The cost to employers of absence is rising - and more and more workers are taking time off for stress. This means healthcare cash plans are coming into their own, writes Raman Sankaran
Often wrongly perceived as a cheaper alternative to private medical insurance, a healthcare cash plan is a stand-alone product that has evolved over recent years to meet a raft of new market demands - especially within the corporate sector.
For intermediaries with corporate clients, it may, thefore, be time to take a fresh look at healthcare cash plans and the possible benefits of introducing them.
The market has changed considerably over recent years. A changing employment and regulatory environment has forced employers to sit up and take notice of employees' health while they are at work and, as a result, many employers are looking to implement proactive health and wellbeing strategies for employees.
To meet the new demands, healthcare cash plan providers have refined and developed their offerings to focus specifically on these changing corporate requirements.
Following the changes, whereas plans were previously sold simply as an added benefit for staff, intermediaries can now provide a stronger business case for selling into companies.
Health and Safety Executive (HSE) guidelines have been an integral part of this increased demand. Guidelines say employees must not be made ill by their work and companies, whether large or small, failing to comply with regulations leave themselves open to costly litigation and fines.
These duty of care responsibilities have forced employers to look in detail at their healthcare strategies and ensure that appropriate measures are in place to look after employee wellbeing while in the workplace.
These guidelines have, alongside changing attitudes to the provision of health in the workplace, contributed to a major shift in corporate needs.
Employers are looking for health management schemes that can have a real impact on business and require products that have a focused and relevant range of benefits that meet specific business needs.
Many companies have realised the adverse effects of health and stress-related absenteeism and are measuring their impact on their bottom line. Firms have seen pounds wiped off their profit margins in decreased productivity, cost of sickness cover, rehabilitation, employee litigation and lower morale.
The figures speak for themselves. Health-related sickness absence is one of the biggest concerns for British business today. Costing over £12.2bn in 2004, it is responsible for more than 168 million working days lost, an average cost of £601 per employee a year, according to the Chartered Institute of Personnel and Development employee absence survey 2004.
Work-related stress in particular is a major concern. It is estimated that stress-related sickness absence alone costs British industry more than £3.7bn a year through absence, high staff turnover, lost productivity, poor timekeeping and the adverse impact on other employees.
As a result, companies are looking into the various health management options available to them to keep the workforce healthy and productivity heading in the right direction.
In response to increased demand from companies, providers are working to ensure their cash plan policies are as targeted and cost effective as possible.
New benefits such as health screening cover and face-to-face counselling have made policies more attractive to employers and opened up significant business potential through company funded schemes for intermediaries.
Advisers still face barriers in this field, which they must overcome if they wish to sell healthcare cash plans. Often these are connected with a perception of what a healthcare cash plan is. The name often links to the generic cash plans of the past that were introduced as a voluntary staff benefit. In reality, providers have reacted rigorously to the major shift in corporate needs to focus their products directly on these needs and it is now time for intermediaries to work with providers to communicate this and change perceptions.
As these products have become more focused, premiums have fallen to provide more value from as little as £1 per employee per week, opening up the potential for far more business in company funded schemes.
Many plans incorporate employee assistance programmes (EAPs). Highly sought after by employers, EAPs ensure employees' emotional needs are provided for at work with the provision of 24-hour confidential phonelines and face-to-face counselling sessions.
Other areas of direct relevance to business include health screening, stress-busting complementary therapies and physiotherapy. Dental and optical cover remain of paramount importance to employers and this is reflected in their position within many policies.
Employees who use a VDU or computer every day have long been entitled to eye tests paid for by their employer. Costs of eye tests and any resulting treatment or glasses are covered by a healthcare cash plan - taking the responsibility of reimbursing the cost away from the employer.
In light of this year's dental reforms dental cover has become a strong selling point for healthcare cash plans.
For intermediaries and employers who have shied away from healthcare cash plans, it may be time to look again at the benefits they offer.
Advisers seem to have realised the importance of healthcare cash plans and more have turned to this market - HealthSure alone experienced a 116% increase in new business through brokers in 2005.
Through close support with the provider, intermediaries can ensure they are fully equipped to answer questions from employers and provide relevant and affordable healthcare solutions. Healthcare cash plans should be part of this package.
Raman Sankaran is director of strategic development at HealthSure.
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