Healthcare cash plans continue to develop

Healthcare cash plans are evolving to satisfy modern demands for a healthier lifestyle, while dental provision has also made a huge impact on their development, says Nicola Sullivan

Today’s healthcare cash plans have evolved from hospital Saturday funds introduced in the 19th century to address the healthcare needs of the working poor before the advent of the National Health Service (NHS). But the pioneers of those early funds would struggle to recognise current cash plan benefits, which have changed almost beyond recognition, offering greater choice and filling gaps in state healthcare provision.

Jill Davies, deputy chief executive of Westfield Health, says employees are gaining access to a greater variety of services through healthcare cash plans as products continue to look to fill these gaps in NHS care. “People are looking for solutions to the difficulties of getting treatment,” she adds.

Traditionally, healthcare cash plans have been targeted at blue-collar workers, but providers are now marketing the perk to all levels of employees, extending plans to provide more comprehensive levels of cover and often promoting schemes as an add-on to private medical insurance (PMI).

One such development is the inclusion of cover for surgical procedures. Westfield Health, for example, launched its Surgery Choices product in September 2007. It is designed to be used alongside Westfield’s Foresight plan and provides cash lump sums for non-urgent surgical procedures to treat conditions such as cataracts, gallstones, varicose veins and slipped discs.

Other providers do not offer cash back for surgical procedures, but instead have evolved products to cover consultations with specialists and medical investigations. Stephen Duff, sales and marketing director at HSF, which provides one such product, however, says: “We are not in the business of paying for operations in hospitals, but that is where we make a distinct difference between what we do and what private medical insurers cover.”

Over the last decade, HSF’s plans have developed to include personal injury cover, which pays out in the event of permanent disability, accidental death and temporary disability, adds Duff.

One factor that has had a huge impact on the development of healthcare cash plans in recent years is dental provision. With fewer patients being treated on the NHS and growing concerns about gaps in the provision of dental care, a number of providers, including HSA, have created plans that focus solely on providing dental benefits.

“Even if you do have an NHS dentist, you are still going to be asked to pay considerable sums for your dental work. Some of the cash plans are now doing dental schemes as a separate entity. I think that’s a new thing that’s happening,” says Duff.

Cash plans are also increasingly being adapted to cater for healthy lifestyles and the fast pace of modern life. At a time when the government is putting pressure on employers to play a part in improving the health and wellbeing of employees, many new cash plans include features such as discounts on gym membership, alternative therapies and advice lines to provide staff with guidance on wellbeing issues. Westfield’s Davies says: “The government is trying to encourage the employer to get more involved in getting the employee fitter and well. The changes in NHS service provision and the healthcare priorities that people have are changing the landscape of the market.”

A number of providers now include such provisions within their cash plan products. For example, Medicash’s Active plan, which launched in April, provides staff with cash lump sums to cover the full cost of a range of complementary and alternative therapies, including sports massage, osteopathy, homeopathy and smoking cessation treatments. It also includes online health screening and reduced membership rates for gyms.

Peter Lauris, sales and marketing director at Medicash, says: “The range of services and treatments covered has been revamped to fit the busy lives of the modern man or woman.”

But as providers extend the benefits included in healthcare cash plans, they face the challenge of how to keep the product as affordable as possible, as its low price is typically seen as a key factor in its appeal. “The market is price-sensitive and it has always been proportionally affordable compared to PMI. The cash plan market has really got to stay affordable to be for the masses,” says Davies.

But despite the fact that some cash plans now include PMI-style benefits, providers claim they are offering a complementary product and not a replacement for the more costly perk.

If you read nothing else, read this…

• To cater for modern healthy lifestyles, healthcare cash plans are increasingly being geared towards employees’ fitness and wellbeing needs.

• Providers insist cash plans are not intended to compete with private medical insurance, despite the fact that some products have evolved to offer more comprehensive perks.

• In response to demand for dental care, providers are increasing the number of plans that focus on dental perks.

• The low cost of cash plans is thought vital to their appeal.