HEALTH insurance schemes offer members not just the opportunity to by pass hospital waiting lists, but the chance to choose the doctor they want to perform the operation or treatment, a private or semi private room and in many cases the flexibility to choose when to have treatment. It also provides a financial incentive in the form of tax relief.

For many people the tax relief that comes with VHI membership, for example, is the deciding factor in whether they become members or not. The relief may have been whittled down in recent years to just 27 per cent of premiums - the standard income tax rate - but it is still significant enough to paying VHI premiums.

When BUPA, the British health insurer begins operations here at the end of the year, they will also be in a position to offer members the same tax relief.

But it isn't just health insurance companies that offer the valuable tax incentive. One of the two health cash benefit schemes operating in the State - the Hospital Saturday Fund or HSF - also qualifies for tax relief on premiums. HSF, a charitable trust which was founded in England in the 1870s and began operating here in 1949 was granted its tax relief status in 1991, a spokesperson told Family Money.

The other scheme, the Hospital Savings Association, also a charitable trust, was set up in Britain in 1920s and began operations here in 1992. It applied for tax relief status two years ago but is still waiting for a decision, "one way or another from the Revenue Commissioners", said HSA's regional manager Mr Alan Holleran.

Why one cash benefit scheme should have the tax relief while another does not, certainly appears to be a mystery. According to the spokesman for the Hospital Saturday Fund, their tax relief status was achieved by fulfilling a Revenue requirement to be licensed under the insurance trading acts of both the Department of Enterprise and Employment and the Department of Health.

Yet when the Hospital Savings Association - which sells virtually the same sort of the cash benefit plan as HSF - applied to the Department of Health for its qualification under the 1967 Voluntary Health Insurance Act, they were apparently told that since they do not in fact sell health insurance per se, the Act is not pertinent to them.

"We would very much like to know what piece of legislation or regulation we need to fulfil to get the tax relief status," says Mr Holleran, "and would be very gratefully the Revenue Commissioners would inform us of it. A spokesman for the Revenue said they were unable to discuss a specific case, but did confirm that HSF had qualified for its tax relief under the 1967 Act.

The Hospital Saturday Fund and Hospital Savings Association schemes offer a complementary service to existing insurance plans like VHI and BUPA which pay the hospital or practitioner directly for care and treatment.

For as little as a £1 a week HSF and HSA offer the member a range of direct cash payments for in patient, out patient, nursing home treatments, consultants fees, treatments from physiotherapists, acupuncturists, etc. and for dental and optical treatment.

Members who are also expectant mothers will even receive cash lump sums on the birth of their babies - as much as £540 if they join the top benefit option offered by HSA.

Both plans provide the same, basic framework of pre conditions and benefits: you must fulfil a waiting period, usually six months, before any claims can be made premiums do not vary according to age or increase with age, though there is an age limit for joining the scheme one premium covers not just the member - but also spouse and children, though cash benefits may not be - the same for dependents as paid to the member.

The Hospital Saturday Fund offers three premium/benefit options which cost either £1, £2 or £3 per week. The Hospital Savings Association offers four premium/benefit options for £1.30, £2.60, £5.20 and £7.80 a week. HSA offers a wider range of benefits than HSF, but both cover the most frequently used categories of hospital or out patient treatment. Both represent very good value for the low weekly cost.

The Hospital Savings Association is naturally keen to see the tax relief issue resolved, especially since it is already available to members of a rival scheme.

For HSA members, which include the employees of Cavan, Longford, Louth and Monaghan county councils, Superquinn, TNT Express, Fujitsu Ireland, Tara Meats, Warners Ireland, Northern Telecom, the additional tax relief offers an opportunity to afford not just a cash benefit plan, but perhaps also a more expensive private health insurance package from VHI or BUPA.