Feature – How staff can top up basic healthcare cash plans

As employers move to fund basic healthcare cash plans for all staff Jamin Robertson evaluates the options for staff seeking an upgrade

If you read nothing else, read this …

  • There has been a 150% increase in the number of employers introducing paid-for healthcare cash plan premiums in the past year.
  • Employers are opting to fund basic level plans for staff and giving them the choice to pay for additional cover.
  • Cash plans can be seen as helping employers to view duty of care obligations, which may lead to reduced insurance premiums.

Article in full

Healthcare cash plans are becoming increasingly popular with employers looking to fund a basic entry-level premium and allow staff to upgrade coverage at their own expense.

Employee Benefits/HSA Healthcare Research 2005 reveals a 150% increase in the number of employers providing paid-for cash plans for staff. Richard Sear, chief executive of provider HealthSure, says corporate schemes now comprise 35% of business, compared with 15% last year. "It’s a big increase. Employers are turning [staff] on to it and they tap in. We’re finding 50% to 60% of staff are choosing to upgrade, right through the range."

Jeremy Chadwick, group head of public relations at provider HSA, partly attributes this demand to a realisation that such products can help employers to be seen to be offering a better duty of care to staff, which can help to lower liability insurance premiums. "It’s a very cost-effective, non-prejudicial way [to meet duty of care obligations]. It’s also a flexible system, with the employer in the driving seat, deciding what to contribute," he says.

The practical appeal of cash plans also appears to be driving demand. Suzanne Murray, product and marketing manager at provider Cardif Pinnacle, says: "It [promotes] a healthy workforce that is more productive. I think we’re seeing a move toward cash plans and away from private medical insurance because it’s low cost and covers everyday expenses that every employee will use. You don’t have to be ill to use it."

Cash plans typically offer customers the same fixed menu of healthcare treatment, with a choice of premium level. A higher premium gives customers more cash back on costs. Policies can be extended to cover dependent children, while partners can chip in at a reduced rate. Customers tend to invest more cash as they get to know the product. Employers usually pay between £1 to £10, and the inclusion of staff contributions pushes the individual monthly cash plan spend to between £15 and £20.

One leading policy offers thrifty spenders £90 towards a dental or optical bill, while top cover pays £240 and £270 respectively. Customers are also entitled to claim on further treatment such as physiotherapy and hospital stays. Dental treatment (41%) and optical services (29%) are the most popular attraction for cash plan users, according to analysts Mintel.

Pam Whelan, corporate sales manager at specialist dental insurer Denplan, says staff ratchet up premiums due to interest in cosmetic dental surgery and the bottleneck for dental treatment through the NHS. An entry-level premium allows customers to claim on worldwide accident and emergency dentistry, priced from £3.10 per month while a top-shelf plan covering preventative and restorative work will set employees back £9.45 per month. Employees fund the add-ons through salary sacrifice or direct debit.

So with cash plan providers tailoring plan premiums to match the size and shape of all pockets, employees face a decision to determine the level of coverage that matches their individual needs.