[SPONSORED BY MEDICASH – READ HEALTH & PROTECTION’S Q&A WITH MEDICASH’S PAUL GAMBON HERE]
Cash plans are becoming the new black for Britain’s employers as an increasing breadth of services and a growing focus on workforce health have made them an on-trend benefit.
Traditionally, many cash plans offered members health cover for dental, optical and physiotherapy, yet rising demand and innovation has led to the introduction of additional benefits.
These include digital GP consultations, virtual physiotherapy appointments and mental health apps, while counselling, diagnostics and skin health monitoring are among other added-value benefits now offered by some schemes.
This evolution is the result of business leaders seeing a link between good health and productivity.
“The view of employers has shifted over the years,” says Medicash chief commercial officer Paul Gambon.
“They now see that there are business benefits of looking after the workforce.”
Indeed, the number of companies offering cash plan schemes to their staff has grown by almost a third (30.2%) in the past five years, according to Heath & Protection’s sister publication Corporate Adviser.
This appetite remains strong with the market expanding by 6.4% to more than 31,000 organisations last year.
Controlling absences
For organisations looking to offer health benefits to staff, private medical insurance (PMI) is an option, but it is expensive.
Cash plans, however, are a more affordable route to getting faster treatments.
Steve Ellis, managing director of employee benefits at Prosperis, notes these plans are for employers who want some control over absences.
People may be off work, needing physiotherapy or unable to get an appointment with their GP.
“It’s plugging the gap between lack of immediate NHS access and full private medical insurance,” he says.
Charlie Cousins, director at Engage Health, adds that small business like the simplicity of these products, with one invoice, no complex forms and the flexibility to cover families without jumping through lots of hoops.
“Cash plans are cheap relative to PMI, so they let SMEs offer something on the benefits front without the budget commitment full medical cover requires,” he adds.
Employers want pathways for treatment
Rising competition and innovation means that the cash plan market has seen some evolution.
A few years ago, the introduction of digital GPs, mental health support and virtual physiotherapy “created a buzz”, according to Nick Johnson, a director at WTW.
“But the speed of change within the product means these benefits are now standardised and expected within a cash plan.”
This has contributed to a major change in how employers see value in cash plans.
They no longer see a pot of money that their staff can claim from, instead they want pathways for treatments.
It is not just the benefits that are evolving to meet the needs of the clients. The claims process is changing, too.
The days of people willing to wait weeks for their money are gone. Once they make a claim, they now expect the money fast.
Indeed, faster payments are becoming a standard service within these products.
“We have been investing in speeding that process up, using our apps, to the best of our ability, to make sure that money is back with the individual as soon as possible,” Medicash’s Gambon says.
For Medicash, this typically means an average of two to three working days.
Rising claims rates
In 2025 the payout rate for health cash plans was the highest of the general insurance lines covered by the Financial Conduct Authority.
Indeed, 68% of healthcare cash plan premiums were returned in claims last year, little change from the 68.7% recorded in 2024.
WTW’s Johnson puts the engagement rate for PMI at between 25% and 30% a year.
“Whereas with a cash plan you see significantly higher numbers, because it is focused on everyday healthcare needs,” he says.
The risk is that such a high level of usage could stretch the industry’s affordability.
This is something Prosperis’ Ellis is concerned about.
He referenced one of his clients, where 20 people are each paying £2.95 a week, giving them £100 for optical, £100 for dental and £100 for physio.
All 20 have claimed the maximum allowance already.
“That is £6,000 in total and they are not paying anywhere near that in premiums,” he says.
“If I’m being cynical, the price will start to escalate quite dramatically because people are using them more and more.
“Let’s beware and just watch out what happens in the next five years,” Ellis adds.
Ellis notes that only 20% of members claim, while the other 80% forget they have such cover, but a shift in this rate could have a significant effect.
“There’s no point in sugar coating something that I’m genuinely concerned about,” Ellis says.
“I’m always concerned about putting a benefit in that an employer may have to take away in future.
“People are more able to claim via apps, where you can claim quicker. I just see it as this beast waiting to get out of control.
“If you are undercharging for what you can claim, ultimately the reckoning day will come,” he adds.
Many of today’s workers are tech savvy and Ellis explains he has seen this shift with another client where the average age of their workers is 25 and ”they are claiming like mad.”
He warns that the cash plan industry will need to adapt otherwise prices will get squeezed.
To keep premiums sustainable, Johnson says the industry needs to better understand claims, keeping member information accurate and review benefit levels to avoid overlap with other healthcare products.
For instance, virtual GPs are provided by cash plans, life insurers, private medical insurance and, according to Johnson, from his bank.
Maintaining affordability
Unless the trend for rising costs across the industry reverses, it may lead to a repricing in the cash plans market.
It is an issue Gambon is preparing to face, but he is also aware that organisations will be more content to pay for a benefit where there is clear use and engagement.
“We are not there yet, but in terms of having a sustainable plan, given that costs are increasing across every one of our suppliers, there will be a knock-on effect,” he says.
Medicash is focused on efficiency to give as much value back to their clients as possible.
Keeping costs low while inflation is rising is crucial to maintaining the product’s affordability and providers are aware of this fact.
Inflation is showing through claims. Indeed, a £100 claim a few years ago, could be £120 today, Gambon acknowledges.
“It makes it harder to be sustainable, but we typically can show good return on investment in terms of what we are offering,” he adds.
What’s next?
Going forward, Gambon expects the appetite for corporate cash plans to remain strong.
Inflation and ongoing challenges within the NHS mean he “can’t see anything on the horizon that is going to fundamentally throw that off course”.
Howden Employee Benefits senior consultant Riaan van Wyk notes that more add-ons, such as digital tools, could help satisfy the rising appetite for cash plans.
He adds that providers could tweak their offerings to differentiate themselves from the competition.
Changes to what members can claim for, the levels they can claim on and the frequency of their claims are options.
“There will be some fantastic changes in the way these benefits are being offered, to get the most out of them,” van Wyk says.
Inclusive plans
“If I have learnt anything in my 10 years at WTW, it is that this market continues to evolve,” Johnson says.
“Every time you think it has reached the point where there is nothing else you can pop into a benefit pot, there is a new piece of evolution waiting around the corner.”
This could mean more inclusivity-focused benefits, such as those concerning menopause and neurodevelopment.
More personalised healthcare elements that allow members to get ahead of any health issue rather than react to them are likely to feature.
This will involve digital health screenings and DNA-based insights. “We are going to see far more of a step into there,” Johnson says.
“It feels like we are only scratching the surface of that part.”