Health cash plans are increasingly popular as sickness and absenteeism become growing issues. Sonia Rach investigates their benefits and the return on investment for employers

health cash plan

Recent research carried out within the healthcare sector shows that sickness absence is costing UK businesses around £16bn. According to HR information specialist XpertHR, the average cost of sickness is £554 per employee, per year. These high figures have led to a growing number of organisations putting in health cash plans for their staff.

Paul Gambon, sales director at Medicash, says: “Cash plans are becoming increasingly popular with employers because they are easy to implement and provide staff with a measurable, tangible benefit that has a demonstrable impact on productivity, absenteeism and morale.”

These plans can vary from each provider but the core benefits that are generally included are dental, optical and physiotherapy. Additional services often include a virtual GP surgery, counselling services and support on personal or workplace stress.

Jennie Doyle, marketing manager at Health Shield, says: “Health cash plans are very much about improving people’s health and wellbeing through everyday health care. The types of plan have evolved over recent years to adapt to changing needs.”

But how do they work? Health plans can be offered on an employee- or employer-paid basis and work well alongside other health benefits such as private medical insurance, in support of an organisation’s overall health and wellbeing strategy.

An employee-paid health cash plan is cost neutral for employers as it is the staff member who pays for their plan, usually via payroll.

However, an employer can choose to offer a company-paid plan and these are treated as a benefit in kind by HMRC and, as such, are exempt from taxation. The premiums are also often offset by reduced costs and savings made in other healthcare expenditure, which means significant savings can be made in the longer term.

For example, an employer may already be paying for employee VDU eye tests or an employee assistance programme and find that they can now be included in the cash plan.

Savings can also be made where cash plans are used to offset the cost of a group private medical insurance plan by introducing an excess charge.

Improving wellbeing

Stress is the biggest cause of workplace absence in the UK and, according to research by the Stress Management Society, every £1 invested in to staff wellbeing equates to a return of £3 in improved efficiency and productivity.

Wellbeing in general is an issue that never goes away and health cash plans can help to address it.

Russ Piper, chief executive of Sovereign Health Care, says: “By supporting an employee’s health and their finances, employers can help reduce the pressures their staff face outside of work, help improve their mental wellbeing and, in turn, boost performance.

“The benefit of cash plans is especially pertinent when you consider the rising cost of NHS treatment. The cost of an NHS dental check-up rose from £18.90 to £19.70 in April, and will rise again to £20.60 in 2017-18.

“It is no exaggeration to say that having a cash plan can be a lifeline for some employees when it comes to affording their everyday health care – and employers should not be afraid to shout about the benefits.”

The impact of this on employees’ level of stress – and particularly their financial concerns, are also likely to be reduced.

Taking charge

Another important benefit for employers is that they are able to encourage their staff to take care of their own health.

Mark Hamson, managing director of health plans at Simplyhealth, says: “By claiming back money towards the cost of a range of everyday health care expenses, it helps to encourage employees to seek treatment quickly, preventing the problem from getting worse, and avoiding any financial worry.

“By seeking help at an early stage it not only supports employees health-wise, but can help reduce absence in the workplace, helping to create a more productive and motivated workforce.”

So what is the best way to assess the return on investment?

Besides a wide range of intangible advantages – including a better approach to tackling absenteeism and an increase in staff productivity – a physical return on investment can be demonstrated in a number of significant ways.

Medicash’s Gambon says: “We know that all employers need to see a tangible ROI, and we work with them to ensure this can be demonstrated. For instance, we encourage employers to monitor absence rates before and after implementation.

“Staff surveys are another way to gather feedback and assess whether employees are more engaged as result of a cash plan. Better-motivated staff means improved productivity and the ease of administration also reduces costs.”

Furthermore, research by Simplyhealth dating from July 2015 found that nearly two-thirds (60%) of employees regard health and wellbeing as one of the top three most appealing benefits and the most appealing optional benefit.

The impact on absence rates

Bearing this in mind, it may be useful to consider a case study from Health Shield that looked at a manufacturing company that introduced a health cash plan across its workforce.

The study found that since the plan was introduced five years ago, the company has experienced a decrease in sickness rates in its office staff from 4.5% to 0.5% and among warehouse staff a reduction from 7% to 2.3%.

The company has also made savings as a result of these reduced sick days and by having to pay for temporary agency staff. As Health Shield’s Doyle says: “A healthy workforce is a happy and a more productive workforce.

“By providing accessible healthcare benefits to employees they are less likely to take time off work for illnesses and therefore productivity can increase.”

Things to consider

  • 1) Use your communication channels to promote your health and wellbeing strategy and position your organisation in terms of marketing and PR at the same time.
  • 2) Research the market.
  • 3) Consider the impact that reduced absence could have on your business. A cash plan encourages employees to seek a faster diagnosis and treatment.
  • 4) Look at different cash plans, as many have added health services such as online GP consultations, counselling, and private prescription services that increase the value of the products.
  • 5) Look for plans with peer-to-peer support.
  • 6) Check the details. Take time to review the terms and conditions and look closely at restrictions and exclusions.
  • 7) Cash plans are available at a fraction of the cost of private medical insurance and are often community-priced, i.e., everyone pays the same regardless of age or medical history, and the premiums don’t rise if a claim is made.
  • 8) By providing financial support in terms of cashback on everyday claims such as dental treatment or eye care, a health cash plan can help prevent more serious issues.
  • 9) A cash plan can complement existing healthcare arrangements, and can help reduce costs.
  • 10) Cash plans often extend to cover partners and dependents – research this and communicate it fully to your workforce.