Simplyhealth is offering a new module on its corporate cash plans to cover private medical insurance (PMI) excesses.
The insurer said it was responding to the rise in demand within the market to use cash plans to cover excesses offered on PMI policies, but warned this practice was not sustainable.
It echoed a feature in December's issue of COVER where Simplyhealth initially suggested that this process may not be stable in the long term.
The new module will be available from 1 April as an additional paid for option on company paid and voluntary cash plans.
For the corporate option, businesses will be able to purchase the extra module to cover their staff to which they currently offer PMI, while employees responsible for their own PMI policy will also be able take up the cover themselves under the voluntary plan.
The PMI excess option will cost 25p per employee per week for up to £100 excess, 50p per week for £200 and 75p for £300.
Howard Hughes, head of employer marketing at Simplyhealth, acknowledged that the provider had seen an increase in demand for cash plans to cover PMI excess over the past 12 months.
"In response to this we have developed a new module to sit alongside the other paid for modules we offer on Simply Cash Plan," he said.
"This module will provide greater choice and flexibility for employers, while providing clarity on how Simplyhealth pays private medical insurance excess claims.
"We understand that offering to cover private medical insurance excess claims as a paid for option is unique but we believe it's the right thing to do."
Hughes continued by explaining that Simplyhealth's experience suggested that cash plans were not designed to meet the cost of private medical insurance excess claims.
"Cash plans are based on 'community pricing' which means that in the long term they cannot withstand this sort of claiming behaviour, and if not paid for, will drive up premiums for everyone.
"Offering 'private medical insurance excess' as a paid for module helps ensure cash plans remain affordable, sustainable and fair to all," he added.
