How much does a company health cash plan cost?

Corporate plans typically start at around £5 per employee, per month at entry level. Comprehensive cover can cost £15 per employee, per month, or more. The premium depends on the provider, the level of cover, and the size of your workforce. Larger groups usually get better rates. By comparison, group private medical insurance typically costs £30 to £100+ per employee, per month, so cash plans are a much more affordable option if you want to offer something to your whole workforce.

Are pre-existing conditions covered?

Not always. Some cash plans cover pre-existing conditions from day one. Others apply an exclusion period or permanently exclude them. Cover will vary by provider and plan tier. When we broker a plan on your behalf, we make sure the position on pre-existing conditions is clearly set out before any employees sign up.

Is there a qualifying period?

Plans may include a qualifying period, typically one to three months from the start of the plan, before employees can submit claims. This prevents the plan from being used to recoup costs for treatment that was already planned. The length of the qualifying period and whether any categories or types of treatment are exempt vary between providers.

Employer's guide to health cash plans

Everyday healthcare costs can add up quickly, especially when household budgets are already under pressure. Dental treatment, eye tests, glasses, physiotherapy and similar expenses are often the kinds of costs employees delay when money is tight. A corporate health cash plan helps staff claim back these routine costs, while giving employers a visible, relatively affordable, wellbeing benefit they can offer to their workforce. It can also encourage employees to seek help earlier, before minor health problems become bigger absence issues.

Updated: 28.08.26

By Alex Mhandu

This content was factually correct when written but may not reflect current developments or information.

In this guide, we explain how health cash plans work, what they cover, how they compare with private medical insurance, and how they can form part of a good employee benefits package.

What is a business health cash plan, and how does it work?

A corporate health cash plan is an insurance policy which reimburses your employees for the cost of routine and preventative healthcare, up to pre-agreed annual limits.

It works differently from private medical insurance, which is designed to cover acute or unexpected illness. A cash plan is built around predictable, everyday healthcare costs such as dental treatment, eye tests, physiotherapy, and similar expenses.

Business health cash plans are typically simple to use. The employee pays for an eligible treatment, then sends the receipt and treatment details to the plan provider, along with their membership information, often through an app or online portal. Once the claim is approved, the provider pays the employee the amount covered by the plan, up to the limit for that type of treatment.

Health cash plan providers don’t usually require employees to complete a medical or provide their medical history.

Funding options

You can set up a health cash plan in a few different ways, depending on your budget and the level of choice you want to give employees.

Employer-funded. You pay the full premium and offer the plan as a staff benefit. This is the simplest option and provides employees with practical support paid for by their employer.
Dual-funded. You pay for a core level of cover, and employees can choose to pay extra for a higher tier or to add cover for family and dependants. This can work well if you want to offer cover to everyone at an affordable cost, without committing to the highest level of cover across your whole workforce.
Employee-funded. You arrange access to the plan, but employees pay the premium themselves, usually through a payroll deduction from net pay. This can still give them access to group rates, but it needs to be set up carefully. It is not the same as salary sacrifice, which has different tax rules. We explain this in more detail below.

What do health cash plans cover?

Health cash plans are designed to cover the healthcare costs employees encounter in everyday life. These are not usually big hospital bills. They are the smaller, more regular costs that can still become difficult when household budgets are tight.

Depending on the provider and level of cover, a plan may help employees claim money back towards:

Dental check-ups and treatment
Dental injury
Eye tests, glasses, and contact lens prescriptions
Physiotherapy, osteopathy, acupuncture, and chiropractic treatment
Health screenings
NHS prescription charges, where payable
Hospital stays, including NHS cash benefit

Many plans go beyond basic cashback. They may also include 24/7 virtual GP access, an Employee Assistance Programme (EAP) with mental health support, discounts on gym memberships or health products, plus high street retail discounts.

However, it’s important to pay attention to the details of each plan. A cash plan does not usually mean every bill is paid in full. Employees can claim only up to the limits set for each benefit category, and reimbursement levels vary by provider and plan tier. Before you choose a plan, it is worth checking not just what is covered, but how much can be claimed and whether it will make a meaningful difference to employees.

Health cash plan vs private medical insurance (PMI)

Health cash plans and private medical insurance are both employee benefits, but they are for different types of healthcare. A cash plan helps with everyday, routine healthcare costs, while PMI is designed for larger, less frequent medical treatment. The table below shows how they compare.

	Health cash plan	Private medical insurance (PMI)
Purpose	Covers routine and preventative everyday healthcare costs	Covers eligible private diagnosis and treatment for acute conditions
Typical cost	From around £5–£15 per employee per month	Typically, £30 – £100+ per employee per month
How claims work	Employee pays for treatment, then claims cashback up to the plan limit	Insurer pays the provider directly for covered treatment
Examples	Dental check-ups, eye tests, physiotherapy, prescriptions	Private specialist consultations, surgery, hospital treatment, cancer care
Best suited for	Whole workforce – frequent, lower-cost claims	Senior staff or targeted provision – high-value, lower-frequency claims

The two products work well together. Many employers offer a cash plan across their whole workforce and private medical insurance for senior staff or as an opt-in benefit. This gives you comprehensive cover at a cost that works at different levels of the business.

Is a health cash plan a taxable benefit?

Usually, yes, if the employer pays for it. The tax treatment depends on how the plan is funded, so it is worth understanding the rules before you choose a setup.

Here’s what employers need to know for 2026/27.

Employees – Benefit in kind (BIK)

If you pay the premium, the cash plan counts as a taxable benefit in kind for your employees. The taxable value is the cost of the premium you pay. This is added to each employee’s taxable income. They pay Income Tax at their marginal rate, but not National Insurance. In most cases, HMRC adjusts their tax code, so the tax is collected through PAYE.

For example, if you pay £6 per month for an employee’s cover, the taxable value of the benefit is £72 for the year. A basic-rate taxpayer would pay 20% income tax on that amount, so the tax cost would be £14.40. A higher-rate taxpayer would pay £28.80.

If your employees pay the full premium themselves from net pay, there is generally no benefit in kind and no associated tax costs. However, if you pay the provider first and then recover the cost from employees, “making good” rules apply. The employee must reimburse you by 6th July following the end of the tax year to ensure no taxable benefit arises – there are options for how this is done, including deducting the amount from the employee’s salary. It’s important to set up this type of arrangement carefully.

Employers - Corporation Tax and National Insurance

The cost of providing a health cash plan is usually an allowable business expense, so you can deduct the premium against trading profits for Corporation Tax purposes.

You will also usually pay Class 1A National Insurance on the value of an employer-funded health cash plan. The Class 1A rate for 2026/27 is 15%. For 2026/27, taxable benefits should be reported through the standard benefit-in-kind process, using P11D and P11D(b), unless you are already registered with HMRC for payroll benefits. Mandatory payrolling of most benefits in kind is due to apply from April 2027.

Salary sacrifice

Some employers ask whether health cash plans can be offered through salary sacrifice. In most cases, this does not create the tax savings they might expect. Under HMRC’s salary sacrifice rules, employees will still pay Income Tax and will make savings on National Insurance. The taxable value is usually the higher of two amounts – the value of the benefit, or the salary the employee gives up.

Pensions, Cycle to Work, and ultra-low emission vehicles are treated differently under these rules. Health cash plans aren’t. There can be greater savings when setting up a health cash plan directly through the business, rather than via salary sacrifice.

Please note that Alan Boswell Group does not provide tax advice, and the above is for informational purposes only. We recommend you get specialist advice from an accountant or tax adviser.

The benefits to your business and your employees

According to the CIPD’s Health and Wellbeing at Work report 2025, average absence rose to 9.4 days per employee per year – a record high, and well above the 5.8 days recorded in 2020. Mental ill health is now the leading cause of long-term absence, cited by 41% of employers. The cost to your business in lost productivity, sourcing cover, and team disruption can be high. A health cash plan won’t solve every absence problem. But it is one of the most practical tools available to support your staff before problems escalate.

Cost-of-living support

Dental treatment, physiotherapy, and optician costs have all risen in recent years. If your employees are putting off healthcare appointments because of the expense, their health is likely to suffer, having a knock-on effect on your business. A cash plan helps make these expenses affordable and ensures your staff get the treatment they need.

Reducing absenteeism

Early access to treatment can mean conditions are less likely to become serious. A physiotherapy appointment for a back problem or a virtual GP consultation could prevent a much longer absence. Plans that include an Employee Assistance Programme also give employees a confidential first point of contact for mental health support, before a crisis develops.

Talent retention and attraction

Unlike some benefits that employees may rarely need to use, a cash plan is used regularly – for a dental check-up, a new pair of glasses, or a physiotherapy session. For employers looking to recruit and retain staff, it forms part of a valuable benefits package. To see how health benefits fit into a wider package, take a look at our guide to employee benefits.

It’s also worth considering key person insurance for specific employees critical to the operation of your business, alongside your wider wellbeing strategy.

What to check before choosing a plan

The cheapest plan is not always the best value. Two health cash plans can look similar on paper but pay out very differently in practice, so it is worth looking beyond the headline monthly cost.

Start with the annual limits. How much can an employee actually claim for dental treatment, glasses, prescriptions, physiotherapy, or other common costs? Does it cover the current cost of these treatments (or contribute a meaningful sum towards them)? Then check the reimbursement level. A plan may cover a treatment, but that does not always mean it pays the full bill.

You should also carefully review the terms regarding qualifying periods and pre-existing conditions. Some plans let employees claim quickly. Others require them to wait one to three months. Some will cover pre-existing conditions from day one. Others exclude them for a set period or altogether.

Finally, check what support comes with the plan. If virtual GP access, an Employee Assistance Programme, onboarding materials, or employee communications are important to you, make sure they are included at the tier level you are looking for.

FAQs

Find the right plan for your business

A health cash plan can be one of the most cost-effective employee benefits your business can offer. But the right plan depends on your workforce size, your budget, and the benefits you already have in place.

As employee benefits specialists, we arrange plans from leading providers and compare cover levels, annual limits, reimbursement percentages, qualifying terms, and overall cost, so you can make an informed choice rather than relying on a single provider’s quote. If you’re interested in getting a good employee benefits package, speak to our team on 01603 967955.

Need help with your employee benefits?

Whether you need a quote, have a general enquiry, or want to talk it through over the phone, we're here to help.

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Employer's guide to health cash plans

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