A health cash plan pays employees fixed cash amounts towards everyday health costs — dental check-ups, glasses, physiotherapy — for typically £5–£15 per employee per month. It doesn't cover private surgery or fast-track diagnosis; that's health insurance's job. Cash plans win when budgets are tight and you want every employee, not just the unlucky ones, to feel the benefit.
- ✓Cash plans cost £5–£15 per employee/month — a fraction of PMI's ~£57 average.
- ✓They pay fixed cash sums for dental, optical, physio and more, up to annual limits.
- ✓Everyone uses a cash plan every year; insurance only helps the employees who fall ill.
What a health cash plan actually does
A health cash plan is a simple deal: the employer pays a small monthly premium — typically £5–£15 per employee — and employees claim back cash, up to fixed annual limits, when they spend money on everyday health. An entry-level plan might pay up to £70–£100 a year each towards dental treatment, optical costs and physiotherapy, plus smaller amounts for chiropody, health screening or prescriptions. Employees pay the bill, photograph the receipt, and the money lands in their bank account, usually within days.
Note what's missing from that list: private consultations, surgery and cancer care. A cash plan is not a cheap version of private medical insurance — it's a different product doing a different job. PMI exists for the serious, expensive, rare events. A cash plan exists for the small, cheap, certain ones.
The usage argument: everyone claims, every year
Here's the quiet truth about company health insurance: in any given year, most employees don't claim, because most employees don't get ill enough to need a specialist. They're insured against a risk, which is valuable — but it's invisible. A cash plan flips that. Everyone has a dental check-up. Most people buy glasses or contact lenses eventually. Plenty see a physio. With a cash plan, virtually every employee can claim something every year, so the benefit is felt, talked about and remembered at appraisal time.
That visibility matters for the money you're spending. Health cover is the most-valued voluntary benefit among UK employees, but perceived value depends on use. A £10-a-month cash plan an employee uses three times a year can generate more goodwill per pound than a £57-a-month insurance policy they've never touched.
There's a prevention argument hiding in here too. Cash plans nudge people towards the check-ups they'd otherwise skip — the eye test that catches glaucoma, the dental visit that catches something worse, the physio session that stops a niggle becoming six weeks off. With UK employees averaging 9.4 sick days a year and absence costing employers around £103bn annually, a benefit that quietly encourages early attention to small problems is doing more than reimbursing receipts.
Cash plan vs health insurance: the honest comparison
The two products are complements, not rivals — but budgets force choices. Here's the job-by-job breakdown.
| Job to be done | Health cash plan | Private medical insurance |
|---|---|---|
| Routine dental and optical bills | Yes — core purpose | Usually only as an add-on |
| Physio for everyday aches | Yes, up to annual limit | Yes, often needs GP referral |
| Fast specialist consultation | No | Yes — typically within days |
| Private surgery (e.g. hip, hernia) | No | Yes — usually in 2–6 weeks |
| Cancer diagnosis and treatment | No (small screening sums only) | Yes, on most policies |
| Cost per employee/month | £5–£15 | £35–£110, average ~£57 |
The bottom two rows are the whole decision. Insurance costs four to ten times more because it's carrying risks that can cost tens of thousands — a single private hip replacement runs £12,000–£15,500. A cash plan caps its own exposure with fixed annual limits, which is exactly why it can be so cheap.
Compare cash plans and health insurance
Where cash plans genuinely beat insurance
For some workforces, a cash plan isn't the budget compromise — it's the better-fitting product.
- High-turnover teams. Hospitality, retail and care businesses with fast-moving staff get little from insurance underwriting cycles and waiting periods; a cash plan delivers value from month one, at a price that works across hundreds of heads.
- Deskless and manual workforces. Physio, chiropody and optical benefits map directly onto the health costs warehouse, construction and field teams actually incur.
- Younger teams. Twenty-somethings claim on dental, optical and physio; statistically they make few insurance claims, so a cash plan buys visible value cheaply.
- Companies at 50–200 employees on tight margins. Covering everyone with PMI at ~£57 a head may be unaffordable; £8 a head covers the whole company for less than PMI would cost for a seventh of it.
- Topping up an existing PMI scheme. Cash plans cover the everyday costs PMI ignores — some employers run PMI for one tier and a cash plan for all.
Costs, tax and setting one up
Employer-paid cash plans typically cost £5–£15 per employee per month depending on the benefit level; premium tiers usually scale the annual claim limits rather than adding new categories. Providers include Simplyhealth, Medicash, Health Shield, Westfield Health and BHSF, and corporate plans usually accept all employees with no medical underwriting — pre-existing conditions aren't an issue because the plan pays for routine care, not treatment of illness.
Tax works like private medical insurance: premiums are generally an allowable business expense for corporation tax, and the plan is a taxable benefit in kind for employees — reported via P11D until the move to payrolling in April 2027, with Class 1A NIC at 15% for the employer. On a £10-a-month plan the BIK is small: a basic-rate taxpayer pays roughly £2 a month in tax for the benefit.
Frequently asked questions
How much does a health cash plan cost per employee?
Typically £5–£15 per employee per month for employer-paid corporate plans, depending on the benefit tier. Higher tiers raise the annual claim limits — say, from £70 to £200 of dental cover a year — rather than changing what's covered. Compare that with ~£57/month average for company health insurance.
What can employees claim for on a health cash plan?
Fixed cash amounts, up to annual limits, for everyday health costs: dental check-ups and treatment, eye tests and glasses, physiotherapy, chiropody, health screening, and often prescriptions or specialist consultation contributions. Claims are usually made by submitting a receipt through an app, with money paid within days.
Is a health cash plan the same as health insurance?
No. A cash plan pays small fixed sums for routine, predictable costs like dental and optical care. Health insurance funds the expensive, unpredictable events — private consultations, diagnostics, surgery and cancer treatment. A cash plan will not pay for an operation; insurance generally won't pay for your glasses.
Do employees need medical underwriting to join a company cash plan?
No. Company health cash plans accept every eligible employee without medical questions, which is one of their practical advantages over insurance for mixed-health workforces. Benefits like dental, optical and physiotherapy allowances are available to everyone from the scheme start date, subject to any short initial waiting periods.
Are health cash plans a taxable benefit for employees?
Yes. An employer-paid cash plan is a benefit in kind, reported via P11D (moving to payrolling from April 2027), and the employer pays Class 1A NIC at 15% on the premium. The sums are small: on a £10/month plan, a basic-rate taxpayer's tax works out around £2 a month.
When is a health cash plan better than private medical insurance for staff?
When budget rules out insuring everyone, when the workforce is young, high-turnover or deskless, or when you want every employee to see value each year. At £5–£15 a head, a cash plan covers a whole company for less than insurance costs for a small fraction of it — a different job, done well.
Can a health cash plan and health insurance work together?
Yes, and many employers run both: insurance handles serious illness — consultations in days, surgery in weeks — while the cash plan mops up everyday dental, optical and physio costs insurance ignores. A common structure is PMI for some or all staff plus a company-wide cash plan underneath.
Which providers offer employee health cash plans?
The main UK corporate cash plan providers include Simplyhealth, Medicash, Health Shield, Westfield Health and BHSF. Benefit structures are similar — fixed annual limits per category — so comparison usually comes down to price per tier, claim limits, app quality and extras like virtual GP access or EAP helplines.
Do health cash plans help with recruitment and retention?
They punch above their weight because they're used constantly. Health cover is the most-valued voluntary benefit among UK employees, and a cash plan makes that value tangible several times a year for every employee — not just the few who claim on insurance. Visibility per pound is the cash plan's real strength.