With medical inflation continuing to rise apace, Owain Thomas finds a viable and increasingly popular alternative that fits tighter purse strings
A brilliant strategy
One minor downside to the market is the increase of Insurance Premium Tax – something many would not be surprised to see lifted further in the next Budget. However, most providers have felt it best to insulate customers, not least because the costs of administering such a move would likely cost more than the savings.
Should the nightmare scenario happen and it reach parity with VAT at 20%, it is likely that those letters to customers would be written. But for intermediaries, it appears a happy hunting ground, and Mike Izzard, chief executive at Premier Choice Healthcare, revealed a major reason for the increasing popularity of cash plans.
He explained: “We use them mainly to pre-fund an excess on the PMI scheme. With some medical insurers, you get a good discount by having a £300 excess, so by having a cash plan for less than the price of the excess, you have two schemes for the price of one, including optical and dental thrown in. It’s a brilliant strategy, really.”
This strategy is enhanced by some cash plan providers offering to pay PMI insurers excess costs directly, removing another hoop for employers and their staff to jump through. Izzard added that he expected this growth trend to continue for some time.
“The market is quite buoyant,” he said. “I think it’s mainly from employers who are growing into the market rather than disenfranchised or disappointed employers migrating down from the PMI side. It’s also a good stepping stone to full PMI and if the employer can’t afford a PMI scheme. It covers all their obligations to employees and they can look at using it to pre-fund full PMI in a couple of years.”
One of the complaints previously levelled at cash plans pointed at them being a poor version of PMI. But this negative perception appears to have been fully eradicated – something Yvette Butterworth of ADVO Group confirmed.
“It’s lost its stigma and gone from ‘Oh, you’ve only got a cash plan’ to people now saying ‘You’ve got a cash plan. What’s on it? What can you use?’ Instead of seeing them as a lower level of cover, they can be a good level of cover for outpatient care and if used in the right way, can help sustain a lower PMI cost and also help take the pressure off it.
“The whole industry has changed so much and seen an opportunity, which cash plan providers are playing along with,” she added.
This appears to be not just a change in view due to market conditions and tightening economy, but as Butterworth explained, the treatment options it provides are genuinely attractive alternatives.
“With PMI you generally have to go to the GP first – if you can get an appointment with one. With a cash plan, you can go direct. So if you wake up in the morning with a stiff back and want to go to the physiotherapist, you can do so straight away.
“It can be as valuable as the full PMI insurance and if you have the two side by side, it’s a great incentive for staff to stay with that employer,” she concluded
