Optical benefits are visible, while dental benefits make employees smile. But are they on their own still enough to sell a cash plan asks Sam Barrett
While cash plans offer a variety of different benefits, the ability to claim at least once a year for a trip to the dentist and for a regular eye test and a new pair of glasses means the optical and dental cover are a key selling point.
As a result it’s hardly surprising they’re the two most common claims. For instance, at Simplyhealth, optical and dental account for around 58 per cent of claims by value with dental racking up 39 per cent of all claims by volume and optical not far behind on 18 per cent of claims. “Employees particularly like these benefits as they’re able to claim at least once a year,” says Howard Hughes, head of employer marketing at Simplyhealth.
As well as appreciating the claims frequency, there’s also flexibility over how employees use these benefits. Although benefit rules vary among the providers some are very generous. For instance Health Shield allows its dental benefit to be used to cover
practice plan premiums and sports gum shields, providing they’re fitted by dentists, while its optical benefit can be put towards prescription swimming goggles and diving masks, contact lens schemes and even lens cleaning solutions.
The optical and dental cover on cash plans can also benefit employers. Sue Weir, chief executive of Medicash, says offering employees a contribution towards the cost of a visit to the dentist or optician encourages employees to look after their health. “You hear horror stories of people who delay seeing the dentist and end up with a more serious problem that requires time off work. Regular check-ups help to prevent this and can also identify serious health problems at an early stage,” she adds.
As well as keeping employees healthy, the optical cover on cash plans can also help employers meet their duty of care requirements. Although it could leave them having to pay for additional tests where an employee has already used up the optical benefit on their cash plan, the level of benefit is designed to enable them to meet their responsibilities towards safeguarding the vision of VDU users.
EU legislation is also set to put more pressure on employers to look after their employees’ eyesight. Under EU Directive 2009/113/EC, commercial drivers will be required to
have their eyes tested every five years. Paul Shires, sales and marketing director at Westfield Health, explains: “We’re still waiting for this legislation to come into force in the UK but it will help to raise awareness of the importance of helping employees to look after their eyesight.”
Indeed, even without this legislation in place, employers could find themselves facing a charge of corporate manslaughter if an employee was involved in a fatal accident while driving for business and it had failed to ensure their eyesight met the standards required.
But while dental and optical benefits remain a key driver behind sales, some providers are finding their importance is waning with some employers. As an example Pete McAndrew, sales director at Health Shield, says that while employers used to weigh up the dental and optical when selecting a cash plan, they’re now much more interested in the package of benefits.
“HR professionals are more switched on to health and wellbeing, with this focus intensifying over the last few years through the government’s work on sickness absence,” he explains. “They understand that these other benefits can help with managing absence and they want the whole package.”
While this shift gives the thumbs up to the product development teams that have added benefits such as consultations, health screening and employee assistance programmes to their plans, it has also created some challenges for anyone selling the plans. McAndrew says it used to be sufficient to talk about dental and optical to employees when promoting voluntary cash plans, but employers now want them to focus much more on the broader health and wellbeing benefits. “They prefer us to set up a health and wellbeing fair so that employees appreciate all the benefits on over,” he adds.
While some providers are noticing a shift in the reasons for purchasing a cash plan, all are reporting pressure on claims costs. “There has been a slight increase in claims costs across the board with the fastest growth seen on consultations and therapies, possibly as a result of the increase in the number of intermediaries selling cash plans,” says Westfield’s Shires. “As claims costs rise we do continually review the benefits we offer to make sure they’re priced correctly.”
As an example, contributing to the rise in claims costs for dental benefits is a small increase in NHS dental charges. From April 2013 these shifted from £17.50 to £18 for band one treatment; £48 to £49 for band two; and from £209 to £214 for band three. These rises, although meagre, are likely to have resulted in increases in the cost of private treatment too.
One of the responses to the rising cost of treatment is an increase in the number of corporate clients, both employers and employees, upgrading their cover with several providers reporting an increase in the average premium.
While some providers only offer the option for voluntary upgrades where an employer requests it, others prefer to make this available in all instances. Where this is the case, to avoid employees upgrading their cover ahead of a large bill for treatment, cash plan providers have rules around when upgrades can take place.
As an example, at Westfield, employees are given the opportunity to increase cover at renewal each year. Shires says it can take time before employees do decide to upgrade. “Where an employee hasn’t had a cash plan before it will take a year or so before they understand the way they work and how they can use them to cover their everyday healthcare costs,” he explains. “After this point it’s common to see more increasing their benefits.”
While there is room for upgrades,
the pressure on claims costs is also likely to result in some movement
on pricing in the next 12 months. Although cash plan providers have stuck to the £1 a week model, adding more and more benefits in the battle for market share, this offering is beginning to look a little bargain basement.
As an example, on Medicash’s £1 a week Proactive plan, there is £55 of dental cover with a further £200 for dental accident and injury and £55 of optical benefit.
Simplyhealth’s Hughes is keen to move away from this model. “When you’re only offering this level of benefit, there’s a risk that it’s such a small contribution to the cost of a trip to the dentist or opticians that it’s overlooked altogether,” he says. “We need to work with purchasers to look at more generous benefits packages.”
Several of the providers are already sliding away from the £1 a week model. For example, Simplyhealth’s Simply Cash Plan is marketed as starting from £5 a month and Medicash’s Reward kicks off at £1.25 a week.
Weir also believes the time is
right to shift. “The £1 a week model was great when the economy was struggling and employers were
looking to providing a cheap but visible benefit to their employees,” she says. “But the time has come to move on and show what a cash plan can do if you’re prepared to pay more than £1 a week.”