Liverpool-based Medicash has merged with Glasgow-based Scot Healthcare. The combined mutual scheme has a turnover of around £20 million on behalf of a membership of 250,000.
The name of Scot Healthcare will be retained in Scotland and Medicash is committed to expanding the brand.
A three-year growth target of 50,000 Scottish members should see new selling and administration jobs created in Glasgow.
"We predict more mergers as smaller health cash plans look to larger schemes for growth and protection from competitive and regulatory pressures," said the Medicash chief executive, Bill Gaywood.
He added: "Commercial insurers, recognising the benefits and market potential of health cash plans, are increasingly offering similar schemes and we suspect that FSA regulations will require change in the way some schemes operate."