnosis and treatment of medical conditions in a fast and efficient manner. NHS data showed that in 2023, one in eight Brits had paid for private health care during that year, with 53% of those people saying they had done so “to be seen more quickly.”
The specifics of what is covered by PMI will differ from policy to policy, and prices vary significantly based on factors including age, medical history, pre-existing health conditions, lifestyle and even location. PMI can be costly due to the difficulty in forecasting when a condition or need for treatment may arise and the severity of it. The average annual cost of health insurance for an individual went up to £1225 in 2022 and is expected to continue to rise due to an increase in claims and higher costs of treatment.3
Which is right for you?
Deciding between a health care cash plan and PMI depends on individual health care needs, budget and preferences. Both options offer valuable but very different benefits and understanding the distinctions between both can help with making a decision. Indeed, some people choose to have both types of cover as they are different.
Established in 1873 as a Bradford-based hospital fund, Sovereign Health Care has been helping people for over 150 years. Its affordable cash plans are available to both individuals and employers as an employee benefit. Find out more at sovereignhealthcare.co.uk.