As waiting lists for NHS treatment remain stubbornly high, many people have started to think about alternative options.
The private health insurance market has soared as a result, with those who can afford to pay for medical insurance using it to access treatment.
While some employees may be able to access medical treatment through their work, many more have decided to pay for private health insurance to speed up the time it takes to see a doctor and to seek medical help.
One option is a medical or health savings account. These are widely available in the US where they are used to pay for medical treatment.
In this guide we look at how they work, who might benefit, and the best options for paying for healthcare in the UK.
Read more: Rishi Sunak: I’m still not happy with NHS waiting lists
What is a medical savings account?
A medical savings account (MSA) is an account used to pay for private medical care in the United States. These accounts were created in the early 1990s as a way to help people pay for medical care, because, unlike the NHS in the UK, in the US there is no free national health service (at the point of use).
Money withdrawn from the account to pay for medical care is tax-free and the account has to be opened with a health insurance plan.
When they were first created, they were designed for self-employed workers and those working for companies with 50 or fewer employees. An employer or an employee could contribute to them.
In the early 2000s they were phased out and replaced by health savings accounts (HSA)s, which are available to more people.
Read more: 5 things to know about health insurance
Medical savings account (MSA) vs health savings account (HSA)
Health savings accounts replaced MSAs in 2003 although they work in a similar way.
While the exact account held will determine how much can be deposited and the tax deductions, the main difference between the two accounts is who can open one.
Healthcare savings accounts, or HSAs, are open to employed, self-employed and unemployed people and an employer can also contribute to one.
In the US, health reimbursement arrangements (HRA)s are also offered, funded by employers, while flexible spending arrangements (FSA)s can be funded by an employee or an employer.
Are medical savings accounts available in the UK?
Medical savings accounts or health savings accounts are not available in the UK. The nearest alternative to these types of accounts are health cash plans and private medical insurance.
The main reason they don’t exist in the UK is because, unlike the US, we have the NHS so there is less need for these types of savings accounts for paid-for medical treatment.
However, if the current NHS crisis continues with long waiting lists and rising numbers of people turning to pay for their healthcare, there may be a window for providers to start offering these types of accounts here.
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UK alternatives to medical savings accounts
In the UK healthcare is free if needed through the NHS which is paid for by general taxes.
However, if you choose to pay for medical care the main options available are the following:
- Private medical insurance
- Healthcare cash plans
- Self-paying for care
Private health insurance policies are one way to receive medical treatment without having to wait on an NHS list. There are lots of policies to choose from and you pay a monthly premium in return for a range of cover options.
If you use your policy, you will usually pay an excess and then be given private treatment up to a maximum amount of money. You can usually choose the hospital or surgery you go to and a range of treatment will be covered for both physical and mental health issues.
However, as with any type of insurance product, exclusions apply so you may not be able to use a policy for all types of treatment. Emergency treatment, for example, isn’t generally covered through private insurance policies. You can read more in our guide to whether private health insurance is worth the money.
Another option is a healthcare cash plan. These are offered by health insurers but work a little differently to private health insurance.
With a healthcare cash plan, you pay a monthly premium and, if you have to pay for medical treatment, you pay it upfront and then you are reimbursed by the provider of your plan. Dental and optical treatment is usually included so if you regularly pay for these things, a plan may be worth considering.
The exact amounts will depend on the plan and the provider and these are sometimes available as a perk from an employer. There are also exclusions and in some cases you won’t be able to claim back the full amount of money you’ve paid.
If you have the money available to pay yourself for private treatment, this is usually the cheapest way to do it as you’re only paying for the care you use. Self-insuring is another option where you put the money you would pay a medical insurer into a savings account (which pays interest) each month. Then if you do need to use the money, it’s there for you when you need it, but if not you can spend it on something else.
Read more: Should I get critical illness cover or life insurance?
How much does private health care cost in the UK?
The cost of private health care in the UK depends on a huge range of factors, from the treatment you need and how long you need it for, to the hospital or medical facility you use.
In 2023, for example, the cost of a private knee replacement was £14,449 on average, while a hip replacement was £13,402 and cataract surgery was £2,775, according to data from My Tribe Insurance.
If you have a private health insurance policy, the average cost for a new policy is £90.03 per month, according to My Tribe Insurance.
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