Corporate cash plans: five questions to ask before making a purchase

Covering a wide variety of day-to-day healthcare needs, from dental and optical to physiotherapy and chiropractic, cash plans represent low cost policies for employers but enjoy high value among staff. In fact, independent research has revealed that they are now as popular as health insurance among UK workers.

Over recent years, cash plans have evolved, becoming increasingly flexible with sophisticated pricing models – and they can be customised to meet business needs like never before.

But what should HR managers or company executives consider when introducing a corporate scheme? PMI Health Group’s Mike Blake outlines five key questions they should ask before making a purchase.

1/ Why do I want to provide a cash plan?

The first question you should ask yourself is: “what do we hope a cash plan is going to achieve for us?”

Do you want it to make you more competitive in the employment market? If so, a cash plan can act as a valuable tool for staff recruitment and retention. For a low premium cost, it can have a high perceived value, enabling employees to claim more in benefit than you pay in premium.

Do you want to give employees a sense of wellbeing? A cash plan can deliver a feel good factor, improving morale and motivation.

Do you want it to contribute to an absence, or healthcare, strategy? A cash plan’s dental benefit, for example, can encourage people to see the dentist regularly, reducing risks of dental problems developing into absence issues at a later date.

2/ What is my budget? How much do I want to spend?

Cash plans range in price depending upon the benefits offered. This allows businesses to select those benefits that will help them achieve their goals, and to set their budget accordingly.

Basic plans can cost as little as 75p per employee per week and will cover healthcare such as dental, optical and payments for time spent in hospital.

Stepping up to the next level, a range of other benefits become available from physiotherapy to alternative medicines and osteopathy, often covering chronic conditions that are not pre-existing.

High end cash plan can cost upwards of £10 per employee per week and offer benefits that can really play a key role in absence management, from high-tech scans and Cognitive Behavioural Therapy, to access to wellbeing websites and discounts for gym memberships.

3/ Will I pay the cash plan premiums or will my staff?

Cash plans are typically funded by employers through corporate schemes for their employees. Families can be included and they can be paid for by the employer or the employee.

Voluntary schemes can see staff paying for the plans themselves – but these schemes, which simply provide access to the benefit, tend to have a relatively low up-take. Employers may then have to arrange salary deduction for just a small number of people, unless the individuals are paying for it by direct debit. This administration cost should be balanced against the cost of including everyone on the scheme.

4/ How do I decide which policy best fits my needs?

When asking yourself this, you should consider what benefits are being offered. If you’re looking to reduce employee absence, does the cash plan offer appropriate wellness benefits, for example.

Do you want to allow employees to upgrade and add other members of their family? If so, how will the insurer will collect the extra premiums – doing so by direct debit is invariably easier than doing so through payroll. Consideration should also be given to the age dependents are covered up to. You might want to align this to your medical policy, for example, to ensure consistency in the benefits you offer.

Specialist intermediaries, like PMI Health Group, can help businesses to find and structure the most appropriate and cost effective plan.

5/ Is this to be a standalone benefit or is it part of employee health strategy?

This is an important question to consider. You may already be spending money on your workforce in areas covered by a health cash plan, such as eye tests, consultations, scans and counselling. As a standalone benefit, you may consider a cash plan to be a cost effective way of bringing these benefits together at no extra cost. In some instances, a company can actually save money and time on staffing because of the reduction in administration.

If a cash plan is to be part of a wider health programme, its introduction will need to be more strategic in terms of the benefits offered. Our expert consultants can advise you on how a plan might best integrate with other benefits or your company’s overall healthcare strategy.

Research reveals protection gap around long-term illness (02/09/2014)

More than three-quarters of UK staff cannot afford to maintain a living on statutory sick pay, research has revealed.

Seventy-seven per cent of those questioned in the study conducted by employee healthcare and risk specialist PMI Health Group claimed they wouldn’t be able to live on just statutory sick pay if their income stopped tomorrow.

At the same time, 46 per cent said their employers do not continue to pay their salary in full if they are off work for three months or more through sickness or injury.

“The study highlights a protection gap in the UK, as half of all workers do not have a sufficient level of protection in the event of long-term illness,” said Mike Blake, Director, PMI Health Group.

“The big question is how much should they expect the employer to cover them? There is an opportunity for companies to position themselves as responsible, desirable employers by offering their staff extra cover.

“Income protection, for example, can be tied into the contract of employment to ensure staff are guaranteed financial stability. The policy will usually kick in after six months and it is down to the insurer, rather than the employer, to make a judgment on when staff are ready to return to work, ensuring everyone is judged on the same grounds.”

The results of the study follow a recent change in legislation, which means employers are no longer able to claim back any statutory sick pay that has been paid to staff.

Companies are only able to reclaim statutory sick pay under certain circumstances, such as when a high proportion of your employees were off sick at the same time

” Now that the employer can’t claim back the cost of statutory sick pay, it’s another cost they have to swallow,” added Mike.

“Consequently, more companies may look to transfer the risk to the insurer so they have a certainty over what absence will cost them each year.

“This, in turn, could see a rise in policies such as sick pay insurance, which allows the employer to insure anything from the statutory amount to full salary. Although the employer will still foot the bill for sick pay, they are provided with certainty over what absence will cost each year.”