Health cash plans are a cost-effective way for employers to help staff meet the cost of everyday healthcare, and the healthcare provider market is evolving to meet increasing demand.
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- Health cash plans remain an attractive, low-cost healthcare benefit for all employees.
- Choice of healthcare providers is growing to meet demand.
- Providers are expanding their plans to offer a wider choice of benefits.
There are currently 26 providers offering health cash plans in the UK following the launch of two new market entrants, Perfect Health Cash Plans and MediCheque Cash Plans, in the past 12 months.
The market is dominated by not-for-profit providers such as Simplyhealth UK, which had the largest market share (45%) in 2012, followed by Westfield Health (11.5%), BHSF (7%) and Health Shield (5.5%).
Individuals accounted for more than three-quarters (77%) of total health cash plan market demand in 2012, according to Laing and Buisson’s Health cover UK market report 2013, published in July. This represented 2,013,000 health cash plans at the end of 2012. Cash plans funded by employers accounted for just 588,000 plans.
Overall, health cash plan demand remained largely flat in 2012, up by just 1,500 plans to 2,601,000 year-on-year. Howard Hughes, head of employee marketing at Simplyhealth, attributes this to the economic downturn.
“We are going through a time of recession, but employer-paid cash plans are still being bought,” he says. ”We are seeing an increase this year.”
Spending on health cash plans totalled £468 million in 2012, according to Laing and Buisson, with individuals spending an estimated £410 million and employers spending £58 million during the year.
The competitive pricing of health cash plans helps to explain their popularity.
Mike Blake, compliance director at PMI Health Group, says: “A lot of cash plan providers promote the £1-a-week price tag. It’s quite an easy concept [for employers and employees] to get, and it’s an easy way [for providers] to communicate to an organisation that plans are going to cost £50 per employee or £1 a week. It doesn’t sound a lot and is cheap to implement.”
However, cash plan prices are on the rise.
Brian Hall, sales and marketing director at BHSF, says: “Some providers are charging organisations silly prices, which tend to be in the £60s, £80s and £100s [per employee]. We are seeing prices increase drastically.”
Hall says price hikes usually follow a provider conducting a price review.
Competition is likely to keep a lid on prices, however, so health cash plans will remain relatively cheap for the foreseeable future, making them more cost-effective to offer to an entire workforce than private medical insurance (PMI), which is typically more expensive.
The average price for an employee-paid cash plan is around £200 a year per employee, compared with £106 for an employer-paid plan, according to the Laing and Buisson report.
Cash plans are used predominantly for dental check-ups, a new pair of glasses or a session with a physiotherapist.
But bolt-on features, such as employee assistance programmes, are gaining popularity.
Simplyhealth’s Hughes says: “Organisations are finding the ability to add bolt-ons, such as PMI excess cover towards specialist consultations and diagnostic tests. Many providers are also adding [doctor] helplines and employee assistance programmes to increase the value of cash plans.”
The expanding range of services available through cash plans is seeing the benefit evolving into a PMI-style product, but at a much more competitive price.
PMI’s Blake says: “Similar to Westfield Health introducing hospital treatment insurance as a cash plan benefit, more [services] may follow. Health cash plans could start to cover costs of up to £500 and look at paying for the treatment. It is a bit of a departure from just a cash reimbursement.”
Blake says cash plan providers may look to plug a gap in the market for low-cost traditional medical insurance cover.
Read the digital edition of our Health cash plans supplement 2014 in full.