How to use health cash plans to offset PMI costs

Private medical insurance for some companies is becoming an increasingly unsustainable cost.

Worker health and wellbeing, although high on the agenda for employers, is not immune to budget pressures.

In the case of private medical insurance (PMI), it’s fair to say that costs continue to rise and that is leading many employers to review their investment in it and consider alternatives.

Health cash plans offer one practical solution, not as a replacement but by shifting some of the everyday healthcare demand away from PMI, improving access to early intervention and supporting a broader cross-section of the workforce. Let’s examine how and why that can work.

Are rising PMI costs sustainable?

PMI has long been viewed as a premium benefit, a clear signal of employer support and a popular tool for attraction and retention. But is it now too skewed towards higher earners, benefiting those who need it the least while excluding the lower-paid employees who are actually more prone to health insecurity?

The key question is not whether it is valuable, but whether it is sustainable as a core pillar of workplace health support.

If premiums continue to increase significantly (employers typically pay around £600–£700 per employee per year), there are only a certain number of levers companies can pull on: do we further limit eligibility, increase employee contributions, raise excess levels, or scrap PMI altogether?

The health cash plan: a modern strategic answer?

Historically, cash plans were associated mostly with eye tests and dentistry. Now they can provide an everyday healthcare safety net that has a broader wellbeing and preventative focus.

They also come at a fraction of the cost of PMI (cash plans can start from around £6 per month), reimbursing or contributing to common healthcare that many people put off due to cost or inconvenience.

Examples might include:

Eye tests and glasses
Private dental costs
Physiotherapy and MSK support (a key driver of absence)
Diagnostic tests such as MRIs and X-rays
Mole checks
Online GP access
Access to mental health support and EAP-style services
Optional wellbeing extras such as discounted gym membership.

For many leadership teams, obtaining this breadth of support is the key: cash plans help address the real-world health frictions that gradually erode attendance, engagement and resilience.

If employees can access faster physio, quicker diagnostics or an online GP, they can address short-term discomfort, reduce long-term illness and avoid a situation leading to stress and burn-out. Quite literally, ‘prevention is better than cure’.

How can cash plans work alongside PMI?

The most effective approach for many organisations is not either/or but a hybrid, layered model where cash plans handle the high-frequency everyday needs and PMI is reserved for specialist treatment of acute conditions.

This approach delivers three crucial advantages:

Early intervention cuts pressure on PMI: Many PMI claims begin with symptoms that employees have ignored for too long. Cash plans help tackle this by making early access easy and affordable, for example a physio preventing an issue escalating to surgery.
Equity: With a heavy modern reliance on deskless workers, shift workers and hybrid teams, there’s a strong business case for providing a health benefit for everyone. Cash plans do this effectively, especially when delivered via a digital benefits platform.
Health budgets stretch further: When organisations are forced to cut benefits, they often do it bluntly, reducing PMI eligibility or scrapping it entirely. This blend lets you rebalance rather than remove: a cash plan like PG Protect can deliver a baseline benefit for all employees while retaining PMI for those who want to pay the extra.

Health benefits review: where do we start?

If leadership is asking to see return on investment, HR teams need to take the time to think strategically and modernise in a way that is relevant. Every organisation should approach a health benefits MOT like any other review: understand the now, identify inefficiencies and redesign for resilience.

Here are five simple steps:

Map HR spend vs workforce needs: Find out who is benefiting from what today. Are benefits aligned with workforce demographics, health risks and working patterns, or are they sadly out of date?
Measure what matters: Shift the focus from cost to value. Consider the actual impact of investing in wellbeing: reducing absence, increasing retention, improving engagement and employee sentiment.
Prioritise prevention and early intervention: Look to strengthen the parts of your benefits offering that help employees act early: physio, mental health support, diagnostics, online GP and health assessments.
Rebalance PMI to protect sustainability: PMI can still play a role but if you need to assess its affordability consider changes to your eligibility structure, excess levels or PMI design. Any gaps can be plugged with cash plans.
Improve access and communication: A benefit only delivers value if employees can understand and use it. Ensure inclusive access for hybrid and deskless workers through digital platforms like HAPI and develop a communications calendar to drive engagement.

The future of workplace wellbeing will not be built on one product. PMI remains a powerful benefit, but for many of our clients it is no longer sustainable as the centrepiece of their wellbeing strategy. Health cash plans are increasingly proving to be a modern, pragmatic solution that is affordable, scalable and preventative.

Not only do they reduce pressure on PMI by supporting early intervention, they also broaden access across the workforce, and enable a layered health approach that is commercially sustainable and employee centric.