Corporate cash plans continue to shine, with the latest figures from LaingBuisson showing the market grew by a chunky 11.8 per cent in 2016 to cover a record 1.01m employees. And, with their benefits evolving to fit the needs of both employers and employees, many expect further growth in this market.
Several reasons lie behind this success, but a significant amount of the growth can be attributed to increased interest from advisers. PES Health director Debbie Kleiner-Gaines explains: “Historically cash plans were sold direct but there was a drive a few years ago to move the weight of a PMI excess into a cash plan.”
But while the ability to use a cash plan to fund the PMI excess may have captured adviser attention, the relationship has subsequently matured. “Nowadays, specialist advisers are widely selling cash plans because they realise it’s much more than an excess insurance,” adds Kleiner-Gaines. “If they don’t speak to their clients about them, another adviser will.”
This drive to sell cash plans comes down to the fact they tick so many boxes with both employees and employers. For employees, they’re a benefit they can actually use. “Whether it’s a trip to the dentist, a new pair of glasses or some physiotherapy, every employee is able to benefit from a cash plan,” says Medicash sales and marketing director Paul Gambon. “Providers are also making it easier to claim, which has helped to widen the appeal even more.”
Most now allow claims to be submitted online, with a growing number also offering apps. As an example, Medicash customers can submit a claim on their smartphone as soon as they’ve paid for their treatment, simply taking a photo of the receipt and uploading it to the app.
Plans are also simpler to understand as Chase Templeton senior employee benefit consultant Karen Smith explains: “We used to see plans where some benefits were stretched over two years, or you could only claim back 75 per cent of your spend. These conditions have been swept away, making it much easier to claim.”
Providing a benefit that employees appreciate is a big winner for employers, helping to boost health and wellbeing but also deliver other business benefits such as engagement, productivity and retention. In addition, for an employer who may have given senior executives PMI, offering a cash plan to all staff can help to harmonise benefits and create a much more level benefits playing field.
Further adding to the appeal is the fact that employers don’t need to spend a fortune to harness these benefits. Cash plans start from around £1 a week per employee, for which an employee would receive as much as £800 of benefit a year.
That said, pricing may be an area where cash plans could lose some of their sparkle. The Health Insurance Group corporate sales manager Gary Peace says that, as a result of greater awareness and easier claims processes, some employers are seeing claims rising substantially, with knock-on effects on pricing. “The risk margins are so tight on cash plans that if employees really do engage, prices have to increase. We’ve seen instances where prices increased by as much as 150 per cent at renewal and we always explain this to employers at outset,” he explains. “It’s a balance though: more claims may mean higher premiums but they should also mean healthier, more engaged employees.”
Also enabling employers to spend as wisely as possible is the fact that most providers allow plans to be tailored. “Larger employers can bespoke their scheme, selecting the benefits they want, increasing cover limits or offering different plans to different sections of the workforce,” says Smith.
Process of evolution
With more interest, especially from advisers, cash plans are successfully evolving into a valuable employee and employer benefit. “Cash plans are no longer seen as a standalone benefit,” says Westfield Health chief marketing officer Kevin Anderson. “They’re part of a much wider health and wellbeing strategy, helping to drive enhanced business performance.”
Increasingly cash plans are becoming more integrated with other benefits, helping to deliver a more coordinated response to employee health and wellbeing. “Cash plans focus on preventative care,” says Health Shield head of marketing Jennie Doyle. “By enabling an employee to access treatment at this early stage they can help to keep claims down on other health insurance products.”
By way of example, she argues that where an employee is suffering from back ache they could use the cash plan to see a physiotherapist or speak to the physiotherapy triage service. This early intervention might fix the problem, preventing it becoming a claim on PMI or group income protection.
Providers are also getting more proactive when it comes to supporting employers’ health and wellbeing strategies. For instance, Simplyhealth head of corporate marketing Colin Perry says his firm supplies clients with management information showing how their plan has been used. “This can point out areas of concern, for example high levels of calls to the EAP about a particular problem or more physiotherapy claims in one department, which they can then take steps to address,” he explains. “It’s about using this information to improve employee health and wellbeing.”
Move over PMI?
While cash plans continue to grow and play a larger part in employer’s health and wellbeing strategies, they draw inevitable comparisons with PMI. One provider, Westfield Health, has taken a step closer to providing PMI benefits with its Hospital Treatment Insurance. This offers two levels of company-paid cover, the lower covers more than 60 surgical procedures and costs from £5.83 per employee a month while the more comprehensive level, starting at £17.36, covers most procedures except heart and cancer.
Anderson says it has seen significant traction. “We have had some business move away from PMI but mostly it’s being taken out as a new benefit, on the back of the growth in interest in the cash plan,” he explains. “Cash plans aren’t looking to steal business from PMI; they’re complementary products.”
The business activity of some of the providers also sends out a strong signal about how they see their market shaping up. While Health Shield bought workplace screening business Prevent last year, Simplyhealth sold its PMI business to Axa back in 2015. “Cash plans are about everyday health,” adds Perry. “Sticking to this principle is key to the sector’s success.”
Dental, optical and physiotherapy remain the most popular benefits on a cash plan but the providers are busy keeping their products relevant and engaging. The following benefits are among the more recent additions: Virtual GP services – most providers have ramped up their GP helplines with the addition of a virtual GP service, enabling employees to ‘see’ a doctor and have any prescriptions delivered quickly and conveniently. Cancer screening – early detection services for common cancers such as bowel, breast and skin can provide peace of mind to employees and where a cancer is discovered, increase the probability of successful treatment.Wellbeing benefits – cash plan providers have developed a broad range of benefits that can complement or even form an employer’s wellbeing programme. These can include mental health support, online health tools and benefit for treatments such as reiki and aromatherapy massage.Discounts – employees can often take advantage of discount portals on their cash plan, giving them access to discounts on everything from gym membership to groceries.