Private Medical Insurance vs Health Cash Plans: What’s the Difference?

Understanding how these two benefits work - and which is right for your business

Introduction

When it comes to supporting employee health and wellbeing, two benefits often top the list:

Private Medical Insurance (PMI) and Health Cash Plans.

They sound similar - both help employees access healthcare and manage costs - but they serve very different purposes.

If you’re trying to decide which one is right for your business (or whether to offer both), this guide will help you understand the key differences, benefits, and how they can work together.

What Is Private Medical Insurance (PMI)?

Private Medical Insurance covers the cost of private healthcare - including consultations, tests, and hospital treatment.

The focus is on major medical needs, such as surgery, inpatient care, and faster access to specialists.

Common features include:

• Fast access to diagnosis and treatment

• Choice of private hospitals and consultants

• Cover for inpatient and outpatient care

• Access to advanced cancer treatment

• Mental health support (depending on plan)

PMI gives employees peace of mind that they won’t face long NHS waiting lists - and can get back to health (and work) more quickly.

What Is a Health Cash Plan?

Health Cash Plans are designed for the everyday costs of staying healthy - not major treatment.

They reimburse employees for routine healthcare expenses such as:

• Dental check-ups and treatment

• Eye tests and glasses

• Physiotherapy, chiropractic, and osteopathy

• Health screenings

• Specialist consultations

Employees simply pay for their treatment, submit the receipt, and claim back a percentage or full amount - usually within a few days.

The Key Differences

The Key Differences

Feature	Private Medical Insurance (PMI)	Health Cash Plan
Purpose	Covers major medical treatment	Reimburses everyday health costs
Cost	Higher (varies by age, cover, and claims history)	Low, fixed cost per employee
Access	Private hospitals and consultants	Any registered healthcare provider
Common Uses	Surgery, scans, cancer care, inpatient/outpatient treatment	Dental, optical, physio, prescriptions
Waiting Times	Fast access, bypassing NHS queues	Standard access, but with reimbursement
Suitability	Great for senior staff or larger businesses	Ideal for all employees or smaller teams
Add-ons	Mental health, virtual GP, extra outpatient cover	24/7 GP, wellbeing tools, lifestyle discounts

Which Is Right for Your Business?

Choose PMI if you want to:

• Offer premium, comprehensive health cover

• Reduce long-term sickness absence

• Support recruitment and retention in competitive sectors

• Provide quick, private access to treatment

Choose a Health Cash Plan if you want to:

• Make health support accessible to all employees

• Offer an affordable, everyday wellbeing benefit

• Help staff manage the rising cost of living

• Encourage preventative health habits

Or - Combine Both

Many businesses use both benefits together.

PMI handles serious or specialist medical needs, while a Cash Plan takes care of day-to-day wellbeing.

Together, they create a balanced, cost-effective health strategy that supports every employee.

How They Work with Other Benefits

Both PMI and Health Cash Plans can form part of a wider Health & Wellbeing package that includes:

• Employee Assistance Programmes (EAPs) – for mental health and emotional support

• Group Protection – for financial security during illness or loss

• Salary Sacrifice Schemes – to make health and lifestyle perks more affordable

Reviewing Your Health Cover

Whether you already offer PMI, a Cash Plan, or both - it’s worth reviewing them regularly.Insurer pricing and cover options change every year, and your workforce’s needs evolve too.

A whole-of-market broker (like Excellect) can compare providers and ensure your business gets the most value - fee-free and fully managed.

Final Thoughts

PMI and Health Cash Plans aren’t competing products - they’re complementary.

PMI covers life’s big moments, while a Cash Plan supports the everyday ones.

For employees, it means better access, reassurance, and choice

.For employers, it’s a smarter way to show you care - while protecting productivity and morale.

Speak to Excellect today for a whole-of-market, fee-free review of your health benefits.