IF YOU READ NOTHING ELSE, READ THIS…
- Small print may restrict cash plan claims.
- Employers should read cash plan terms and conditions carefully before implementing a scheme.
- Employees need educating about the terms and conditions of their plan.
Employers’ need for valuable employee benefits has never been greater, so it is important to ensure the perks on offer do not fall short of staff expectations because of their terms and conditions.
Health cash plans are a case in point. Employers must ensure they know exactly what plans cover and what they exclude, plus any restrictions that staff should know about.
Philip Wood, executive director, sales and marketing at Health Shield, says: “There is a lot of small print in health cash plans. Headlined is the benefits tables with the price and benefits, but people have got to look behind that.”
For example, there is a growing trend to use health cash plans to cover private medical insurance (PMI) excesses. This enables staff to minimise PMI premiums, and therefore their healthcare costs. But some cash plans will only cover PMI excesses on treatments the cash plan covers, such as consultations, so employers should check the small print, particularly if PMI excess cover is a prerequisite for their plan.
Andy Abernethy, marketing manager at Medicash, says: “Employees have been caught out by this. For example, if they have had an accident and gone through accident and emergency at a hospital and then on to private treatment, they could find they are not covered because they have not gone through a specialist consultation.”
Cash plan providers may also insist that employees only use healthcare professionals from an approved list when claiming for treatment. Employers should check such details if changing providers and make staff aware that they may need to switch from the professional they are currently seeing to ensure their treatment is covered under the plan.
Pre-existing conditions
But employers should first consider any pre-existing conditions among staff that could prevent immediate use of a cash plan. Plans can stipulate that they do not cover pre-existing conditions, and some have a waiting period before certain benefits are available.
For example, Simplyhealth’s cash plan has a 12-month waiting period before its new child payment can be made, and someone who is pregnant when the policy is taken out cannot claim this particular benefit.
Employers must also consider employees’ extra-curricular activities that could affect their ability to claim through a cash plan. For instance, an employee who is injured taking part in a sport for which they receive payment may find their plan will not pay out to cover their treatment.
The way in which an employer arranges a health benefit can determine whether or not a cash plan will cover certain claims. For example, Engage Mutual will pay out for health screening if it is arranged by the employee, but not if it is arranged by their employer in the workplace, says David Castling, commercial sales manager at Engage Mutual.
Claim periods are another potential pitfall for employers and employees. It could take as long as a year, sometimes up to two years, for an employee to be able to make a second claim on the same benefit. For example, buying a pair of glasses through a cash plan could use up an employee’s optical benefit allowance, so they would have to wait until the next benefit period to claim again for, say, an optical treatment or eye test.
Dental and optical
Dental and optical are the benefits most commonly claimed under health cash plans, but even these are subject to restrictions.
Brian Hall, sales and marketing director at BHSF, says: “A lot of health cash plans talk about their optional eye cover meeting the employer’s visual display unit duty of care in full, but they do not even come close because reading equipment is varied. If a person needs varifocal spectacles at £200, a £50 optical benefit isn’t going to cover it.”
Health Shield’s Wood says certain cash plans’ dental benefits will not cover dental procedures such as teeth whitening, which could be an important benefit for employees in a customer-facing role. “Also, with optical, some providers will not cover contact lens solutions, which I do not understand because if you use contact lenses, you need to buy the solution to clean them,” he says.
“There is quite a lot of detail when people actually lift the lid and look behind the pricing and benefits tables. It is worth going through line by line.”
As part of this exercise, employers should also look at cash plan reimbursement levels. Some providers will offer 100% reimbursement on all benefits in the plan, while others vary reimbursement between benefits.
Cover for dependants
Finally, staff who want to add a partner or dependant to their plan should check what benefits they will receive under this extended cover and the impact on the cost of the plan.
Matthew Judge, technical director at Jelf Employee Benefits, advises cash plan users to check the small print about dependants. Some cash plan providers grant each child on a plan access to their own benefits, while others offer set benefits for any children listed on the plan to share, so one could use the physiotherapy benefit and another the optical cover.
Mike Blake, compliance director at PMI Health Group, warns employers that some plans only cover children up to a certain age, which could cause problems if an employee is using their plan in conjunction with PMI. The employee could find that the PMI plan covers their children into their twenties, but the cash plan covers them only up to the age of 18.
This all said, health cash plans should be relatively simple to operate and use. Howard Hughes, head of employer marketing at Simplyhealth, says: “The key thing about a health cash plan, which is very important, is it is really simple to implement, and if it is not simple to implement, then something has gone wrong somewhere. It should be easy because all the employer needs to do is choose the benefit level. There is no underwriting that applies, unlike a private medical insurance plan, so there is no need for tricky terms and conditions.”
Medicash’s Abernethy agrees, adding that a health cash plan is designed for employees to make claims on, so there should be no overly restrictive terms and conditions that would prevent claims being made.
SMALL PRINT TO CONSIDER IN HEALTH CASH PLANS
Pre-existing conditions
Some plans do not cover pre-existing medical conditions, and even those that do, tend to limit it. Employers should identify providers’ approach to pre-existing conditions and ensure their employees understand the importance of disclosing any conditions they may have.
Medical examinations
Most cash plans do not require medical examinations, so staff must disclose any existing conditions to maximise the chances of claims being covered.
Waiting periods
Plan members are typically unable to claim in the first few months after joining. This clause is designed to prevent people joining the plan to claim for a current condition and then cancelling the policy.
Charging structure
Having identified the conditions covered, employers should assess the charging structure. Staff will typically be able to claim in full or a percentage of their costs. Should an employer make the wrong selection, staff should know that all cash plans are covered by the Financial Services Compensation Scheme, which means 90% of their spend is protected.
Child cover
Many providers offer children’s cover for free, so it is worth quizzing providers about what they will and will not cover.
