When Aviva, the world's fifth-largest insurance company, decided to re-enter the health cash plans market last November (it offers 100% reimbursement for the two most popular claims - dental and optical cover - up to the value of £250), it was yet more evidence that the 100-year-old health cash plan concept is enjoying something of a revival. Against expensive private medical insurance, inflation-proof cash plans are proving popular, with providers such as Medicash reporting direct business up 67% in the first half of 2009, while corporate-only provider Health Shield saw an 82% increase during the same period.
Currently, company-paid contributions comprise just 13% of the total cash plans market, but Laing and Buisson's 2009 UK Market Report found the number of company-paid contributors increased by 29% during 2008, showing massive growth potential, with huge elasticity for more. In fact Health Shield projects it can boost its premiums income from £22 million now to £40 million by as early as 2013. About 4.75 million employees (7.7% of the population) are covered by a health cash plan, but providers are eyeing up the possibility of more.
But while new entrants ensure healthy competition is maintained, to some the sheer quantity of providers and complexity of packages on offer is beginning to reach a tipping point, causing confusion rather than clarity. Try to compare just two providers: Medicash and HSF. Medicash's basic scheme costs £9.75 a month for £80-worth of cover for optical and dental, with 100% of bills paid up to that amount. HSF's next-level scheme is only a few pounds more, but offers £100 optical and dental cover, and extends this to partners and children who live at home. Yet this only pays 50% of bills, which means staff have to spend more money themselves to reach the higher benefit limit.
Issues like these are compounded by the fact that as HRDs have more choice, more services are also being added to cash plans for them to get their heads around. Yet, as our HR/Simplyhealth survey of senior HRDs found, 40% hadn't even heard of health cash plans, while 47% admitted they were not aware of exactly what types of healthcare benefits are even covered.
"It's difficult, even for people in the industry, to fully understand the market," says Stephen Duff, director, HSF. "It's very difficult to compare like-for-like." This is why HR magazine has helped create the first independently audited assessment of first-tier level schemes provided by some of the main cash plan providers. For the first time HRDs can, in one place, judge for themselves exactly what is on offer. The results (above and next page) throw up interesting variations.
One of the top-performers is HSF, for providing the most generous funds (although not percentage payouts) for dental and optical costs, as well as the most generous grants for births, adoptions and disability costs. It also covers partners and children in every plan. While most plans cover children, no others cover partners without an extra fee.
Duff defends having lower percentage payouts in terms of offering simplicity: "We have a simple viewpoint - employees either get 50% or 100% payouts (the latter is on its higher monthly premium service) on everything, rather than differing percentages on just certain things," he says. In fact, he believes suppliers have not only been caught up in 'keeping up with the Joneses', adding a spiralling number of services, but they are now starting to get to the point of adding extra products more for show than because it's what buyers want, or will consume: "We're starting to see products being added without real use," he says.
Tied into this, though, is something he thinks is even more serious. Duff believes this pressure to add yet more products is already causing some providers to offer more than they can afford to pay out. "We operate at a level of 81%-82% of our income being paid out each year," he says. "It's a figure we're comfortable with, but I know of at least one provider who paid out 103% of its income. "
Insurers, like the banks, are regulated by the Financial Services Authority because, overall, claims growth has been rising faster than contribution growth. This is substantiated by Laing and Buisson, which also found benefits were growing ahead of contribution income. Gross margins of providers - which peaked at 30.5% of contribution income in 2005 - decreased by a further 0.5% in 2008 to reach 28%.
In HSF's case, contributions growth has been 57% from 2004 to 2009 but claims growth was 64% in the same period. The provider is still in the black, though - it earned £27.2 million in contributions last year and paid out £20.7 million. But Duff says some suppliers are cutting too close to the bone, should claims for their additional services actually be made. In fact, he believes some (he does not want to name them) suppliers are deliberately not communicating what has always been the ethos of cash plans - which is that staff should be encouraged to claim as much as they can: "There are schemes that rely on non-promotion," he says, "because they would just not be sustainable if they were (promoted)." Conventional wisdom suggests that if a plan provides only a 50% or 75% reimbursement, it might encourage fewer claims but if it provides 100% reimbursement there is no disincentive to claim.
Elliot Wallace, head of product development, Simplyhealth, believes providers could make their offerings more simple to understand: "Most HRDs don't say: 'I know what I want, but am confused by the options', they just don't know what they want. We've gone for a modular approach for this reason," he says. "The core stuff (optical, dental, consultancy) will be the minimum, and then if clients want to add the more fringe benefits, they can if they like."
All providers now offer consultancy first, to discuss clients' needs, but suppliers like Bupa are adamant they are reacting to client (employees') needs, and not just chasing each other's tails for oneupmanship. Because the scope of cash plans has widened, Bupa is pushing its Additional Health product, launched to complement private medical plans, but without the crossover. Also with this is its Patient Cash product, which allows people to claim cash for things normally covered in a PMI product. "Both were specifically created based on feedback," says Emma Exelby, sales manager, Bupa Cash Plans.
At least one provider thinks this is a deviation too far. "Cash plans that start going down the PMI route are no longer cash plans as we know them," says Lara Rendell, marketing manager, Health Shield. "You can still stand out - particularly in the health and wellbeing space. We won't follow other people, but prefer to provide a steady service."
The desire to stand out, it seems, will continue. Product tweaks, though, will make it more important for HR professionals to make sure they get the best cover, with the needs of employees top of mind.
COMPARISON OF HEALTH CASH PLANS IN THE UK - PART 1
All figures are correct as 1 June 2010
HSF
Type of scheme S300 (company scheme)
Cost per month £13.00
(x%) is the amount of each
invoice that Includes partner and children
can be claimed
Monthly benefits
Dental trauma N/A
Dental £200 (50% of each invoice paid)
Optical Included in above
Total dental and optical £200
Therapy treatments £300 (50% of each invoice paid)
Physiotherapy Inc above
Osteopathy Inc above
Chiropractic Inc above
Acupuncture Inc above
Homeopathy Inc above
Reflexology N/A
Chiropody/podiatry Inc above
Total therapies £300
Specialist and investigations £600 (50% of each invoice paid)
inc health screening
Birth grant £300
Adoption grant Up to the age 10 - £300
Hospital contributor £50 a night (max 40 nights)
partner/child £25 a night (max 40 nights)
parental stay 0
General and Hospice Inc above
Accident Inc above
Elderly and mental illness Inc above
Recuperation after 7
nights - contributor £100
after 7 nights - partner/child £50
after 15 nights - contributor £150
after 15 nights - partner/child £75
Health and wellbeing N/A
Hearing aid N/A
Prescriptions N/A
Day case surgery (up to 8 occasions in 1 year)
contributor £50 per day
partner/child £25 per day
Home care assistants and
home help Up to £375 (50% of each invoice
paid)
Surgical appliances N/A
Personal injury N/A
Permanent disability Up to £10,000
Accidental death £5,000
Temporary disability £24 per week (not applicable to
children under 16)
Broken bones Up to £375 for multiple
fractures
Helplines Medical, stress, legal, GP
Simplyhealth
Type of scheme Level 2
Cost per month £13.65
(x%) is the amount of
each invoice that Covers policy holder and children.
can be claimed Resident
children (max of 4) are covered free
and are entitled
to the same payback amount as their
parent
Monthly benefits unless otherwise stated
Dental trauma N/A
Dental £90 (100%)
Optical £90 (100%)
Total dental and optical £180
Therapy treatments £250 (75%)
Physiotherapy Inc above
Osteopathy Inc above
Chiropractic Inc above
Acupuncture Inc above
Homeopathy Inc above
Reflexology N/A
Chiropody/podiatry £100 (75%)
Total therapies £350
Specialist and investigations £200 (75%)
inc health screening £75 screening
Birth grant £200
Adoption grant £200
Hospital contributor £27 per night (max 20 nights)
partner/child £9 - child only (max 20 nights)
parental stay £27 per night (max 20 nights)
General and Hospice N/A
Accident N/A
Elderly and mental illness N/A
Recuperation after
7 nights - contributor N/A
after 7 nights - partner/child N/A
after 15 nights - contributor N/A
after 15 nights - partner/child N/A
Health and wellbeing N/A
Hearing aid N/A
Prescriptions N/A
Day case surgery
contributor £27 per day
partner/child £9 - child only
Home care assistants
and home help N/A
Surgical appliances N/A
Personal injury N/A
Permanent disability N/A
Accidental death N/A
Temporary disability N/A
Broken bones N/A
Helplines Counselling, health, wellbeing advice
Medicash Corporate Active
Type of scheme Silver (Solo)*
Cost per month £13.00 **
(x%) is the amount of
each invoice that *100% of receipts paid up to annual
can be claimed maximum** Children up to 19 can be
added to health plan free of charge.
Health cover benefits are paid at
half
Monthly benefits adult rate, with the exception of
chiropody, parental stay and personal
accident cover
Dental trauma Included in below
Dental 100 (100%)
Optical 100 (100%)
Total dental and optical £200
Therapy treatments £225
Physiotherapy Inc above
Osteopathy Inc above
Chiropractic Inc above
Acupuncture £50 (alternative
therapies allowance)
Homeopathy Inc above
Reflexology Inc above
Chiropody/podiatry £25 - adult only
Total therapies £300
Specialist and investigations £175 + £50 tests
inc health screening No health screening
Birth grant £250
Adoption grant Inc above under the age of 1
Hospital contributor £35 per night excluding the
first
partner/child £17.50 - child only
parental stay £17.50 (for child under age of
12)
General and Hospice Inc above
Accident Inc above
Elderly and mental illness Inc above
Recuperation after
7 nights - contributor 50% of £35 for between 5
and 9 nights
after 7 nights - partner/child half adult rate (child only)
after 15 nights - contributor 100% of £35 for 10 consecutive
nights or
after 15 nights - partner/child more half adult rate (child only)
Health and wellbeing See above
Hearing aid £50
Prescriptions individually tailored benefit
Day case surgery
contributor £30
partner/child £15 child only
Home care assistants
and home help N/A
Surgical appliances N/A
Personal injury individually tailored benefit
Permanent disability individually tailored benefit
Accidental death individually tailored benefit
Temporary disability individually tailored benefit
Broken bones individually tailored benefit
Helplines Legal, medical information,
stress, Homecall, GP
Health Shield
Type of scheme Level 2
Cost per month £16.25
(x%) is the amount of
each invoice that
can be claimed
Monthly benefits
Dental trauma £400 (100%)
Dental £120 (100%)
Optical £120 (100%)
Total dental and optical £640
Therapy treatments £280 (100%)
Physiotherapy Inc above
Osteopathy Inc above
Chiropractic Inc above
Acupuncture Inc above
Homeopathy Inc above
Reflexology N/A
Chiropody/podiatry £120 (100%)
Total therapies £400
Specialist and investigations £210 - adult only (100%)
inc health screening £120 health screening
Birth grant £300 single sum payment -
antenatal appointment
Adoption grant N/A
Hospital contributor £45 per night
(max 25 nights per year)
partner/child £45 per night
(max 25 nights per year)
parental stay £45 per night
(max 25 nights per year)
General and Hospice Inc above
Accident N/A
Elderly and mental illness N/A
Recuperation after
7 nights - contributor N/A
after 7 nights - partner/child N/A
after 15 nights - contributor N/A
after 15 nights - partner/child N/A
Health and wellbeing £120
Hearing aid N/A
Prescriptions 2 (max for each adult)
Day case surgery
contributor Day case included in hospital
partner/child Day case included in hospital
Home care assistants
and home help Not covered
Surgical appliances Not covered
Personal injury
Permanent disability Up to £10,000
Accidental death N/A
Temporary disability N/A
Broken bones N/A
Helplines Counselling, lifestyle, health and
medical, legal, health and wellbeing,
worldwide cover
COMPARISON OF HEALTH CASH PLANS IN THE UK - PART 2
All figures are correct as 1 June 2010
Bupa
Type of scheme Level 2 Additional Health individual
Cost per month £15.17 direct not corporate
(x%) is the amount of each
invoice that Individual plan as Corporate plans
can be claimed are tailored.
Dependent children are covered at no
extra cost up to age 21 or 24 if in
full-time education, and unmarried.
Normally corporate plans are
discounted between
Monthly benefits by a third and half as compared to
direct plans
Dental trauma N/A
Dental £125 (100%)
Optical £125 (100%)
Total dental and optical £300
Therapy treatments £75 (100%)
Physiotherapy N/A
Osteopathy N/A
Chiropractic N/A
Acupuncture Inc above
Homeopathy N/A
Reflexology Inc above
Chiropody/podiatry £75
Total therapies £150
Specialist and investigations N/A
inc health screening
Birth grant N/A
Adoption grant N/A
Hospital contributor
partner/child N/A
parental stay
General and hospice N/A
Accident N/A
Elderly and mental illness N/A
Recuperation after 7
nights - contributor N/A
after 7 nights - partner/child
after 15 nights - contributor N/A
after 15 nights -partner/child
Health and wellbeing N/A
Hearing aid N/A
Prescriptions £21
Day case surgery
contributor N/A
partner/child
Home care assistants
and home help N/A
Surgical appliances N/A
Personal injury N/A
Permanent disability N/A
Accidental death N/A
Temporary disability N/A
Broken bones N/A
Helplines 24 hr inc at no extra cost
Aviva
Type of scheme Core Health Adult
Cost per month £17.99
(x%) is the amount of each Only offer individual cash
invoice that can be claimed plans. 100%
reimbursement of all core health
benefits.
Normally corporate plans are
discounted between by a third and
half as compared to direct plans
Monthly benefits
Dental trauma N/A
Dental £250 (100%)
These two have a combined cap of
£250
Optical £250 (100%)
Total dental and optical £250
Therapy treatments £150 (80%)
Physiotherapy Inc above
Osteopathy Inc above
Chiropractic Inc above
Acupuncture Inc above
Homeopathy Inc above
Reflexology N/A
Chiropody/podiatry N/A
Total therapies £150
Specialist and investigations N/A
inc health screening
Birth grant £200
Adoption grant Included above, up to age 16
Hospital contributor N/A
partner/child
parental stay
General and hospice N/A
Accident
Elderly and mental illness N/A
Recuperation after 7
nights - contributor N/A
after 7 nights - partner/child
after 15 nights - contributor
after 15 nights -partner/child
Health and wellbeing N/A
Hearing aid N/A
Prescriptions £50 (80%)
Day case surgery
contributor N/A
partner/child
Home care assistants
and home help N/A
Surgical appliances N/A
Personal injury
Permanent disability
Accidental death N/A
Temporary disability N/A
Broken bones N/A
Helplines GP and stress counselling
- unlimited calls
AXA PPP
Type of scheme Cashback 50 Level 2/Cashback 100
Level 2
Cost per month £11.95
(x%) is the amount of each
invoice that Prices based on figures for
can be claimed individual plans as
corporate figures vary. Cashback 50
offers 50% reimbursement and Cashback
100 offers 100%
Monthly benefits
Dental trauma £10,000 (100% - up to pounds
2,500 per incident up
to 4 incidents per year)
Dental £90 (50%)
Optical £70 (50%)
Total dental and optical £10,160
Therapy treatments £260 (50%)/(£260 (100%)
Physiotherapy Inc above/Inc above
Osteopathy Inc above/Inc above
Chiropractic Inc above/Inc above
Acupuncture Inc above/Inc above
Homeopathy Inc above/Inc above
Reflexology N/A
Chiropody/podiatry £80 (50%)/ £80 (100%)
Total therapies £340
Specialist and investigations £150 (50%) includes diagnostic
tests
inc health screening £70 (50%) specialist allergy
testing
Birth grant £220 (per child)
Adoption grant N/A
Hospital contributor £154 per week or £22 per
night
partner/child
parental stay £154 (one parent per week) or
£22(one parent per night)
£308 (per week intensive care)
£44 per night
General and hospice N/A
Accident N/A
Elderly and mental illness £154 per week or £22 per
night
Recuperation after 7 nights
- contributor N/A
after 7 nights - partner/child
after 15 nights - contributor
after 15 nights -partner/child
Health and wellbeing £150
Hearing aid £70 (50%/100%)
Prescriptions N/A
Day case surgery
contributor £200 or £20 per admission
(50%/100%)
partner/child
Home care assistants and
home help N/A
Surgical appliances N/A
Personal injury N/A
Permanent disability N/A
Accidental death £5,000
Temporary disability £2,000 (hearing) £2000
(sight)
Broken bones N/A
Helplines 24hr health at hand, 24hr stress
counselling
BHSF
Type of scheme Level 3+/-
Cost per month £13.50
(x%) is the amount of each
invoice that Covers policy holder only. Options
can be claimed for separate
family policies. New levels have been
introduced and existing levels have
had price reductions
Monthly benefits
Dental trauma £600 (100%)
Dental £150 (100%)
Optical £150 (100%)
Total dental and optical £900
Therapy treatments £500 (75%)
Physiotherapy Inc above
Osteopathy Inc above
Chiropractic Inc above
Acupuncture Inc above
Homeopathy £125 (75%)
(combined maximum benefit with
chiropody)
Reflexology N/A
Chiropody/podiatry £125 (75%)
(combined maximum benefit with
homeopathy)
Total therapies £625
Specialist and investigations £250 (75%)
inc health screening £125 health screening
Birth grant £150
Adoption grant Included in above up to age one
Hospital contributor £700 (£20 per night - max
of 35 nights)
partner/child N/A
parental stay
N/A
General and hospice Inc above
Accident N/A
Elderly and mental illness N/A
Recuperation after 7 nights
- contributor £150 after 10 consecutive
nights
after 7 nights - partner/child
after 15 nights - contributor
after 15 nights -partner/child
Health and wellbeing N/A
Hearing aid £300 (75%)
Prescriptions N/A
Day case surgery (up to 10 occasions)
contributor £200 (20 per event)
partner/child
Home care assistants and
home help N/A
Surgical appliances N/A
Personal injury N/A
Permanent disability Up to £100,000 - adults only
Accidental death £10,000
Temporary disability N/A
Broken bones Up to £2,000
Helplines Counselling, medical, legal
Figures independently audited for HR magazine
