Sales of corporate cash plans and stand-alone dental plans have proved remarkably resilient in recent years, with the data from Corporate Adviser Intelligence’s report into the sector showing modest growth for the fourth consecutive year. CLICK TO DOWNLOAD THE SUPPLEMENT PDF
At a roundtable event at the House of Lords to discuss these industry-wide findings BriggsFiscal managing director Gary Briggs said these figures underlined the fact that cash plans were clearly “the product of the moment” within the employee benefits space.
“Health has obviously been a huge focus for employers post pandemic, and then we have also had the cost-of-living crisis.” Both have helped support sales he said, providing financial help with everyday healthcare needs, be it optical or dental treatment or mental health support.
Buck senior consultant Sarah Brannan agreed that these products are helping large and smaller employers address a number of issues they face, not least the drive to attract and retain talent in what has been a difficult employment market in many sectors.
She added: “Sickness absence is increasing and we are having a lot more conversations with clients about what they can do, particularly with that tranche of the population that to date have been largely uninsured and unsupported when it comes to healthcare benefits. This is often where we are seeing the biggest increases in both absence and job dissatisfaction.”
Brannan said that cash plans can provide a cost-effective way of offering healthcare benefits, providing support around mental health and musculoskeletal issues — both major causes of absence in the workplace — while also creating engagement and value for employees, in terms of tangible discounts on dental, optical and physiotherapy treatments.
Advo Group commercial director Lucy Pearce agreed with this analysis. She says clients are increasingly looking for ‘whole of workforce’ benefits post Covid, which was in part being driven by a renewed C-suite focus on diversity and inclusion issues, rather than just having medical benefits for a top tier of management. “They are increasingly looking to create a more equal proposition and narrow the benefit gap between pay tiers at an organisation. We’ve had lots of companies talking about how they can move away from that older model while staying within a budgetary constraint.”
There was agreement among panel members about the key attractions of a cash plan, from an employers’ point of view: these were its low cost, simple product design, and the relatively high claims ratio, meaning staff were likely to use and value the product.
However, there was less agreement on how cash plans should evolve and innovate to meet the needs of a modern workforce, particularly in terms of the wellbeing support they give.
Many of the consultants at the event would like to see a broader range of benefits available. Pearce said she would like to see the inclusion of financial wellbeing benefits, particularly given the current cost-of-living crisis. “I think we’ve definitely seeing a shift here, and more demand for such benefits, even if it’s something as simple as a financial planner.”
Goddard Perry employee benefits consultant Fiona O’Hara said clients were increasingly asking about neurodiversity assessments and support. “We’ve seen a lot more appetite for engagement in that space, where traditionally it would just be the larger corporates championing this kind of support and service. But we’ve seen more SMEs want to offer this provision too.”
Willis Towers Watson director Claire Linaker said there was also demand for more gender-specific benefits, for example more targeted help and support for an individual’s fertility journey or around
the menopause.
Brannan said that while this could help make benefits more relevant for a modern workplace, she added that the same effect could be achieved by lifting some of the exclusions current applied on many of these cash plan policies.
“This would address some of these issues around diversity, equity and inclusion and women’s health. Why is there a default exclusion for example on the vast majority of cash plans for things to do with menopause or neurodiversity? If we lift this exclusion, all of a sudden we’ve got a diagnostic benefit and we’ve got a consultation benefit and we’ve got a prescription benefit that can then be used for treatments related to the menopause. This seems to me to be a fairly simple way of addressing these issues without requiring a massive benefit redesign or system change.”
There was also discussion about whether cash plans should be providing cover that would help towards the cost of managing ongoing chronic conditions, that are excluded from other healthcare benefits, such as PMI policies.
The one benefit most consultants on the panel wanted to see more emphasis on was screening and health checks. This could provide real value for employees they said, particularly given the current delays in NHS care when it came to accessing diagnostic tests.
Brannan pointed out screening is currently available as a benefit on some cash plan products, although claims rates are very low — at less than 1 per cent she estimated.
Partners& wellbeing and benefits director Steve Herbert said providers need to make sure such screening benefits were easy to access, by signposting where employees could go for relevant help. Most people do not know where to access such services within the private sector, and have little idea of the potential cost. This can discourage people from using this benefit, he says, even if they get a payment towards the cost.
Better signposting and communication around screening benefits should lead to better engagement on these benefits, though this is likely to lead to significantly higher claims.
However, while there was clearly enthusiasm for a richer benefit suite, some consultants on the panel expressed concerns that this could lead to price increases, potentially damaging one of the key attractions of cash plan products.
Towergate Health & Protection head of wellbeing Debra Clark pointed out that this was an issue that cash plan providers would have to manage carefully. “On one hand we as consultants want to see more benefits, and more relevant benefits, which could in some cases be promoted better. But we like the price point. The question is how to deliver this without pushing up prices or seeing service standards drop.”
This, Clark points out has been an issue with some employee assistance programmes (EAPs) where usage has increased significantly during the pandemic, which have led to some service issues with some providers.
Barnett Waddingham consulting lead health and risk Kevin O’Neill said: “I think the big concern here is that when you start adding cover for a whole range of additional benefits, and start covering chronic conditions, all of a sudden you will get a significant increase in claims which will impact premiums and then cash plans become less affordable. It becomes self-defeating in a sense.”
Simplyhealth head of corporate and consumer sales Camilla Brooke agreed this is one of the key challenges facing providers. She pointed out that on the voluntary-paid plans and stand-alone dental products there has been significant claims inflation, with the cost of claims, particularly for dental treatment “sky-rocketing”. “This creates a really, really challenging market” she said, with providers like Simplyhealth aware that keeping premiums affordable was important while also ensuring products offer value for employers and employees.
Brooke added that one way to square this circle — to increase benefits provision, encourage more customers to claim, but prevent claims costs spiralling — was to develop partnerships with third party providers, giving economies of scale when delivering a range of healthcare and wellbeing services.
“We’ve recently partnered with scan.com to enable people to access scans at a preferable rate. We will shortly be partnering with a physio provider as well. This is where providers can be more savvy about the suitability of pricing of products in the longer term.”
Better use of partnerships could help deliver cost-savings in the cash plan sector that have been seen in other parts of the insurance industry. Some large household insurers, for example, are the UK’s biggest purchasers of white goods, allowing them to source them at heavy discounts and pass them onto policyholders, rather refunded the price that a householder would pay at the shops.
Providers are also moving towards more flexible product design, allowing consultants to work with clients and offer more bespoke solutions. This potentially should help intermediaries ensure the price point remains suitable to a client’s need, but could also addresses one of the other major issues raised by consultants — the duplication of wellbeing and support services across different employee benefit products.
Punter Southall Aspire director health and protection Emma Snowden says this is a potential problem, particularly with EAPs and virtual GPs now being offered as standard on most group risk, PMI and cash plan products.
“I hear what some consultants are saying about wanting additional benefits like financial wellbeing services, but there are a lot of pension products now offering these services.
“There’s already so much overlap between group risk and healthcare products. Not only are some clients paying for services they may not necessarily need but it is confusing for clients. The ability to be able to strip out some of these services might help keep costs down and also provide an easier solution for consultants who sometimes have to point out services in the product, but explain why they are not being promoted.”
This duplication was cited as a potential problem by a number of those attending the event. Linaker pointed out that there are some providers who link to different virtual GP providers, depending whether you have a group risk or healthcare product — which can make things confusing for employers.
She says a more flexible approach would also help consultants tailor products towards different sectors, and different sized businesses.“It’s about having flexibility in the design to deliver a more bespoke service.” With some businesses, particularly with higher number of manual lower paid workers, cost will be key she said; while other business may want to pay more for a more comprehensive benefit package that dovetails with existing employee benefits.
Brooke says this is very much the approach that Simplyhealth is taking with the evolution of its cash plan product and will be launching a more modular version later this year. “We want to look at modular options to allow employers and intermediaries to pick and choose what is needed.”
Some advisers asked about whether this would enable full flexibility, in other words dropping some of the core dental or optical benefits if needed (for example if the client had a stand-alone dental plan). Brooke said these details were still being worked out at present. She said the ambition was to offer “very bespoke” flexibility, while retaining the products’ key identity.
Those attending the roundtable event agreed that it was important that the lines were not blurred between cash plans and ‘PMI-lite’ products.
Snowden said: “I certainly wouldn’t want to see cash plans morph into a PMI-lite product. I don’t think it needs to be there.”
Other advisers agreed cash plans could lose their distinct place in the employee benefits market if this happened— although some advisers recognised that there was a degree of confusion among some advisers as to how cash plans differed from other healthcare benefits.
Snowden said: “There is still some misconception around cash plans, with some clients thinking it is primarily to pay for hospital in-patient stays. For some people there is this association with a more old-fashioned product, we have to explain that cash plans offer a more modern range of benefits.”
There was some discussion whether these products should be called ‘Everyday HealthCare Plans’ to better convey what they offered, but most advisers felt that cash plans were a fairly well understood concept.
Most advisers wanted to see cash plans working as a complementary product to PMI. Snowden says: “We have a number of clients that have both PMI and cash plan products. The two can work together. So perhaps the focus for the development of cash plans should be on the areas PMI doesn’t cover, and that would actually give us a lot bigger consulting piece.”
Bravo Benefits co-founder and MD Wojciech Dochan said that ultimately there needs to be a wider rethink as to how private healthcare products — particularly those offered through the workplace like cash plans and PMI — work in conjunction with public healthcare services, to help meet individual’s various health needs.
“The question is how do we integrate these better. If you take a general insurance healthcare product there should be some element of preventative support, to help people stay healthy, there should be a diagnostic element and then there’s the treatment piece. This is ultimately what employers and employees really want.”
Advisers agreed cash plans shouldn’t aim to provide all benefits to all people — as the costs would then be prohibitive — but they say it should be clear what they do offer in terms of wellbeing, diagnostics and treatment, and how this differed from other healthcare products in the market and dovetailed with existing NHS services.
This the panel said should ensure it remains a popular product and facilitate further growth in the workplace benefits market.
