In sickness and wealth

Picking the right cash plan is about more than which offers the best value in payout terms. Sam Barrett finds a growing array of benefits designed to suit all sorts of workforces

With their tables of benefits offering different levels of paybacks, it’s very difficult to work out which corporate cash plan offers the best value to your client. Throw in the service delivered by the different providers and the decision can seem impossible.

“Plans do vary enormously,” says Mike Izzard, managing director of Premier Choice Healthcare. “Some are very traditional, covering the dental and optical benefits but also offering cover for hearing aids and prescription charges. Others are much more suited to the modern pressures of the workplace with stress helplines and employee assistance plans. Whether it’s good value or not will depend on the client’s requirements.”

Even with the cheapest plans it can be difficult to determine which offer best value. Although it’s possible to pick up a number of corporate cash plans for £1 a week, benefit structures can vary greatly (see table). For example while Heathsure offers more than Westfield Health on its dental and optical benefits, Westfield offers additional benefits such as MRI and CT scans and an employee assistance programme.

And benefits aren’t always paid in the same way. Although it’s become much more common to offer 100 per cent rebates, some of the cheaper plans offer rebates of 50 per cent. For example, on its £1 a week plan HSF offers policyholders the ability to claim back 50 per cent of their dental and optical bills, up to a total reimbursement of £50 a year.

“Just because a plan only offers a partial refund doesn’t make it bad,” says Stephen Duff, sales and marketing director at HSF health plan. “If your annual dental bills are around £100, then 50 per cent up to £50 is better than 100 per cent up to £45.”

Benefits vary too. While every plan will include dental, optical, physiotherapy and consultations, all sorts of other benefits crop up on the schedules. Debbie Roberts, senior consultant at PMI Health Group, says: “Benefits are really evolving. Over the last few years some of the plans have developed their employer support aspects with employee assistance programmes, occupational health services and screening but we’ve also seen recent developments that offer additional benefits to both employers and employees.”

As an example she points to Westfield’s Surgery Choices option, which can be included on its Foresight plan. With this, for an extra £1.24 a week per employee, they are covered for 60 different non-urgent operations including cataracts, knee problems and hernias. “It’s not full blown medical insurance but it does give valuable additional cover,” Roberts adds.

Another development she particularly likes comes from Health Shield. Rather than further developing the employer-focused aspects, it has included an extensive list of alternative therapies on its scheme. These include Indian head massage, Reiki and aromatherapy and, according to Roberts, can be effective at busting stress and boosting employee morale.

An initial opinion on value can often be determined by looking at the most popular benefits. “Optical and dental are the most popular benefits and they’ll be the main drivers when we put together a plan’s benefits,” says Jill Davies, deputy chief executive at Westfield Health.

Also popular are physiotherapy benefits, especially as there’s no need to obtain a GP referral to access the benefit, other therapies such as osteopathy and chiropractic and the employee assistance programme benefits.

The nature of the company will also influence which benefits are most popular with employees. For example, a company with a large number of manual employees might require a large amount of physiotherapy benefit, especially as this can be accessed without GP referral. Conversely, office-based employees might benefit more from a stress helpline or employee assistance programme.

As well as buying off the peg, some of the providers will tailor schemes for different industries. For instance, HSF health plan is strong in the security industry where the personal injury element of the plan was introduced to suit the market.

What makes a good value cash plan may also be determined by the other benefits in place within the organisation. As an example Roberts says that it can be worth using a cash plan to cover the excess on a medical insurance plan. “Most plans will put some money towards specialist consultations, with some covering the cost of diagnostic tests too. By doing this an excess can be put in place to reduce the cost of the medical insurance,” she explains.

Health screenings are another feature growing in appeal to employers. Siobhan Race, head of marketing at BHSF says: “We are seeing increasing interest from the corporate market for health screening, whether as an option within the cash plan or as a separate benefit.” Screenings carried out on site mean employers will not lose staff all day and can raise the profile of the benefit amongst the workforce. BHSF can offer the screening of up to 14 staff in a day-long site visit for £700.

Cash plans can also be a useful way to deliver healthcare benefits to all employees, especially where it might be too costly to extend medical insurance beyond senior management. Richard Halley, head of B2B sales at HSA, says this can deliver good value, especially for the employer.

“A cash plan is a much more affordable benefit and because employees don’t need to be ill to be able to use it, it’s a very highly valued benefit. It also demonstrates to employees that the employer cares about their health,” he explains.

The newer plan designs also make it easier to upgrade benefits at low cost. Izzard says employees can sometimes have a benefit makeover and achieve much better return on their investment. “If an employer has an employee assistance programme they might want to consider upgrading this to a cash plan that includes this benefit. It doesn’t cost much more but delivers a lot of benefits that will be appreciated by employees, including those that would never have called the employee assistance programme,” he says.

Halley also believes that advisers should examine where employers may benefit from an upgrade to a cash plan. “Employers should certainly be looking at cash plans as they can often offer a cheaper and wider benefit than what’s already in place. For example, under duty of care requirements, employers will already be providing eye tests to employees who use VDUs. This can be covered by a cash plan,” he explains.

Whether your client prefers the standard optical and dental focused plan or would like something that could help with stress cases, the cash plan providers do tend to pay back a reasonable amount of the premium in benefits. Indeed Izzard says it isn’t difficult to claim back more than the premium each year, with cash plan providers relying on people either not needing to or forgetting to claim to keep their margins intact.

As far as the figures go, Philip Wood, marketing director at Health Shield, says his company aims to pay back at least 70 per cent of premiums to its members. “In every £1 this allows for 15p to be spent on obtaining the member and a further 15p on administration. The amount that’s returned to members does vary and has been as high as 82p in the pound with 2007 seeing us return 80p in the pound to our members,” he explains.

This high return is fairly standard among the not-for-profit providers. For instance in the year ending March 2007, HSF health plan paid back 78 per cent of its policyholders’ premiums and Westfield also looks to return up to 80 per cent. “We like to maintain this by keeping our administration costs really low, for example by settling claims quickly,” says Davies. It aims to settle all claims within five working days, with the majority paid within two working days. Additionally, where possible, it looks to pay money directly into the employee’s bank account as this is more convenient and means they won’t be out of pocket for long.

While paybacks are relatively high, the levels vary between voluntary and company-sponsored schemes, with the former type tending to have higher levels of claims because of selection against the provider. As the level of claims is generally lower on the company-paid schemes they often enjoy better terms, with qualification periods removed, cover provided for pre-existing conditions and increased benefit levels.

However Wood has seen a change in benefit paybacks on the company-paid schemes. “Employers are pushing their company-sponsored schemes more with worksite marketing and this is resulting in some higher returns for these schemes,” he explains.

But although paybacks may be rising, the other key advantage of cash plans is that, because of the cap on benefits, premiums are fairly static. “We like to keep premiums the same for several years,” says Davies. “Affordability is important but we keep an eye on the healthcare market and NHS developments to make sure benefits are relevant and in line with current prices. They should be a good value product that as well as delivering benefits to employers and employees gives advisers a lower cost risk management solution to offer their clients.”