Complementary to PMI, cash plans can help through hard times, Peter Lauris tell Peter Carvill.
Fresh off the Manchester train that pulled into Euston station less than an hour before, Peter Lauris, sales and marketing director at Medicash, is disputing the idea of a health care cash plan being able to act as a replacement for a private medical insurance (PMI) policy in these cash-strapped times.
“Cash plans,” he says, “are never, ever, a substitute for PMI because the two are quite different. But, at the same time, they are complementary because a PMI plan will not cover things like optical or dental treatments. Some PMI plans do, but most don’t, so the two can run in tandem.
“Employers that have PMI are finding that premiums are forever rising and this is largely linked to claims experience, so when people claim they are effectively losing their no claims discount or equivalent, and premiums continue to rise as a result. Some employers that we’re talking to are now reviewing PMI but it’s a very difficult benefit to withdraw. Once it’s there, companies like to continue with it but the people joining companies may have restricted access to the product, which can lead into potential areas of discrimination. So employers may be looking at cost savings and, rather than withdrawing the PMI completely, they may restrict and substitute it with a cash plan that for the same premium, or less, can cover far more people.”
Lauris says the current recession is starting to impact on the nation’s health with Medicash already coming face-to-face with the psychological toll these uncertain times are taking on people.
“We are already seeing the early signs of mental illness – and you can define that whichever way you want – over undue stress. A lot of it is being caused by job insecurity, domestic conflict and debt problems. What we provide is the ability to be able to access stress helplines very early on where people can talk through some of their issues and start looking for positive outcomes.
“Some of our plans, particularly around the business-to-business corporate side, can lead into face-to–face stress counselling when problems are quite severe. The counsellors we have are trained to a very high standard and, if a clinical referral results from that, then the individual is channelled that way very early on.
Survival of the healthiest
“Another issue,” he adds, “is that it’s not just the stress counselling but people are going to have to stay healthy in order to stay in work. This might seem a bit harsh but we already know about the effect that the drop in the stock market has had on pension funds, and the Government is looking at the ages of retirement because the population is living a lot longer than it did historically.
“So it looks like retirement ages are going to be nudged upwards. People are going to have to work for a much longer period before they retire. Now the NHS is very, very, good in its treatment of conditions but the issue centres around the quality of life that enables people to continue to amass income in order to make savings for their retirement.
“This can be overlaid with people thinking that they need to stay healthy in order to stay in the job because, if there is selection in the workplace, I’m sure that absence records will start playing a part in that process at some point. So by utilising a cash plan, seeing where you are with a snapshot of your general health and wellbeing, taking some very simple steps, looking at things like check-ups with the dentist and optician for general health and early signs of conditions, you’re on the road to taking personal responsibility to keeping yourself fit and able to work.
“This means that productivity levels while you’re in work should be sustainable. When you have people suffering from illness in work, not only is their productivity affected, if they have to go off to receive treatment for ailments that they have been ignoring because they have left it too long, that has an effect on colleagues who are trying to cover that person’s position. So there are plenty of unseen costs as well. To summarise, people are going to have to stay healthier to stay in work longer so that they can reach the golden retirement in the future.”
The great unknown
Ask any person on the street about a policy that pays for medical treatment, and most likely they will give you an answer along the lines of PMI, an answer that will probably contain the four letters ‘B’, ‘U’, ‘P’ and ‘A’. Yet cash plans seem to operate in a middle ground between PMI and the NHS. But hardly anybody seems to know about them. Would Lauris say that was a fair point?
“I agree and I think there is a big educational piece to be done. We’re trying to lean and stimulate debate over the activities we do in trying to educate people, both as companies and employers, and as individuals, about the fact that cash plans have a firm place within their financial planning arrangements. If I take the example of dentistry, access to NHS is becoming increasingly difficult for various reasons such as people having to travel longer or not being able to get on NHS books – and that is if indeed they can because the waiting lists are so long – so people are being put off going to dentists.
“So for anyone sitting down and looking at the cost between private care and NHS care, the difference in price between the two is not as great as people believe or think it might be. Having the opportunity to pay into a plan where you are going to be able to know with confidence that you can go and have treatment at a dentist of your choice and then being able to reclaim some or all of that money back is one typical example of how the cash plan comes into play.”
Yet he concurs that the product, while being well-received when it is in place, is still not popular: “The general public will look at a cash plan and think that it’s too good to be true because they are not familiar with it and most people think their choices boil down to either NHS or PMI. There is a void in the middle that cash plans currently fill which people are not currently educated about.”
Time to act
As is often COVER’s message, the real agents for action out there are the brokers and advisers that can direct their clients to the product. And Lauris thinks that, while cash plans are not traditionally seen as a big earner, they do have a place in the armoury of the discerning IFA.
“Brokers should be looking to add value to their existing customer relationship. One of the things about cash plans, and brokers’ perception of these policies, is that they are a low-generating commission product, and therefore the amount of work in a broker’s mind is disproportionate to the return that they are likely to get. I would counter that by saying that these policies add value to their relationship with the client at a modest cost. While it may not generate the big bucks that a PMI scheme does, it allows them to bind that customer in further with them.
“It’s about adding value to that relationship for a modest cost because the more holding a company has with a supplier – in this case the broker – the less likely they are to move away from them in the future. And, where companies are thinking about moving their PMI schemes, brokers should be talking to them about cash plan alternatives. Because if they don’t, someone
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