Buyer’s guide to health cash plans 2014

Health cash plans are an effective, low-cost health benefit that are rapidly gaining in popularity.

Health cash plans enable employees to access a range of healthcare treatments and services including employee assistance programmes and health screening. But optical, dental, hospital inpatient care and physiotherapy are the most popular treatments that employees claim for.

Another attraction of cash plans is their value for money because policyholders can claim back more than they spend on their annual premium. For example, Medicash offers Medicash Reward, which costs from just £1.25 per employee per week but entitles employees to claim up to, say, £220 per annum for dental cover.

Furthermore, employees are not required to have a medical before joining a plan, premiums do not increase with age and children under 18 are usually included for free as part of a parent’s cover.

Laing and Buisson economist Phillip Blackburn says: “Low cost cover, which can be claimed often, is something [employees] can really see value in. The plans can be introduced into the workplace in various ways, either through salary sacrifice, as a flex benefit or as a core benefit. Employees can cover a lot of their workforce and there is also a wide range of plans to choose from to suit individual needs.”

Cost-effective benefit 

From employers’ perspective, health cash plans are a cost-effective way to support employees’ everyday healthcare needs at a time when low or non-existent wage increases are failing to meet their basic living costs.

Health cash plans can help employers to alleviate the financial strain that may arise from healthcare provision for employees and their families, reducing sickness absence rates and boosting staff retention and morale in the process.

Offering a health cash plan through a flexible benefits plan is particularly cost effective as it helps employees to tailor a plan to their specific needs.

More than 130 million days were lost due to sickness absence in the UK in 2013, according to the Office for National Statistics report, Sickness absence in the labour market, which was published in February.

The main cause for working days lost in 2013 was musculoskeletal conditions, such as back and neck pain, leading to 31 million days lost. The next most common cause was minor illnesses, such as coughs and colds (27 million days lost), followed by stress, anxiety or depression , at 15 million days lost.

Health cash plans can offer support for employees affected by stress, anxiety and depression, such as counselling. Providers often offer counselling through employee assistance programmes (EAPs).

Another attraction of health cash plans for both employers and employees is their stable pricing, despite the fact that many providers have substantially enhanced their products and services over the last few years.

But prices are not expected to remain low for long due to the industry’s desire for plans to be seen as more than a cheap alternative to healthcare benefits such as private medical insurance (PMI), particularly given cash plan providers’ recent innovation.

Product innovations include value-added services

Cash plan innovation in recent years includes value-added services , which in addition to EAPs and employee helplines extend to access to services such as Best Doctors. Both Medicash and Westfield Health have added the Best Doctors service to their cash plans, which allows employees to obtain expert medical advice about their health complaints.

Some providers are also offering services to support employee wellbeing. For example, Health Shield enables employees to claim for nutritional therapy and Indian head massage, providing a recognised practitioner delivers the treatment.

Some health cash plans can also be used to cover PMI excesses, but some industry critics consider this as a misuse of the benefit.

Accordingly, Medicash and Simplyhealth now offer cover specifically for PMI excesses. Medicash’s Proactive plan offers £200 worth of cover that employees can use to pay excesses or for specialist consultations and diagnostic tests.

Wider medical cover is now available 

Health cash plans’ association with PMI is clearly unavoidable, and increasingly so as some providers attempt to bridge the gap between the two benefits. For example, Westfield Health’s Hospital Treatment Insurance, which it launched in April 2012, can be added to its cash plans to enable employees access to medical and surgical procedures. And Perfect Health’s surgical cash plan offers employees access to over 1,500 surgical procedures.

The ability to combinecash plans with hospital treatment insurance enables employees to access continuous healthcare treatment and avoid National Health Service waiting lists. The benefit for employers is that their staff get quicker access to top-notch treatment, enabling them to get well and return to work quicker. Furthermore, early diagnosis can make many illnesses much easier to treat, which also reduces employees’ recovery time.

A health cash plan also helps to make staff feel valued, according to the Employee Benefits healthcare research 2013, published in June 2013. The research also found that the majority (61%) of respondents said that cash plans help them to feel well perceived by staff.

Cash plans are often considered more suitable for younger staff

Health cash plans are often considered more suitable for younger staff, especially those who may not see the full value of PMI because they are relatively fit and healthy.

Some employers provide cash plans to employee groups that do not receive PMI, while others offer them to all staff. Obviously, funding is an issue and some employers may not be in a position to offer either benefit to all staff.