Organisations are striking a balance between private medical insurance and cash plan offerings, as outright choices have become far too simplistic, says Stephanie Spicer
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PMI will benefit a smaller number of employees but usually to a far greater degree, a healthcare cash plan will, however, benefit almost all with a smaller payout.
PMI and cash plans should be used as complementary not competing benefits.
Healthcare cash plans do have a role to play in controlling employee absenteeism.
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Providers of private medical insurance (PMI) and healthcare cash plans will often inform organisations that offering both benefits is the best provision for the workforce. There are obvious advantages of being able to offer both PMI and cash plans, perhaps selecting PMI for key staff and cash plans to the wider workforce. But many employers feel one or the other is the most likely realistic option, so which should you go for?
Colin Boxall, director of healthcare at E-xcellent Health, says: "Healthcare cash plans and private medical insurance schemes complement, they do not compete. One starts where the other finishes." >From an employers' point of view, private medical insurance offered to staff ensures they can avoid the waiting lists on the NHS, get treated and get back to work faster. But it is however, the more expensive option.
Perception Healthcare cash plans, on the other hand, provide benefits relatively cheaply paying out a lump sum to meet certain medical, dental or optical needs or to cover expenses for a hospital stay. If still in a dilemma as to which benefit to provide, employers need to consider just what they want to achieve, for staff and for the benefit of the company. Paul Moulton, director of corporate sales at Axa PPP Healthcare, says: "If an organisation is looking to provide a well perceived benefit for as many people as possible, the solution would be cash plans because they are on average a third to a fifth cheaper than PMI. If, however, they want to provide a highly perceived benefit and an employer benefit, because there is a positive impact on sickness absence, clearly the answer would be PMI."
A key reason employers tend to opt for PMI is because they see it as a means of controlling absenteeism. But cash plans can also have an impact here. "If cash plan benefits are chosen correctly, they can alleviate many short-term absences by allowing access to specialists, diagnostic procedures and therapies. Although this will not allow an opt out of the NHS it can considerably shorten the process by allowing early diagnosis and treatment," says Boxall. Absenteeism Rather than being seen as the poor man's employee benefit, healthcare cash plans can offer an appreciable option for staff.
Like PMI, they are also popular with employees, are an aid to recruitment and retention, and to differing degrees absenteeism. "Medical insurance will benefit a smaller number of employees often to a far greater degree because of the more serious nature of the claim. A healthcare cash plan will benefit almost all employees because it covers everyday expenses, such as dental or optical. There is an immediate feeling of gain and feeling of appreciation," says Boxall. Flexible benefits platforms can assist employers which want to make both PMI and cash plans available to staff.
PMI can be offered as a core benefit, but with cash plans as an optional upgrade for dependants or the individual employee and therefore give them access to both. For employers still concerned about the budget, a new benefit with a back-to-work focus, allows individual employees access to private medical insurance if their illness prevents them from working. As it only relates to conditions that prevent people working it reduces the average cost to the employer by about a third.