What types of cover are available?
There’s a range of cover on the market varying from low-cost basic plans to more expensive plans offering more extensive benefits. Plans can depend on the type of scheme chosen, payment method and company size. Every provider is different and the benefits and annual limits of providers vary. It’s worth comparing benefits tables and keeping in mind what you think employees are likely to claim for.
Remember that workers are limited to annual maximums for claims, so a plan may not always cover the cost of treatment. This is something employers should bear in mind, according to Richard Sear, chief execeutive of specialist health provider National Friendly.
He warns firms against simply opting for the cheapest provision and urges HR practitioners to consider what will be the best value for employees. While more and more providers are offering cheaper cash plans, he fears they haven’t kept up to date with the changing healthcare landscape.
He adds: “About 80% of any cash plans are in the dental or optical arena. On the cheaper plans people don’t claim. When they go to the dentist and are faced with a £500 dental cap, a benefit that gives them £50 isn’t going to go very far.”
However, he points out that if an individual has a higher level of cover, the value of the annual maximum they can claim will be much higher and their care costs have a greater chance of being met.
How do I buy cash plan?
Larger organisations that have their own procurement department are well placed to purchase cash plans and treat them as they would any other project, such as car fleets, according to Paul Moulton, sales and client relationship director at Axa PPP.
He says: “If you are set up to deal with providers, why not utilise that? If you have good infrastructure, use it. It’s not a complicated product and will ultimately be less expensive. A medium-sized business would perhaps have to spend an awful lot, so then it might be better to use an intermediary. If in doubt, get specialist advice.”
Cash plans: tax implications for employers
Cash plans are treated as a benefit in kind so there is a taxable cost to the employee when introducing this benefit. There is a detailed guide on the tax and national insurance contributions for employers paying for an employee’s cash plan on HM Revenue and Customs website.