Health insurance versus cash plans: do the figures add up?

With the cost of private health insurance continuing to rise at a seemingly inexorable pace, it is no surprise that more and more people are opting out.

The latest figures from the Health Insurance Authority show a continued decline in the number of people with private health insurance; they have reduced from 2.3 million at the end of 2008 to 2 million in August.

However, this doesn’t mean people are leaving themselves completely exposed to medical expenses. So-called cash plans, which offer money back on a range of everyday expenses, remain popular; as of last month, 102,000 people were insured with such a product, up from 101,000 in December 2013, but down from 109,000 in March 2011.

Dermot Goode of totalhealthcover.ie says the reasons for their popularity are clear. “One, there is a growing market of people who can’t afford health insurance; and two, some people want better cover for routine expenses.”

So what are cash plans, what are their benefits and does forgoing private health cover pose any risks?

What are cash plans? The premise of a cash plan, as the name suggests, is that it gives you

cash back on everyday medical expenses. So, visits to the GP and physiotherapy expenses are likely to be covered under such a policy, typically up to a fixed amount per family per year.

You pay for the expense yourself, and then claim your money back afterwards.

However, such policies don’t cover inpatient hospital expenses and, as such, are considerably cheaper than the alternative.

At present, Laya, VHI, Glohealth and HSF Health Plan all offer cash plans. Aviva does not have a licence to do so and says it currently has no plans to introduce such plans.

What do they cover?

Given that most people are likely to incur the cost of several visits to a GP in a year, as opposed to a stay in hospital, the attraction of cash plans is clear.

Typically, such plans will offer money back on a host of day-to-day expenses, ranging from GP or dental visits to the cost of seeing a consultant and having diagnostic scans, and some plans will even cover prescriptions (Laya, for example, offers €10 back on its Money Smart plan). For maternity expenses, many of these policies will offer a grant.

If you spend some time in hospital, you will be entitled to a cash grant, which may cover the €75 charge imposed per night on a public bed for those without medical cards. For example, HSF’s Family Direct Scheme 5 pays €84 a day for up to 40 days in hospital.

The level of cover varies between providers, so it’s important that you first consider how you’re likely to use your plan. For example, GloHealth’s Good individual policy offers up to €150 back on the cost of a scan such as an ultrasound, MRI or CT, while the similarly priced Health Individual Level 1 from VHI offers just €25, for seven such scans.

Typically, the more you spend on your policy, the more you can claim back: HSF’s €1,056 Family Direct C policy pays €32 back on up to 10 GP visits , but its Family Direct Scheme 2, which costs €186, offers no cover for a visit to the doctor.

What do they not

cover? The key thing to remember when purchasing a cash plan is that they don’t offer cover for in

patient care in a hospital. If you or a family member never have to go to hospital, this won’t be an issue.

If you do need to spend time in hospital, however, it means that you will be dependent on the public sector, which remains under pressure. In addition to being locked out of private hospitals and private care, cash plans also potentially preclude you from jumping waiting lists to see a consultant.

While most cash plans offer you money back on a consultant appointment – for example, VHI’s Health individual Level 1 plan offers you €60 back for up to seven visits – if you can’t be treated in the private system, then some consultants might not see you in the first place.

While Goode notes that more and more consultants are willing to see patients who pay for themselves, the “Catch-22” arises if and when it’s discovered that you need treatment in a hospital.

While you can go down the self-pay route, availing of the “cash grant” which is offered, for example, €80 for 10 day cases with Glohealth’s Hospital Care – Better Family policy, the cost of treatment privately may well be several thousand euro, and thus may be prohibitive.

Do waiting periods apply?

If you have never had a health insurance policy before, waiting periods will apply to cash plans just as they do to regular health insurance policies. The maximum periods are set out in the panel.

However, depending on your provider, you may not have to wait the full waiting period before you get cover as outlined above, so be sure to check before you sign up. For example, HSF is currently waiving new condition waiting periods (excluding maternity-related benefits) for new customers who join its health plans by November 30th.

Remember, if you already have health insurance and are looking to downgrade it, the above waiting periods won’t apply, provided you haven’t had a break in cover of more than 13 weeks.

If you decide to upgrade your cash plan to a full-service private health insurance plan at some point in the future, remember that waiting periods might again apply for any of these additional benefits, such as hospital cover, from two to five years. This can make them less attractive.

Some providers are trying to deal with this problem. For example, GloHealth will waive two years of the upgrade waiting period for pre-existing conditions if you upgrade from Activate Cash/More Cash to Activate Hospital/More Cash.

Can I get a cash plan just for my child?

While it might make sense to drop private health cover for a child – given that children’s hospitals are all public anyway – in favour of a cash plan, and keep full cover for the adults in your family, it may not be possible.

According to Goode, you typically have to have an adult on a cash policy to get a child included. However, many policies – and all of HSF’s policies – are offered on a family basis, which means that if purchased as a top-up to private health insurance for the adults, the cash plan can be used to cover at least part of the cost of all the children’s visits to the GP and the dentist.

Should I bundle my policies?

One way of addressing the cost of your family’s health cover is to consider downgrading your own private health insurance policies to simpler, cheaper cover with little outpatient benefits, which will ensure that you can still see consultants privately and get treatment in certain private hospitals. This can then be topped up with a cash plan, covering day-to-day costs, which may not actually end up costing you much more. For example, if you spend €405 on Laya’s Money Smart 30 Family product, six visits to the GP plus six prescriptions spread across the family will refund you €240, which is almost half of the cost.

“You can be clever with them,” says Goode of cash plans. “It can be a supplement to health insurance. You can use it to prop it up and maybe cover those excesses that you’ve taken on.”