Cash plans a good cure for small medical bills

Health insurance in the Republic has traditionally boiled down to just three letters - VHI. But, like many other sectors long dominated by one state-owned player, the health insurance industry is poised for radical change.

BUPA's arrival in the Irish market three years ago heralded the beginning of a more competitive era, a process that is likely to be copper-fastened by the publication of the White Paper on the health insurance market.

The paper, which has been drafted and will be published when cleared by the Government, is expected to allow the VHI to extend its product range. This will give it scope to offer products not currently available such as dental insurance, medical record facilities and possibly even long-term care options.

Meanwhile, several other insurers such as Hibernian and Norwich Union, the third largest health insurance provider in Britain, are keeping a close eye on regulatory developments in the Irish market with a view to possibly entering it at a later date. All this means that the consumer, long used to just one company and its range of products, is likely to have more choice than ever.

Already the options facing the consumer are better than they once were. Gone are the old days when VHI's Plans A to E were all that existed on the market.

Nowadays, consumers can choose from BUPA's three plans - Essential, Essential Plus and Gold - and from the 10 offered by the VHI. In addition to its basic plans, the VHI is now offering an Options scheme with each plan which provides extra benefits.

But a growing number of people are opting for a hybrid form of coverage, choosing a cash plan to supplement their health insurance coverage.

"Many people may have excellent health cover but they don't have cover for routine medical expenses," says Mr Dermot Goode of Irish Pensions Trust (IPT), which provides an independent health insurance consultancy service. "More and more people are reducing their health insurance from levels that are not appropriate to their needs and using the money to fund a cash plan," he says.

However, he stresses that such plans are not a substitute for VHI or BUPA cover, rather a complement to basic health insurance.

The two main providers of such cash benefit plans, which cover many of the out-patient aspects of medical care not provided for by the VHI and BUPA, are the Hospital Saturday Fund (HSF) and the Hospital Savings Association (HSA).

For as little as £1 (€1.27) a week with HSF and £1.60 per week with HSA, members can avail of a range of direct cash payments for in-patient, outpatient and nursing home treatments. The plans cover consultants fees and alternative, dental and optical treatments. Members are also entitled to a lump sum cash payment on the birth of a child.

The plans are worth considering, particularly for those who find themselves with heavy routine medical costs. A young couple with children who spend heavily on visits to their GP or on dental and optical costs might find it makes sense to move to a lower level health insurance plan and spend the money saved on a cash plan which allows them to claim back some of these costs.

VHI's Plan C, for example, costs £437 a year through a group scheme. Those who are not pushed about having a private room - which in any case is not guaranteed under Plan C - might find they would fare better with Plan B, at a cost of £283 annually, and a cash plan purchased with the money they save.

For those with chronic complaints, the plans may also be worth considering as they provide cover for treatments like homeopathy, osteopathy, chiropody, acupuncture and physiotherapy, which may not be available under ordinary health insurance plans. Those without good sick or disability pay schemes at work could also find it useful because the plans provide a cash benefit for every night spent in hospital.

The Hospital Saturday Fund (HSF) - so-called because it was once responsible for collecting money for the upkeep of hospitals and most people made donations on a Saturday after they were paid - has six plans ranging in cost from £1 to £7 per week and depending on which scheme a member opts for, he can claim varying amounts for different treatments.

The amount which can be claimed for dental or optical treatment is half of the cost incurred up to a maximum of £50 to £350 over a 12-month period, depending on the scheme. Half the cost of alternative treatments can also be claimed, up to a maximum ranging from £100 to £500, while members can also claim between £8 and £16 per GP visit and are allowed to claim for up to 10 visits per year.

The cost of HSA's six plans runs from £1.60 per week to £12.80 per week and members are entitled to a range of 20 annual cash benefits each year for a variety of treatments. Members can claim half their dental costs up to a maximum ranging from £30 to £240 per year and from £28 to £224 for optical treatment depending on the scheme they choose while the lump sum payable upon the birth of a child ranges from £90 to £720.

Mr Alan Holleran, general manager of HSA Healthcare in Ireland, says the plans are aimed at health care maintenance. He also says that under HSA's plans, each member of a family can claim up to the maximum amount rather than the whole family sharing the cash benefit entitlement as is the case with HSF.

HSA also launched a Solo Plan, aimed at those without dependants, at the beginning of April. Rather than providing half of the cost of certain treatments, the plan offers fewer overall benefits - 12 compared to 20 on the ordinary plan - but 100 per cent of the cost.

Both companies report growing interest in their plans, particularly from young companies with youthful work-forces. HSA numbers Tesco Ireland, Esat Digifone, Nortel and Celestica among the companies offering its cash plan as a group scheme, while HSF's schemes are offered by 250 companies including Gateway, Smurfit and the Government departments.

Both firms deal directly with the public as well. However, pre-existing medical conditions are not covered by the cash plans while a qualifying period is required before claims are made.

Unlike VHI or BUPA memberships, tax relief is not available for joining such schemes but for those who find themselves regularly shelling out cash for fillings and frames, they may make a lot of sense.