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Health Care Cash Plans

by James A. Young(more info)

listed in insurance, originally published in issue 22 - September 1997

Cash plans originated back in the late 1800s when the then voluntary hospitals introduced non-profit making insurance funds which, for a small weekly contribution, guaranteed medical treatment and ensured doctors and nurses would be paid.

In 1948, Nye Bevan, the then Health Minister, drew his inspiration from such a Contributor Scheme and supervised the introduction of the National Health Service.

With the newly formed NHS, Contributory Schemes no longer needed to pay fees to hospitals, opting instead to pay cash benefits direct to their contributors to supplement national health and insurance benefits.

Contributor Schemes are now more commonly known as “health care cash plans” and should not be confused with Private Medical Insurance (PMI), as there are major differences between the two:

Cash plans do not attempt to indemnify their members against the full cost of surgery and treatment in private hospitals, but rather provide cash benefits for the member, spouse and children whenever they enter an NHS or private hospital. This provision gives the patient the choice of how to spend their cash benefit. Should they decide that they would prefer private treatment, then the cash benefit is there to put towards any private fees incurred. Cash plans do not claim to cover all private treatment costs but in those real emergencies they say there is nothing better than the NHS anyway! The other angle is that contributors can choose to be NHS patients and would therefore still receive a financial sum from their cash plan cover. This sum could be put towards any expenses incurred by the stay in hospital.

Cash plan subscriptions are not age band related, but with PMI the older you get the more you pay. The time to join any type of healthcare insurance, be it PMI or a cash plan, is when one is fit and young. Typically, a simple statement of good health is necessary to qualify for membership of the cash plan. The advantage with cash plans is that normally once you are registered as a member you can remain in membership for life. This principle also applies to age. Contributions are the same for an 18 year old student as they are for a 69 year old pensioner who joined during his/her working career.

A single cash plan subscription usually covers the whole family, but PMI normally only covers the individual. This means that for the one weekly payment the member is covered, as is their spouse/partner and any resident children up to the age of 18.

You don’t have to be ill to claim under a cash plan. Generally cash plans offer a wide range of cover, and although hospitalisation is included in this, also incorporated are “everyday” type cover such as dental treatment and optical care. Therefore during the course of a typical year, cash plan members are very likely to use their cash plan cover for one benefit or another for either themselves and/or their family. Benefits obviously vary between companies but are also likely to include maternity, physiotherapy, osteopathy, chiropractic, homoeopathy, acupuncture, chiropody and consultation to name a few which may not be covered in all but the most expensive of PMI policies.

With many cash plans a doctor’s referral is not required to use the benefits. Therefore if a cash plan member feels that a visit to the chiropractor or physiotherapist is required they just book the appointment with the approved healthcare professional, giving the member more responsibility to administer his/her own health requirements.

Cash claims are usually paid within a few working days, but PMI claims can often take a lot longer. Cash re-imbursements are sent directly to members at their home address, which gives the member the freedom to select the treatment best suited to their needs.

The majority of cash plan companies are non profit making organisations which means that they operate solely for the benefit of members. They are mutual organisations with no shareholders. Any financial surplus is used to maintain reserves required by the DTI and to improve benefits wherever possible.

There is much talk in the media and press at the moment regarding the falling membership of private medical insurers. The loss is credited to healthy members leaving as they find that they claim very infrequently.

By contrast, in recent years, cash plans have achieved considerable membership increases and are receiving more publicity as it becomes increasingly apparent that cash plans are a very attractive alternative to PMI.

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About James A. Young

James A. Young, MA (Cantab) joined HSA Healthcare as Chief Executive and General Secretary in 1987 following 5 years as Director of Economic Development for Nottinghamshire County Council. James’ career also includes service with W R Grace Ltd, The Marley Tile Company, The French CGE Group and the Guiness Group. He can be contacted at HSA Healthcare, Hambleden House, Andover, Hampshire SP10 1LQ. Tel: 01264 353211 Fax: 01264 333650.

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