The benefits landscape is evolving under a series of pressures from the economy, regulation and changing attitudes. By responding proactively to these developments, corporate cash plans can build on already strong growth said delegates at last month’s industry forum Cash Plans For The Future.
One area where advisers would like to see some innovation is around demonstrating the actual value of cash plans to employers.
As companies tighten their belts they want ever more visible benefits, one of the key selling points for cash plans in recent years. But advisers at the forum said they would like to see a greater emphasis on the return on investment that employers get from the plans they put in place.
“We talk about benefits of cash plans in terms of absence management and absence cost,” said The Health Insurance Group intermediary sales director Brett Hill. “Providers could put more out there in terms of marketing tools to help us go out and have those conversations with clients with a bit more confidence. A lot of intermediaries have a PMI background and are not necessarily comfortable having conversations about cash plans. But absence management stats are something they can fall back on.”
For the industry to better communicate the value of cash plans, it needs to understand whether it wants to get over the message of their value as a perk for employees or as a productivity tool for employers too.
That the product can score on both counts is not disputed – there is certainly something in it for everyone. Companies themselves have an interest in keeping the workforce fit and healthy and “add-on” benefits such as health screening, occupational health and employee assistance programmes (EAPs), can help do this.
Health screening, for example, operates as a preventative approach to maintaining the health of a workforce as it ensures that employee health is monitored regularly, and identifies any potential illnesses and causes of absence.
Mike Wagg, head of intermediary sales at Simplyhealth highlighted the issue. He said: “If you look at the consultations and scans benefit it’s about that early intervention. How do you measure that cost saving when you’ve had someone who’s had something diagnosed from the early stage? What’s the benefit for the employee and employer of getting that person back to work?”
“Some providers make the reimbursement of the excess quite a cumbersome process and I think that’s got to be addressed”
But there is also the value to the employee in terms of pure reward, which is hard to quantify.
“What value can you put on that?” asked Steve Sharrock, head of intermediary sales at Westfield Health. “You can’t put a value on it but at £1 a week it’s low cost but highly valued by the employee.”
Clearly the cost to a company when a member of staff – especially senior management – is incapacitated due to illness can be devastating.
Matthew Judge, director at Jelf Employee Benefits, said cash plans were a low cost way of creating health and wellbeing and saved people huge sums of money because the spectrum of benefits is so good. “The key,” he said, “is how it’s positioned with the workforce.”
Wagg said cash plans can be used constructively as an employee benefit but also an employer benefit as well. “This is for many reasons: certainly for keeping the workforce buoyant and getting employees back to work in event of sickness or accident, and also the tangible benefits such as dental and optical,” he said, “It is very much both an employee and employer benefit.”
However, neither Hill nor Sharon Harwood-Davis, international business consultant at Advo, were convinced that employers were yet being persuaded that cash plans could improve health and wellbeing and productivity.
“They still see cash plans as a money saving option for dental and optical but I don’t think they see it as something that will get people back to work,” said Harwood-Davis.
Despite this, advisers believed the concept of the corporate cash plan as a health and wellbeing tool will have its day eventually, potentially opening up future markets.
Delegates at the forum debated whether products would be developed with more add-ons, and whether this is ultimately the best way forward.
“If they don’t develop or they go down the critical illness route but just adding further and further random benefits, it just deminishes what they are,” said Hill. “Or the alternative is they race to the bottom in terms of price. Looking at some prices we’ve seen on cash plans coming out in the last six months or so, we, as an intermediary, look at it and think those numbers can’t stack up.
“We talk about benefits of cashplans in terms of absence management and absence cost. Providers could put more out there in terms of marketing tools to help us go out and have those conversations with clients in a bit more confidence”
“If it’s developed in another way so providers can carry a bit more margin on it then it has to develop in a way that has more tangible benefits to the employer such as return on investment which is unlike what it’s been in the past which is predominantly an employee perk.”
Judge agreed that plans must be made more attractive to the employer, but he cautioned against allowing them to become over complicated. He reported attending an industry seminar recently where experts said that if cash plans take on too many elements of risk and the plans are used more and more, claims will go through the roof.
“The very thing that made cash plans attractive will kill it,” he warned, “You’ll get double digit increases over the year. Cash plans have to develop but they must stay in a defined space.”
Delegates generally agreed that add-ons to cash plans must be realistic as too many extra features made the plans too complex; quality over quantity was the universal opinion. But that does not mean there is not room for further add-ons to be developed. In fact, the changes to the state health system presented a massive opportunity to the cash plan market, said delegates.
“You could start trying to pick up some of the gaps in what PMI is missing which is primary care, GPs and diagnostics,” said Hill. “Or you can start making it more of an employee health and well-being benefit by getting more health management systems or getting into the occupational health field.”
In a straw poll at the end of the forum, delegates were split 50:50 on whether increasing the number of add-ons would have a positive effect on growth in the cash plan market.
Half the delegates thought that most employers only wanted basic products while the other half voted that employers and employees genuinely valued the extras on offer.
But there was a strong feeling that the NHS reforms, which could move the goalposts on what is free for patients, presented a whole host of possibilities for the sector.
Analysis of the key legal reforms in the Health and Social Care Bill concluded that it provides a legal basis for charging and for providing fewer health services to fewer people in England.
The common consensus at the forum was that, to lessen the blow, the Government would try and push costs onto employers rather than employees. Should this happen it would likely see a potentially increased uptake in medical insurance and cash plans.
“At some point they’re going to have to try and transfer some of the primary care costs on to the employer,” said Hill. “They won’t do it now because of the economic climate but at some point employers above a certain size or turnover will be required to offer some of this stuff. It’s the only way out.”
“They should be doing this now,” said Judge. “But it’s such a miserable climate and the Government doesn’t want to be seen to be tinkering with the NHS. But if you look at most health services in Europe they’re good but they provide a level of care that people top up and its accepted that’s what they do.”
But despite delegates generally agreeing that the NHS was unsustainable in its current format, the group was split about whether pressure on the NHS would boost cash plan sales. A vote found that 25 per cent of delegates thought it would, and soon, but 75 per cent thought it too early to say.
“You could start trying to pick up some of the gaps in what PMI is missing which is primary care, GPs and diagnostics. Or you can start making cash plans more of an employee health and well-being benefit by getting more health management systems or getting into the occupational health field”
It was suggested that outside of the industry many people would hold the view that it would be difficult to start charging for NHS services as this would amount to a Government admission of the end of the NHS.
Potentially any party that introduced charging for healthcare could find the polls turning against them very quickly. But this did not mean changes at the fringes of what is currently free could not be introduced, said advisers, an area where the cash plan sector is ideally placed to meet a public need.
“They would try not to position it as charging,” said Hill, “They will position it as burden sharing with the costs still free to the individual at the point of need.”
“The landscape’s changing and will continue to change,” said Wagg. “There will be opportunities and challenges and any provider needs to be able to adapt to that and, where the opportunity arises, work in partnership rather than in isolation. We recognise that that is an opportunity that we need to embrace.”
Charging for NHS services is one of the most sensitive issues in UK politics so does that mean that PMI and cash plan providers could come under attack for being seen to want to promote it, but providers argued their messaging would ensure they were not perceived negatively.
“We sit in the PMI market and cash plan market as well,” said Wagg. “The products we offer are there to complement the NHS not to replace it. We need to position as that and where there are changes adapt to that.”
Another item on the political agenda at the moment is pensions auto-enrollment. The Confederation of British Industry is urging small employers not see this as a burden but as an opportunity for small firms to overhaul what they offer employees in terms of benefits. Could this result in a potential opportunity to sell more cash plans?
Probably not, seemed to be the general consensus. In a straw poll at the end of the session, none of the delegates thought pensions auto-enrolment would increase the take-up of cash plans. A quarter of attendees thought it would depress demand with the remaining 75 per cent predicting that auto-enrolment would have no effect on the cash plan market.
“The money has to come from somewhere,” says Sharrock. “An employer might say if I have to put 3 per cent into pensions that’s 3 per cent I can’t put into salaries. It will depress demand for a period of time. People will review all their benefits so there are opportunities but there are challenges as well.”
Delegates did see opportunities for improving the ways providers communicate with policyholders and process claims, such as online or through smartphone apps.
Linda Tressider, national sales manager at Premier Choice Healthcare, said: “You’ve got to make it as easy as possible but without burdening the employer. Some providers make the reimbursement of the excess quite a cumbersome process and I think that’s got to be addressed.”
Westfield Health already has a smartphone app, which enables Westfield policyholders to view available balances and recent claims for any dependants.
Hill suggested the next logical step would be to submit claims via a smartphone app. “With a smartphone just how difficult is it to take a photo of that receipt, tap in some info using an app and upload it?” he said. “All you have to do is register your mobile number and it’s as good as a signature.
All delegates agreed that employees would want to access cash plan information through a smartphone app. 75 per cent thought enough people would be interested to make app development worthwhile while 25 per cent held the view that some would be interested but the numbers would be relatively insignificant.
But overall, delegates saw a very positive future for cash plans in the corporate sector, with potential for growth to continue for many years to come, albeit from a low base. And for advisers that do not have it as a tool in their armoury, the concern will grow that their competitors will.
