Can't afford cover? A cash injection can numb the pain

Esther Shaw on money-back schemes that help you budget for the cost of healthcare

If you've made a trip to the dentist in recent months, you'll know that paying the bill for treatment can be almost as alarming as having your teeth drilled.

Three in four people get no state help with dental care costs, according to the National Consumer Council, leaving many patients facing bills of more than £40 simply for a check-up.

It might also be best to look the other way when an optician reveals its charges: eye tests that typically cost £17 a time are free only to the young, the elderly and people with serious eye problems.

The pressures on NHS resources are well documented, and free, immediate treatment for many ailments is getting harder to come by.

In the past, people have sought to make healthcare bills more affordable by taking out private medical insurance (PMI). But for many families, this is no longer an option because of the rising cost of premiums. In any case, PMI policies tend to cover only acute conditions such as cancer and heart attacks, rather than everyday medical costs.

The cheaper alternative to PMI is a cash plan. These savings schemes help fund bills for dental and optical charges and also cover osteopathy, chiropody, health screenings, physiotherapy and alternative therapies such as acupuncture. They will provide financial help, too, if you are admitted to hospital as an in-patient.

But rather than meeting the full cost, cash plans offer a sum towards a consultation or treatment for specified conditions, up to an annual limit. You then have to stump up the rest of the money yourself.

Cash plans are proving more and more popular: we spent £424m on them in 2004, according to medical economics group Laing & Buisson - 3 per cent more than in 2003. At the start of this year, more than 8 per cent of the population were contributors.

Insurers and banks are increasingly providing this type of protection to both companies and individuals. "Healthcare is an important area for the banks - especially at a time when the future of the NHS is being questioned," says Andy Dean from independent financial adviser (IFA) Towry Law. "They are always looking for ways to tie customers in so they can cross-sell their other products."

One of the newest entrants in the cash-plan market is the internet bank First Direct, which last week launched its own version. Customers can choose from two types of policy with four different levels of cover; the premium costs between £10 and £30 a month.

A single adult paying the £30 premium for a year would qualify, among other benefits, for up to £130 towards eye care, £130 on dental costs, £130 for chiropody, £450 on a consultation and £450 towards physiotherapy and complementary therapies.

But are these schemes good value? "The idea of a cash plan that will cover an element of the cost of routine healthcare is certainly attractive. But you have to remember you get what you pay for," says Philippa Gee from IFA Torquil Clark.

"If you have no other health cover, then a cash plan is a step in the right direction."

Note, however, that these plans are no substitute for taking out fully comprehensive medical insurance, which meets all the costs of a treatment, including expensive care for serious illnesses.

People need to ask themselves what they want their cover to do, says Mr Dean. "On the face of it, cash plans seem to offer a great number of benefits. But there is no point over-paying for benefits you're not going to use." For example, you may only ever need to go to the dentist or optician, and not take up all the treatments to which you're entitled.

There are other caveats, too. Some providers impose a qualifying period. For example, with a Saga cash plan you face a 13-week wait before you can make a claim. Like many providers, Saga also requires existing medical conditions to be disclosed - and you may find some companies refuse to cover these altogether.

"If you can't afford PMI, a cash plan is a good fallback," says Anna Sofat of IFA Thinc Destini. "But it all hinges on comparing the monthly cost with the benefits you are [likely to] get."

It may be simpler to transfer a little money each month into a savings account, she says. This way, if you don't need to pay for treatment, you still have some cash put by.