Healthcare cash plans

Healthcare cash plans are different to health insurance. Find out what they pay for and whether they're the right option for you.

If you want a payment plan that will help cover the cost when you go for routine medical treatment such as the dentist or a round of physiotherapy, then a healthcare cash plan can be an affordable alternative to health insurance.

While the NHS means that medical care is free at point of use in the UK, there are still plenty of regular expenses such as glasses, dental treatment and even recommended additional therapies that the state healthcare system won’t typically fund.

So what’s included in a healthcare cash plan and is it a better option than health insurance?

What’s included with a healthcare cash plan?

As with any financial product there are a lot of very different options and so it’s important to understand exactly what kind of cover you’re buying.

Check the small print for exactly what’s included, not just to avoid nasty surprises but also to make sure you are getting your money’s worth from the policy and not paying separately for things that could be included.

It’s common for healthcare cash plans to include trips to the dentist, including both regular check-ups and additional treatments like the hygienist.

Optician expenses are also quite common, including the cost of eye tests and glasses (although not necessarily ongoing costs such as contact lenses).

Most will also include physiotherapy and potentially any treatments recommended by your doctor, such as a series of sports massages.

The more comprehensive policies include a wealth of other treatments, from maternity payments to chiropodists and even for complementary medicine.

Some healthcare cash plans also pay out if you need to attend hospital for treatment or surgery, which can help allay the expense of travel, hotel stays for families and other inevitable costs that arise when someone has to stay.

Who’s covered?

You can usually buy a cash plan for an individual or a couple. Often it’s possible to add children to the cover for free, partly because they are so low risk and most of their additional costs - like dentist treatments and glasses - are met by the state.

Another option is to buy a plan that simply covers one aspect of your healthcare, like the optician or dental treatment.

It’s worth shopping around and comparing cover for these rather than just relying on your dentist or optician’s own plan.

Exclusions from healthcare cash plans

This kind of cover is usually fairly basic and a lot of treatments won’t be covered; few plans pay out sufficiently to cover private hospitalisation or surgery, although you can use the payment towards such expenses.

It’s important to understand what specific situations will not be provided for.

For example, most cash plans refuse to pay out if the treatment is as a result of excessive alcohol use or use of any illegal substance.

It’s common for cover to be refused for pre-existing conditions, or at the very least refused for an initial period like six months.

Cover varies depending on what the cash plan is intended for, with some only providing dental care, for example.

When you shop around for plans, make sure that you check what each includes and that you’re comparing like for like.

Do I really need a healthcare plan?

Before investing in a healthcare cash plan you need to be sure that you will actually use what it includes, otherwise it is just a waste of money and you would be better off paying for appointments as you go.

When you are choosing a policy, consider how likely you are to use the agreed payouts compared to how much it costs each month.

If it feels like bad value then you may prefer to save a monthly amount into an account so you have cash ready to cover your own appointments. That’s sometimes referred to as ‘self-insurance’.

It’s also worth checking whether your employer provides some sort of healthcare plan as many will at least cover optician appointments and potentially more.

The difference between a healthcare plan and health insurance

A healthcare cash plan and a health insurance policy are very, very different financial products, even though they cover a similar area.

With a health insurance policy you pay a monthly premium and then any unexpected treatments are provided for, often with a very high spending limit.

Insurance is unlikely to cover routine appointments like visits to the dentist or optician, unless you take this cover as an optional extra.

However, a healthcare cash plan takes care of the commonplace expenses such as charges for the dentist and eye check-ups.

It is less like an insurance policy and more like spreading the cost of routine appointments over a year - although cash plans can pay out more than you put in if you have enough appropriate claims.

Where to buy a healthcare cash plan

You may be able to buy a plan through your employer using salary sacrifice, although the rules on that are changing in 2017 so be aware that this might change.

Otherwise, it’s a good idea to shop around and compare plans, so going online is probably the quickest way to do this.

Your dentist or optician may also offer individual plans that simply spread the cost of your regular check-ups and treatments. However, it’s really important to do the sums to make sure that is genuinely good value for you.