Because they're worth it

The rising popularity of healthcare cash plans is set to continue. Peter Lauris explains how this employee benefit is an investment in the workforce's health - which won't cost an arm and a leg.

The current economic climate means companies are feeling the pressure more than ever to re-evaluate expenditure and cut costs where they can. Whilst reducing employee benefits such as healthcare, might be seen as a quick fix, the reality is that it's a false economy long term. Employees are the lifeblood of any organisation and looking after their physical and mental health is therefore crucial to enable any organisation to thrive. This is especially important during times of uncertainty and change, and employee benefits are one way employers can show they care.

Healthcare benefits continue to be seen as an attractive and desirable benefit by employees and the demand for them is rising, particularly as basic health costs, such as dental and optical check ups, are getting more expensive. When this is combined with an increased awareness of how employee wellbeing should be addressed in relation to Corporate Social Responsibility (CSR), employees are demanding more than just a basic salary from their employer. Benefit packages which include healthcare offer added value, security and peace of mind. For an employer they offer a level of reassurance that the health of the workforce is being protected and significant amounts of money will be saved through reduced absenteeism, increased productivity and staff loyalty. Private medical insurance (PMI) is still a very popular employee benefit, however it is becoming increasingly higher priced as the market suffers the effects of the credit crunch, rising treatment costs and the pressure to include costly new drugs. Being able to tick the box marked 'affordable' when considering PMI as an employee benefit will become less likely in the future. According to market analyst Laing & Buisson the biggest challenge PMI providers will face is meeting consumer demands and expectations whilst keeping their products at affordable prices.

This is where the healthcare cash plan comes in to its own. Unlike PMI where premiums can rise depending on a company's claims experience, healthcare cash plans (HCPs) are an affordable alternative and are there to cover the costs of everyday healthcare such as visits to the dentist and optician, to stays in hospital, consultancy and health screening. Benefits that appeal to the corporate market in particular are the inclusion of occupational health and employee assistance programmes (EAPs) as they address duty of care obligations. As people are increasingly looking to non-invasive and drug free treatments to prevent health problems and treat the ones they are suffering from, HCPs have responded and have expanded their range of benefits to include complementary and alternative therapies such as sports massage, osteopathy, acupuncture and reflexology. Resurgence in this kind of approach to healthcare has resulted in the growing strength of the health and wellbeing market. HCPs have recently seen significant growth and rising popularity amongst both the corporate and consumer sector with Laing & Buisson recently reporting a significant 27% rise in employer paid healthcare cash plans in 2007.

So why is the healthcare cash plan going through this renaissance? It's simple; affordability and flexibility. HCPs are an affordable way for any size of organisation to provide comprehensive healthcare without it being prohibitively expensive. Employees can be covered from as little as a few pounds and there are different levels of cover you can opt for. Savings can also be made by securing P11D income tax relief on such health spending which is classified as duty of care. HCPs also allow organisations to budget long term as their premiums are more robust and less likely to change. This is because as HCPs have fixed benefit limits where members claim up to set amounts, the claims costs are more predictable.

In addition to the affordability appeal, other factors Laing & Buisson have identified as being responsible for the strong growth in company paid plans are the widening appeal of add-on benefits such as health screening and employee assistance programmes (EAPs), and the increased interest from intermediaries.

A corporate health screening programme is a preventative approach to maintaining the health of a workforce as it ensures that employee health is monitored regularly, and identifies any potential illnesses and causes of absence. For people who are already active and healthy, corporate health screening serves to reassure them, providing them with information about maintaining good health, fitness and wellbeing. The cost to a company when a member of staff, especially a senior member of staff, is incapacitated due to illness can be devastating. According to the Health and Safety Executive (HSE), at any time some two million British workers are suffering from ill-health that they believe is caused or worsened by their work. HSE estimates that 35 million working days are lost to ill-health each year in the UK, costing around £12 billion to industry. The 'prevention is better than cure' approach therefore makes a huge difference to an organisations bottom line.

As employers feel the impact of increased duty of care standards, employee health and wellbeing is at the forefront of HR strategies, with particular focus on dealing with workplace stress. In 2004 the Management Standards for Work Related Stress set out by HSE provided employers with guidelines to help address the mental wellbeing of their employees and their duty of care responsibilities. By offering employee assistance programmes (EAPs) which include professional stress counselling, employers can confidently meet a number of these standards. EAPs provide access to professional counsellors via a counselling helpline or face to face counselling sessions if required. Employers need to be mindful that factors outside of the work place, such as the current credit crunch, can also be a major cause of stress, and failing to help employees cope when this is the case is still a breach of employer duty of care. EAPs are an extremely valuable resource and employers need to promote all aspects of the service to gain the maximum benefit. Staff feel valued as a result of the provision and know they have a private and confidential option when they are finding it hard to cope.

HCPs are a tangible benefit giving real value for money that many employees welcome with open arms, especially when the rising cost of living is putting stress on many household finances. One rising cost that has been under the media spotlight is that of dental care. A recent survey conducted by the British Dental Health Foundation and Medicash has worryingly revealed that fear of the cost of dental treatments is one of the main reasons people stay away from the dentist with 45% of people saying that it was the bill as opposed to the drill that put them off going.

Cash plans can also run alongside PMI for those companies that still want to provide this type of employee benefit. A PMI excess can be increased which will in turn drive down the annual premium. The increased PMI excess can then be supplemented with the cash plan consultation benefit. The company benefits from the reduced annual premium whilst the employee is still able to benefit from the provision yet doesn't feel the effect of the cost cutting exercise. The money saved can then be invested back in the business or even used to fund the cash plan.

All employers need to recognise the importance of a positive approach to health and to have systems in place to aid retention, improve employee loyalty and help employees get back to work more quickly when they are unwell. A good employer should want to look after their staff, reward them, ensure they stay in good health and encourage work/life balance. In return employees feel valued by the investment made in their health and wellbeing and give their best in return. The health and future success of all organisations depends on its employees - so looking after them should be a top priority.

Peter Lauris is sales and marketing director at Medicash