Happy and healthy

During the last General Election, political parties banged the Europe drum, yet a national survey revealed that health and education came far higher on the public agenda.

The National Health Service continues to be at the centre of debate. A survey of 2,000 people by the British Medical Association (BMA) revealed that 23% thought National Lottery money was the best way to improve health services.

However, treasurer for the BMA, Dr James Appleyard, stressed that health could not rely on the lottery's popularity.

Nearly one-third of the 2,000 people questioned were in favour of voluntary taxation, through lottery sales, for the benefit of the NHS. An even stronger commitment was shown by a further 20%, who favoured an increase in taxes to give healthcare a new lease of life. The results of the survey only serve to underline the public perception that healthcare is under funded and in crisis.

In their manifestoes, both Labour and the Conservatives acknowledged the need for 'radical reform', but also promised not to increase the basic and top rates of income tax and not to extend VAT. So, where do we stand now that we have a Government that says it is committed to improving healthcare, but seems to have no extra funds to do so?

Looking after yourself

The time has come for individuals to start making provisions for their own healthcare, in the same way that many people take responsibility for their own retirement income.

There is an ageing population which has already started to put a financial burden on the NHS. Treatments which are currently available free, such as dental surgery and physiotherapy, may have to be paid for by individuals as the State looks for ways to reduce its own financial input into the service.

Stakeholder healthcare to pay for day-to-day treatments is already becoming the next fashionable employee benefit. Many companies already offer private medical insurance (PMI), but it is relatively expensive and does not cover the everyday yet essential healthcare treatments such as a filling at the dentist, or a new pair of glasses. The cost of these treatments to the public has been rising steadily over the last 20 years and will continue to do so.

Healthcare cash plans can help fund costly treatments and also provide additional benefits to the employer. A survey published by the Confederation of British Industry (CBI), which tackled absence and labour turnover, showed absence costs British industry over £10bn a year.

It also showed that businesses were bearing the brunt of a 17.9% increase in labour turnover as costs are incurred when employees move on to another job. Advertising vacant positions or employing recruiters to help fill positions can prove costly and, once positions are filled, there are further costs such as training.

So, as an employee benefit, healthcare cash plans are attractive. They not only help with the recruitment of staff, but help to improve the retention of employees.

The benefits of employers offering this kind of stakeholder health scheme are obvious.

Potential employees normally look at salary, bonus, company car, life insurance and pension benefits before deciding to accept a job. Many of these benefits can be expensive and exclude large numbers of the workforce.

However, because healthcare cash plans can be provided inexpensively, they can be offered to all employees. With a wide choice of price points, healthcare cash plans are a genuine flexible benefit that can cater for the needs of both senior and junior staff.

They can also help staff get back to work more quickly and even reduce absenteeism. Because they can claim back the cost of treatment, staff become more willing to investigate health problems earlier instead of waiting until problems become more acute. And if they are treated immediately, there is more chance that employees will not have to take time off work or at least return sooner.

Regular check-ups

Regular dental and optical check-ups and the benefits from immediate treatment, such as physiotherapy and osteopathy, will, in many circumstances, mean a healthier employee who takes less time off work. Healthcare cash plans are increasingly seen as essential to any corporate health screening initiatives and are often a key component in staff protection benefits. To the employee, they are attractive because they have a perceived high value, but cost relatively little.

For modern human resources professionals, looking to become an employer of choice, healthcare cash plans are proving a golden opportunity.

This is because PMI, apart from being expensive, is also often limited to senior management. Faced with high tax on an employee benefit that is frequently not used, employees are now asking for health cover that is affordable and can be used even if they are not ill.

The proof that cash plans are gaining popularity among employers is that many of the country's largest and most forward-thinking companies are now taking stakeholder healthcare into consideration and providing healthcare cash plans for their staff.

The healthcare cash plan sits comfortably with IFAs selling stakeholder pensions as they are a complementary type of long-term protection for the individual, and it is the long-term protection concept that IFAs are able to sell.

IFAs are already seeing the opportunities for healthcare cash plans. Progressive advisers have been searching for new forms of income and cash plans can supple- ment their bread-and-butter business.

They provide good opportunities to cross-sell extra protection products together with pensions, critical illness and so on, but with minimal investment in time and effort. They can also be sold alongside PMI as a way of reducing or covering the excess on standard policies.

With the UK market for healthcare cash plans likely to expand over the next few years, alert intermediaries realise they can tap into a steady commission stream from a flexible benefit.