Private medical insurance (PMI) vs health cash plans: What’s the difference?
Blog Article | By Simplyhealth | Published on 20/10/2025
Looking after our health and the wellbeing of those we care about has never been more important. But with different health-related products on the market, it can be confusing trying to understand what each one covers.
When looking for medical insurance in the UK, two popular options are private medical insurance (PMI) and health cash plans. While both offer health and wellbeing support, they work in different ways and choosing the right one can make a big difference to your finances and access to care.
In this article, we’ll break down the key differences between private medical insurance and health cash plans.
What is private medical insurance (PMI)?
Private medical insurance is designed to cover the cost of private healthcare and medical treatment for acute conditions that start after your policy begins. It usually involves paying a monthly or annual premium, and in return, the insurer will pay your specialists, diagnostic tests and private hospital directly to the provider up to your policy limits. Depending on the policy, you may be required to pay an excess, which is a pre-agreed amount of money you pay towards the cost of a claim, and the insurer will cover the rest. Some policies require the excess to be paid for each claim, while others apply it only once per policy year.
What PMI usually covers:
Diagnostic tests like MRI/CT scans and blood tests
Seeing specialists without long waiting times
Private hospital stays and treatments
Elective surgeries and procedures*
*Cosmetic procedures are typically not covered, unless deemed clinically necessary
What PMI usually doesn’t cover:
Pre-existing conditions*
Maintenance or routine checks of long-term or chronic illnesses like diabetes, asthma, or multiple sclerosis
Routine or preventive care, like dental check-ups or prescription costs
Cosmetic surgery that is not deemed clinically necessary
Emergency treatment
*Some insurers may provide coverage of a pre-existing condition- i.e. some corporate schemes, moratorium underwriting or tailored policies. Always review the policy documents to understand exactly what is and isn't covered.
Example of PMI being used
Sarah, a working mum of two, has PMI for her family. Her 12-year-old son develops reoccurring knee pain. Rather than waiting for an NHS appointment, she uses her PMI to get him seen by a specialist more quickly, who recommends physiotherapy as an outpatient - all covered under her plan.
What is a health cash plan?
A health cash plan is designed as a more affordable alternative to PMI and offers support towards everyday health costs. You pay a set monthly premium and can then claim money back (up to annual limits) towards health treatments and appointments.
What a health cash plan usually covers*:
Routine dental treatment, including check-ups and fillings
Eye tests, prescription glasses, and prescription contact lenses
Physiotherapy, chiropractic and acupuncture
A cash sum if admitted to hospital
Some also provide access to GP and mental health support services
*Specific coverage will vary depending on the provider and plan
What a health cash plan usually doesn’t cover:
Comprehensive or complex medical treatments like surgery or long-term care
Private hospital fees
Example of a health cash plan being used
A childcare provider pays for all 50 of their employees to have a health cash plan. Employees have the flexibility to choose a registered professional for their treatment and then claim money back towards things like dental check-ups, eye care, and physiotherapy.
This, in turn, helps with retaining top talent. A recent survey shows that 72% of employees agree that workplace healthcare benefits encourage them to stay with their current employer.1
A helping hand from Simplyhealth
Our Simplyhealth plans come with the following benefits*:
*Excluding our Simply Dental plans and On-Demand product
What are the key differences between PMI and a health cash plan?
Think of PMI as your safety net for big, unpredictable health issues. A health cash plan is more like a budgeting tool for routine care.
Quick comparison table
Feature | Private medical insurance (PMI) | Health cash plan |
Purpose | Covers the costs of private healthcare treatment and services for short-term, acute medical conditions | Helps towards your everyday healthcare costs |
Coverage | Costs covered towards specialist consultations, diagnostic tests, elective surgeries and procedures (deemed clinically necessary), private hospital stays and treatment | Examples may include money back towards dental, optical, physiotherapy and chiropody. The exact benefits will depend on the provider and type of policy |
Cost | Generally more expensive than a health cash plan depending on factors like age, health, lifestyle, location, medical history and level of cover | Typically less expensive than PMI. The exact price will depend on factors like the chosen provider, level of cover and whether you're applying for an individual or family policy |
Claims | Direct payment between your insurer and chosen private healthcare provider (after any applicable excess) | Customer pays for the treatment upfront and then claims back towards the cost (up to an annual limit) |
Best for | Providing fast access to private treatment for acute, short-term conditions | Individuals who want to manage their everyday health costs |
Which is right for you?
Choosing between PMI and a health cash plan depends on your priorities and budget.
For families and individuals
When choosing between PMI or a health cash plan, it’s important to consider your personal circumstances. If you’re looking for protection against acute and short-term unexpected health issues, with fast access to private treatment, PMI may be a suitable option. On the other hand, if you’re looking to claim back money towards your regular, everyday health-related costs, a health cash plan may be a better fit.
Key factors to consider:
Budget – Whilst PMI offers a more comprehensive level of cover, it’s typically more expensive. Families with a tighter budget may find a health cash plan a more affordable option.
Healthcare needs – For family members requiring specialist care, PMI can help provide faster access to private doctors.
Usage – Health cash plans are great for families who want to claim back money towards everyday health care treatments.
Whether you consider PMI or a health cash plan, you should fully review the terms and conditions to understand what is and isn’t covered under the policy, to make an informed decision. Price and the level of cover will vary depending on the provider.
For businesses and employers
Consider the needs of your employees, your budget and the type of benefits you want to offer.
Key factors to consider:
Objective - Start by defining your goal. Are you looking to offer comprehensive cover for acute medical conditions, or are you looking to support employees with their everyday healthcare costs like dental, optical, and physiotherapy? Understanding your objective will guide you in choosing the type of cover that best fits your employees' needs and supports your overall business strategy.
Budget - If you have a limited budget but the main goal is to support your team’s overall wellbeing, a health cash plan may be the best choice. If there's more budget available and the aim is to provide cover towards the cost of private healthcare treatment and services for acute medical conditions, PMI may be the better option.
Company size - Smaller businesses may decide to offer whole of workforce health solutions, such as a health cash plan, as a cost-effective way to provide health benefits to all employees. Larger companies may find health cash plans easier to manage and scale across a large workforce, reserving PMI for senior or critical roles to control costs while still providing valuable health benefits.
Employee demographics and needs - Consider the demographics and specific needs of your employees. Different age groups and health profiles may require varying levels of coverage, so understanding your workforce can help tailor the benefits to better support their healthcare requirements.
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FAQ's
Is PMI worth it in the UK?
Whether PMI is worthwhile very much depends on your individual circumstances. With the NHS facing unprecedented waiting times and a backlog of treatments, private medical insurance is becoming increasingly valuable.2 However, it can typically be a more expensive healthcare option and may not cover chronic or pre-existing conditions. It’s important to fully review the terms and conditions of the plan you’re considering to help you make an informed decision.
Can employers offer PMI and health cash plans together?
Yes, employers can offer both PMI and health cash plans together as part of their employee benefits package. PMI typically covers more extensive medical treatments, while health cash plans help with everyday health costs like dental, optical, and prescriptions. Offering both gives employees broader healthcare support and flexibility.
Can I use PMI and a health cash plan together?
Absolutely. Some businesses combine both for a more comprehensive coverage. However, it's important to note that you can’t claim betterment - this means you can’t claim more than the actual cost of your treatment by using both policies together. For example, if your treatment costs £500, you can’t claim £500 from both providers to receive £1,000. The total amount you receive in claims must not exceed what you’ve paid for the treatment.
Can I use both NHS and private healthcare at the same time?
Yes. You might have an NHS GP, but use PMI for a faster diagnosis or treatment. Likewise, you can use a health cash plan to help cover the costs of treatment that isn’t widely available to you on the NHS. This could be because that form of care is only available to select groups, isn’t considered clinically necessary, or hasn’t yet been approved for use in the NHS.3 Examples include eye tests, health screenings, and acupuncture.
How quickly can I use the plans after joining?
With health cash plans, you can often claim for most benefits as soon as your plan starts and once you’ve received the treatment or service. However, some benefits may have a qualifying period. This is the minimum amount of time you need to wait before you can make a claim for certain benefits, like dental treatment. This means any treatment you receive before your plan starts, or during the qualifying perio,d won’t be covered under that benefit.
You can typically use PMI for acute conditions that start after your policy begins. However, this can vary depending on the provider, and some policies have a qualifying period for claims. Pre-existing conditions are often excluded or subject to a separate waiting period.
Always check your policy documents for specific waiting periods and exclusions.
Are pre-existing conditions covered?
With PMI, most policies exclude treatment for conditions you had before taking out the cover. Some providers offer moratorium underwriting, where if you haven’t had symptoms, treatment, medication or advice relating to the condition for a set period (usually two years after the policy starts) - then they may cover you for the condition in the future.
With health cash plans, you can usually claim for routine treatment, even if it relates to an existing condition. It’s important to always check the policy details.
How can PMI or a health cash plan benefit my business?
Employees having access to healthcare is no longer a nice-to-have - it’s essential. Key benefits include retaining top talent, reducing costs, absenteeism and promoting a healthier workforce.4
How can PMI benefit my family?
PMI can benefit a family by providing faster access to specialists, diagnostics and treatments, potentially avoiding NHS waiting lists, and therefore giving peace of mind.
Can I choose my own hospital or specialist?
With PMI, you often have a list of approved private hospitals and consultants to choose from, depending on your level of cover. With health cash plans, you can typically use any qualified or registered provider and then submit your receipt for reimbursement.
Do both PMI and health cash plans cover mental health services?
Some PMI and health cash plans include mental health support, but coverage will vary depending on the provider and plan, so check the specifics before choosing.
How long does it take to get reimbursed from a health cash plan?
This will vary depending on the plan provider. At Simplyhealth, we process all claims within one day, and if approved, you'll get your money back within 3 working days.
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References
Simplyhealth via Opinium surveys of 500 HR decision makers in the UK, and 2000 employees (21st May – June 2024)
https://commonslibrary.parliament.uk/research-briefings/cbp-7281/
www.telegraph.co.uk/money/consumer-affairs/conditions-treatments-arent-covered-nhs-much-do-cost/
Sinclair, A. and Suff, R. (2025) Health and wellbeing at work. London: Chartered Institute of Personnel and Development
Please note: The information outlined in this blog does not represent the views of Simplyhealth and is provided for general informational purposes only. It should not be construed as professional advice. We recommend consulting with a qualified insurance advisor for guidance tailored to your specific needs.