A cash plan is a cheap, broad everyday-health perk; private medical insurance is dearer but covers private diagnosis and treatment. Many small firms start with the cash plan.

How it actually works

The two benefits do different jobs. A health cash plan reimburses everyday costs — dental, optical, physiotherapy, health screening — up to set annual limits, usually for a low cost per head and with no medical underwriting. It is a visible perk that most staff can use every year, which is part of why it lands well as a benefit.

Private medical insurance is the heavier cover. It pays for private diagnosis, consultations, scans and surgery, giving fast access to treatment and sparing staff long NHS waits. It costs considerably more, it is underwritten, and it is the cover that matters when someone is seriously ill rather than when they need a routine appointment.

For a small team the choice comes down to the goal. If you want an affordable benefit that everyone actually uses, a cash plan often gives more perceived value per pound. If you want to protect staff from waiting months for treatment, private medical insurance is the one that delivers it. Plenty of firms run both — a cash plan for all staff and private medical cover for a smaller group.

Both can be set up as group benefits, so this is not an either-or you have to guess at. A broker can price a cash plan and a private medical scheme side by side for your headcount, so you can see exactly what each buys before deciding where the budget goes.

Questions to put to the insurer or broker

  • Which of these would my staff actually use through the year?
  • Can I offer a cash plan to everyone and private medical cover to a smaller group?
  • What does each cost per head for a team of my size?

Related questions

Cover, tax and advice are three separate questions

This explains how business and group cover is structured, not what a scheme would cost you — that turns on your workforce, the cover level and the insurer. The tax treatment described is general and depends on your circumstances, so confirm it with an accountant, and use an FCA-authorised broker to arrange the scheme itself. Private medical insurance still excludes conditions an employee already has, and the chronic conditions every insurer excludes, whoever pays the premium.

Get a free quote — a specialist broker calls you back, free and with no obligation.

Or see how UK cover compares and the FCA-authorised broker list.