CASH plans, which started life as penny-a-week schemes more than 100 years ago, are making a signifi...
CASH plans, which started life as penny-a-week schemes more than 100 years ago, are making a significant comeback and, unlike private medical insurance, are not seen by the Government as an affront to Labour Party dogma.
We are currently seeing a positive corporate market and selling an increasing number of cash plans which are becoming more popular than ever.
Cash plans are not a political issue - although they can be a bolt-on product to PMI, they stand on their own as a product that supports the NHS. If an individual is hospitalised there is a cash grant per day. Therefore, it is decidedly not a private medical insurance product but is simply designed to give patients some cash when they undergo medical treatment.
Plans such as BCWA's Hospital Cash Plus are, in effect, supporting the NHS and sit alongside it. People claiming their Hospital Cash Plus grants are receiving a cash payment to help them and their families during a period of hospitalisation. We are seeing more and more small to medium-sized companies looking for some form of cost-effective health cover for employees that is not full-blown PMI, and cash plans offer that important alternative. There are, however, those companies that choose to add on cash plans to existing PMI cover due to the range of low-cost benefits offered to employees, such as dental check-ups every six months, whether treatment is required or not, together with optical benefits.
Group membership rates to Hospital Cash Plus, which offers seven benefits, start at £37.05 a year for a single person and £74.10 for a married couple, and it is worth emphasising that you do not have to be in hospital to claim benefits. Membership can provide up to £5,200 a year when in hospital and up to £200 extra to help recuperate, a maximum of £160 towards dental fees and up to £140 a year for optical care and provision of spectacles. Sight tests are a pre-requisite for all staff operating in front of computer screens and Cash Plus also offers cash grants towards the cost of glasses, bifocals or contact lenses, as well as sight tests.
Benefits for outpatient treatment are also available up to £360 a year. The maternity cash benefit of up to £200 a year is even doubled for twins.
For individuals, contribution rates start at £39 a year for a single person and £78 for a married couple. In both group and individual membership, there is always the option of being able to transfer to a higher plan. Anyone under the age of 65 can apply for membership.
Cash pluses
In essence, cash plans are about offering a wide range of cash 'pluses' to relieve financial pressure at particularly crucial and worrying times. There is help towards the cost of NHS and private treatment at times when extra cash is just what the doctor ordered.
When first introduced in the 1890s, these schemes were set up to keep open the doors of the ailing voluntary hospitals to guarantee the means of admission to those hospitals by contributors and their families and later to provide an income for workers if they were hospitalised. In those days premiums began at a penny a week. Now this simple form of health insurance is being offered to white collar employees in hi-tech companies. It is being bought by a young market where it fits budgets, and buyers can clearly see the benefits.
Statistics show that just under half of claims paid are for the hospital cash benefit. The next most popular benefit is optical, followed by benefits for dental treatment. What is also important is that children under 16 are covered for hospital cash benefit, and the fact that someone might be covered by some other insurance package is irrelevant, as Hospital Cash Plus benefits are not affected.
This upsurge in cash plans has come in the wake of charges for areas of healthcare such as eye tests that were originally free at source.
Manna from heaven
The growing popularity of cash plans should be seen by independent financial advisers as manna from heaven due to the opportunity they offer to advise companies and consumers alike on healthcare and PMI in general. It is, however, of prime importance that cash plans are seen as a value for money, no frills package. Consumers want easy to understand packages, available at a reasonable price.
Growth is also coming from existing clients wanting to provide their employees with a cost-effective benefits package, and for the intermediary it is a way in which to cross-sell and provide clients with a wider package of benefits. All this healthcare activity is set against the backdrop of a Government philosophy that expects people to take greater personal responsibility for their lives, leading to a realisation that the State cannot be relied upon to satisfy every healthcare need.
Some 4.5 million people are currently in private medical insurance schemes and that figure will almost certainly grow over the next decade. Growth will come from the corporate market with little, if any, contribution coming from the currently static individual market. As people live longer, so they need more care with ever-spiralling costs being incurred. It is in this area that cash plans can play a meaningful role. It is against this backdrop that product innovation will become evermore challenging and important, with insurers striving to devise ways of providing protection against rising healthcare costs at the lowest premium possible. One area destined for growth is most definitely the small company sector, with an increasing number of companies beginning to look at enhancing their staff benefit packages.
BCWA, which this year celebrates its 65th anniversary, was founded as, and still remains, a non-profit making association to provide benefits for its members in times of ill health. Since 1935, it has grown enormously to become a major health insurer in the UK, but without losing sight of its philanthropic origins.
While cash plans are growing - and growing dramatically - our principal business is still PMI. People coming into the healthcare market for the first time are taking out standalone cash plans as a first step to PMI cover. The overriding factor is that they get some money irrespective of whether they use NHS or private facilities.
Philip Fowles is sales and marketing director at BCWA Healthcare
