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• Low-cost health cash plans can deliver value as long as staff actually benefit from the limited cover they provide.
• Establishing what expenses staff are likely to claim for, and communicating the value of the cash plan, is key to achieving cost-effectiveness.
• Plans should be chosen with long-term recruitment and retention in mind. The cheapest plans may not be the most attractive to future recruits.
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Cash plans can be a cost-effective healthcare benefit, but cover may vary greatly according to price, says Alison Coleman
The health cash plan market is huge, with a number of providers vying on cost and offering plans with increasingly low premiums. But do the cheapest products, which can cost less than £1 a week per employee, offer real value for money?
That depends on whether they provide enough cover on everyday expenses people are finding it hard to meet, says Richard Sear, chief executive officer of National Friendly. "Some health cash plans that cost less than £1 a week are nothing more than a box-ticking exercise by the employer because the cash benefits are so low as to be quite meaningless. A plan that pays out £50 towards dental treatment that actually costs £500 will not be seen as of any real value by the individual."
However, others insist low-cost health cash plans can justify a place in the employee benefits offering. Lara Rendell, marketing manager at Health Shield, says: "If the scheme and the level of financial payout it provides reflect the needs of the majority of the workforce - and employers can establish these through regular employee surveys - then, with good communication of the benefits, a health cash plan will be valued."
Range of tariffs
Many health cash plans include a range of tariffs allowing staff to increase their premiums and claim back a higher amount against treatment costs. "Flexibility is important," says Rendell. "The level of cover on our own cash plan can be increased, up to £100 for dental costs and £200 for optical expenses, which many people choose to do."
It may also be worth paying more for extras such as physiotherapy, or alternative therapies, such as acupuncture or homeopathy to be included, says Susan Brooks, employee benefits consultant at Lorica. "For employees who have to do a lot of manual handling in their job, these extras could be important," she says. "What really matters is that employers know their staff, what they want and would actually use, and then choose the most cost-effective cash plan to suit."
So is there really is such a big difference between what the cheapest schemes and top-of-the-range plans cover?
Brooks says: "At the low-cost end, there is not much to choose from, although some include cover for things like surgical appliances and accidental death, with no real purpose. At the top end, where premiums are approaching £40, you are almost into private medical insurance."
Choosing a scheme based on cost may relieve current budgetary pressures, but compromising on value could lead to longer-term costs, warns National Friendly's Sear. "Employee benefits are vital to attracting and retaining talent," he says. "As growth returns and [organisations] start recruiting again, health benefits will count."
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