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• Cash plans reimburse members for the partial or full cost of a range of everyday health treatments, such as dental and optical care.
• Several providers offer cash plans for £1 a week per employee or less.
• Employers must shop around for the benefits that suit their staff, not simply the cheapest.
• In low-cost schemes, employees may have to top up the plan themselves to receive the benefits they require.
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Cash plans are an economical health benefit, but the cheapest schemes may not be the best option, says Tom Washington
Health cash plans have long been a cost-effective way for employers to offer staff a health benefit without the cost of funding private medical insurance (PMI). Health cash plans reimburses staff for the partial or full cost of a range of everyday health treatments, such as dental and optical care, health screening and physiotherapy.
Low-cost plans are typically pitched at about £1 a week per employee. But price competition has seen a rise in the number of bargain schemes, with some offerings priced at less than £1 a week entering the market.
For example, cash plan provider Health Shield’s Essentials scheme costs just 75p a week per employee, and Simplyhealth has launched a 60p-a-week plan. Such prices make these schemes hard for employers to ignore, but just what do they include?
Howard Hughes, head of employer marketing at Simplyhealth, says that although the firm offers a cash plan at just 60p a week, it chooses not to actively promote it. “There are margin issues and at that level the plan starts getting thin on cost and on benefits,” he says. “It is something for our sales guys to keep in their back pocket. We feel we have to offer a plan at that low price to compete with the market, but the £1-a-week level has much better benefits.”
But Lara Rendell, marketing manager at Health Shield, says budget cash plans are a good option for many employers. “Essentials is our most popular scheme, mainly because it is priced so competitively and is easy for the broker market and HR market to understand. It is off-the-shelf, so is put into place quickly.”
Cash back on treatment
Health Shield’s plan includes £50 cash back on dental treatment, £165 on dental accident cover, £50 on optical care, £200 on special consultation and £100 for health screening.
Brian Hall, sales and marketing director at BHSF, says schemes at this price provide good overall cover, but employers should beware. “Will the provider insist on selling upgrades to staff to recoup an undercharged employer scheme by overcharging the employee? The acid test is what the employer and employee upgrades come to in total.”
Hughes says a higher level of cover is often worth paying for. “We do not feel that comfortable at the 60p-a-week level,” he says. “It will give employers something, but we always give individuals the option to buy up and improve their cover.”
If purchasing a low-cost plan, employers may wish to check if they are able to fix the price for a set period. This may help to guard against taking out a plan that is underpriced to win business, but then increases in price over time. “Once [a plan] is offered, it is difficult to withdraw because benefits are used regularly, so employers should check how long a supplier is willing to fix the price,” says Hall. “It could be expensive if the rate jumps in year two or three.”
Rendell adds: “Employers need to look at what their budget and staff requirements are. The 75p-a-week plan is the cheap and cheerful option that covers essentials, not things like hospital inpatient or maternity.”
But Hughes thinks prices will stabilise. “I do not see [prices] going any lower,” he says. “With cash plans, pricing is stable, unlike PMI. If they get cheaper and cheaper, I would start to question the value in the benefit.
“The real challenge is to convince organisations to invest more in the health of their staff and into higher-level cash plans.”
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