Healthcare cash plans: an introduction for employers

In the past couple of years, squeezed budgets, redundancies and wage freezes caused by the tough economic climate have resulted in strained workforce environments, plummeting staff morale and anxiety among employees.

But this has not dented employer investment in the cash plan market. According to Laing & Buisson’s Health and Care Cover Report 2010, the recession appears to have prompted firms to take note of low-cost health and wellbeing products.

The report showed continued strong growth in company-paid health cash plan demand, which was up 36% to 399,000 at the end of 2009.

So why are cash plans proving so popular? According to Charlie MacEwan, a spokesperson for not-for-profit cash plan provider Western Provident Association, many organisations have not awarded a pay rise in three years and so cash plans are being seen as a tool by which they can give something back to staff.

How do cash plans work?

In return for relatively low premiums – which are paid either by the employer or employee – the plans pay a cash contribution towards the cost of everyday, routine, medical expenses. Basic plans cover the cost of optical and dental care and therapies such as acupuncture and homeopathy.

The more comprehensive schemes tend to cover physiotherapy, osteopathy and chiropractic services, private consultations, and scans such as CT and MRIs. For these cash plans the premiums are higher. However, cash plans are still considerably cheaper than providing private medical insurance (PMI).

Richard Sear, chief executive of specialist health insurer National Friendly explains: “PMI policies are designed to cover unexpected or serious health problems that might require a visit to a consultant or long courses of hospital treatment. Cash plans provide financial help towards treatments that may not be life threatening but affect staff absence.

“They offer monetary amounts for everyday healthcare like optical and dental, which are often not covered by PMI plans, and pay claims quickly without any medical underwriting.”

According to Matthew Judge, technical director of Jelf Employee Benefits cash plan costs can cost as little as a £1 per week, but a typical level bought by an employer will be between £2 and £3 per week. “Companies can often purchase the entry-level rate and allow employees to buy according to their needs,” he explains.

James Glover, corporate sales and marketing director at Simplyhealth believes that the benefits of cash plans are self-evident. Not only do they support employees by taking the pressure off their finances during difficult times, they also deliver many of the tools that employers are already funding such as employee assistance programmes and eye tests, he says.

In addition, they can help reduce absence by getting people back to work quickly because they are able to access treatment without delay. “By introducing cash plans, employees feel cared for and in turn more motivated to achieve company goals, resulting in a productive workforce that has a positive effect on the bottom line,” explains Glover.

“Happy employees are also much easier to retain, while a benefits package that includes a valued cash plan can act as a draw for new talent.”

And the popularity of cash plans looks sets to continue. Simplyhealth’s Bothered Britain Report, which surveyed 257 HR managers, found that nearly half (44 %) said their companies will increase the range of health benefits in the future because they are genuinely concerned about the health and wellbeing of staff.


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