Cash plans have a vital role to play in the employee benefits market, and could not only help build healthier workplaces but could drive engagement on a whole range of employee benefits. CLICK TO DOWNLOAD THE SUPPLEMENT PDF
This was the view of consultants and advisers attending a recent roundtable event at the House of Lords, to discuss the findings of Corporate Adviser’s report into the cash and stand-alone dental plan sector.
One of the issues under debate was the role of the consultant, and what providers could do to support advisers, helping them build a market for these products.
It was clear those attending the debate wanted to see higher quality and richer management information (MI) from providers. This should hep advisers offering a consultancy approach to these products and also drive better engagement with both employers and employees. Many pointed out that they got better data and information from group risk or PMI providers.
Barnett Waddingham consulting lead, health and risk Kevin O’Neill saID: “I think one of the things that is really lacking with cash plans is the level of MI that we get back. Better information would be really useful for us and would enable us to drive conversations with employers and help us when building structured benefits programmes.”
O’Neill says he would like to see more detailed information on how cash plans are being utilised, where claims are being made, which additional support services are being used and by which particular demographics within the workplace.
Buck senior consultant Sarah Brannan agreeD that more comprehensive data sets would be useful for consultants working in this area. “It would be very useful to see what tranches of the employee population are using which benefits. This could help us tailor communications more appropriately and know which benefits or services need better promotion within the workplace.”
She added that she would also like to see seasonal data as well, showing when claims are more likely to be made. This can also help with regular promotions of key benefits at certain times of the year, for example the payment towards flu jabs.
Consultants said that better MI from providers would also help when it comes to the duplication of some services between group risk, PMI and cash plan products.
O’Neill said: “Better MI would enable us to see if people are using the virtual GP services through their group life, through a GIP product or on a cash plan or PMI policy. One of our jobs is to understand this duplication and discuss with employers which is the best GP or EAP to use, and make sure this is promoted. But having information on how they are being used at present could help inform these conversations.”
Towergate Health & Protection head of wellbeing Debra Clark saID access to industrywide and sector-specific data would also give consultants better insight into market trends. “One of the things we try to do is advise our clients about future trends. We can look at usage and advise them on the here and now, but we can also suggest areas they may want need to look at – be it neurodiversity or gender-specific health. One of the reasons a client has employee benefits is to attract and retain the right people and they won’t do that if their current benefit offering is not up-to-date.”
Willis Towers Watson director Claire Linaker said that more sector-specific information would be helpful.
“A company working in the food production industry is going to be very different from an IT company, for example, in terms of the claims made and support accessed. This information can help us design more bespoke and appropriate benefits programmes.”
She pointED out that this can also impact communications and engagement programmes. “There’s the assumption that communications are all digital now, but this isn’t always the case. There’s an awful lot of organisations where people aren’t sat at a desk with access to email during working hours. So the question is how we tailor information for them to help boost engagement levels.”
Advo Group commercial director Lucy Pearce saID employers want help from consultants — and providers — when it comes to communicating employee benefits. “Cash plans have very tangible and accessible benefits, and are widely used, so this can be a good opportunity to open the conversation and talk about other employee benefits.”
Consultants were agreed that better communications should drive higher engagement levels with the product. This could help ensure a better return-on-investment for clients — in terms of improved employee wellbeing and reduced absence.
Brannan said that to do this consultants need to ensure that employers are embedding these cash plan benefits within their own HR processes. “Communication is key here, particularly with line managers. If they’ve got one of their team calling in sick because they have got a bad back are they reminding them that the cash plan is there, and it provides cover for physiotherapy? If they are calling in with a mental health issue are they reminding them of the EAP benefits and how to access this help. Having this benefit embedded into the sickness absence process will ensure more people are aware of the benefits and using them. And as a result you’ve got the HR team really seeing the value in, and it should then start to impact on sickness absense levels — so you are seeing more return on investment.”
Bravo Benefits co-founder and MD Wojciech Dochan pointed out that better communication of benefits should increase engagement. But he added that this could be a double-edged sword as this is likely to mean the number of claims increases, which could impact premiums further down the line.
Simplyhealth’s Martin Smith saID this has always been an issue across the industry. “Traditionally cash plans
worked on the basis that not everyone claimed — but that was when 90 per cent of the spend was on optical
and dental benefits.
“Now we have a far broader spread of benefits I think we have moved beyond that.” He said it is possible to deliver better value, via improved communication with clients, and helping them track sickness absence, without necessarily pushing up premiums. Providers working with third parties to deliver more cost-effective benefit solutions can also help, he added.
Those attending the debate said it isn’t just providers that could do more; they would also like to see action from government to support the workplace healthcare market, particularly in relation to cash plans.
One cause of concern was the fact that a corporate-paid cash plan counted as a ‘taxable benefit’ and the value of the premiums have to be included on an employee’s P11D form, which is likely to result in a small additional tax bill.
Currently annual premiums have to be below £50 for this to be excluded from these rules — an allowance that has not changed for decades. Although in the past some policies, effectively priced at less than £1-a-week, might have ducked in under this threshold, healthcare inflation means that many basic policies are now priced above this level.
Consultants agreed that they would like to see a more generous level applied for occupational health benefits, effectively take most cash plans out of this requirement. But they acknowledged this could be politically sensitive — with the government reluctant to give tax breaks on private healthcare benefits.
However, some consultants argued the limit could be raised to include cash plans, which broadly support NHS services, but set at a level that meant this tax was still paid on PMI products.
Dochan saID: “It would be good to see a limit of £150 to £200. This would remove the need to complete a P11D on a lot of cash plans, and would give a bit of headroom, assuming that if a change is made it would not go up again for years.”
Is the current level a deterrent for employees? Most advisers did not think so, given the relatively low cost of this tax. But Linaker said again this was often sector-dependent. “When we are arranging cash plans for whole-of-workforces where there are a significant number of lower paid workers we try to ensure pricing comes in below this £50 a year limit so this is not a problem.”
Again many consultants agreed that communication around these tax charges was key, to ensure people did not opt out. Brannan says: “It all depends on how it is communicated. If it is a £70 annual charge then that’s around £1.34 a week – you can’t get a cup of coffee for that now. In our experience most people would be happy to pay this, given the benefits available, particularly the ability to make GP appointments at a time of their choosing.”
Although the tax savings would be relatively small, raising this limit and taking cash plans out of the P11D rules could be a significant selling opportunity. Partners& wellbeing benefits director Steve Herbert said: “It would definitely open a few doors. If the government announced a tax break, even at a modest level for occupational health initiatives it’s an opportunity to start talking about employee benefits in the round and looking again at what firms can provide.”
Herbert added that HMRC might perversely welcome an increase as it would remove a lot of paperwork for lower-cost cash plans which presumably raise relatively little revenue.
Some consultants would like far more radical reform. Dochan said there was certainly an argument for the government effectively setting up an ‘auto-enrolment for corporate healthcare’. He explained: “I’d like to see this go one step further. Forget about lobbying for change on P11D and ask the government to make it mandatory for employers to provide some sort of health package for staff.
“This would change the market by going for an Australian-style system where employers have to provide an element of healthcare for workers. There is a political argument that says if the government is requiring people to work until 67, 68 or 70 then they should mandate employers to provide healthcare provision.”
Not all advisers were supportive of such plans, particularly because of the impact this could have on the NHS. Punter Southall Aspire director health and protection Emma Snowden said that this would clearly take resources away from the NHS and any change to the the NHS would be a “political hot potato”. Lobbying for change on P11D levels may be more realistic and deliver better benefits she said.
However not all shared this view. Dochan said he thought an AE for corporate health could “save the NHS” rather than have a negative impact on it, by significantly reducing demand for its services. He added that there needed to be a more holistic argument about how private healthcare treatment, which includes cash plans, dovetails with publicly funded NHS services.
Snowden said that many companies, and employees like cash plans as they were seen as supporting NHS services, rather than running a parallel system.
However there was acknowledgement that the picture was complex. Most agreed the rapid rise in the number of digital and virtual GP services now offered on group risk, cash plan and PMI products was diverting resources away from primary NHS functions, and potentially exacerbating problems with the overall shortage of GPs.
O’Neill said that these sort of far-reaching changes are not going to happen any time soon. But he said it was a good point in the political cycle to start having these conversations. “I don’t think we are going to change anything overnight. But manifestos are being discussed and written right now, so this is the time to start having these discussion.”
Better data from providers, improved products, a new focus on wellbeing and support from government for occupational healthcare benefits should mean that cash plans continue to evolve and thrive as a product — while more effective consultancy can ensure these are delivering for both employers and employees.
O’Neill saID: “The one thing we as advisers can be doing is looking at all the benefits employers offer their staff and picking out the best bits of each to come up with a decent wellbeing proposition, that provides early intervention when needed while also signposting people to counselling, diagnostic tests and appropriate treatment.”