As recession forces employers to make cost savings where possible, Peter Lauris advises how intermediaries can ensure healthcare benefits survive.
A recession is synonymous with cost cutting and radical operational changes and any organisation wanting to survive will need to look closely at expenditure. The battle for most suppliers is to keep the customers they have, increase their spend where possible and to generate new clients. During economic downturn, it is crucial for advisers to prove to organisations that they cannot afford not to have what you sell.
Employers will face tough decisions but, while reducing or removing employee benefits such as healthcare may seem like a quick fix, the reality is it is just a false economy. Intermediaries should warn potential and existing clients about the negative impact making cutbacks on healthcare benefits can have; and educate them about the importance of maintaining a healthy, cared for workforce. Therefore having in-depth, up-to-date industry and product knowledge and offering a range of affordable healthcare solutions is vital.
One healthcare product continuing to see significant growth and rising popularity is the healthcare cash plan (HCP). Appealing to both the corporate and consumer sector, Laing & Buisson last year reported a considerable 27% rise in employer paid HCPs in 2007. Cash plans are considered to be a cost effective way for employers to show they care about their employees by investing in their health and wellbeing and they may help reduce absenteeism due to ill health.
Controlling these levels is particularly crucial during the financial crisis as individuals worry about job security and money. A recent survey by the research organisation Work Life Balance and Coventry University has found absenteeism nearly doubled during the onset of the recession. Employers should therefore be looking at products that help maintain employee health to ensure this problem does not escalate.
Cash plans cover the cost of everyday healthcare such as visits to the dentist and optician, to stays in hospital, consultancy, health screening and stress counselling. HCPs can be excellent value for money with every pound spent on the plan equating to £17.50 worth of potential benefits for employees to claim. Employers may make further savings by securing P11D income tax relief on health spending where it is classified as duty of care. HCPs also allow organisations to budget long term as their premiums are robust and less likely to change because of their more predictable claims models.
HCPs can also provide a healthy result for intermediaries. The plans provide a lucrative income stream because the attraction of low monthly premiums and their inclusivity allows them to be implemented across an entire workforce. And when they are underwritten, they are based on a community pricing strategy which means if a client has high claims one year, it should not mean increased premiums in the next. Once an organisation has a HCP they often become loyal customers as they see the benefits first hand, resulting in regular renewal and commission for intermediaries.
Intermediaries can improve the relationship with their client by adding value to the service they provide and discussing the merits of HCPs is an ideal way to do this. The inclusivity, affordability and flexibility of a these plans means that intermediaries can offer their client a healthcare product that may provide them with a wider range of benefits for a greater number of employees and at a lower cost than PMI. Also, it is not just the employee who can gain from the greater number of benefits but their family too; employees are able to extend their cover to include partners at discounted rates and children at no extra cost.
Regular communication with a client will also serve to strengthen a relationship and intermediaries can obtain regular claims history reports from the HCP provider which may identify possible risk factors. Such as if a report identified above average claims for chiropractic treatment, the client may need to retrain staff on lifting and manual handling; information that may prove invaluable.
When advising a client, intermediaries need to find the best solution to fit an organisation’s needs, yet have the knowledge to find another option if their circumstances change. For example, a client who has always opted for private medical insurance (PMI) may find the rising annual premiums too costly to maintain but fear removing it from the benefits package could affect employee morale and absenteeism levels. An effective solution would be to introduce or increase a voluntary excess on the PMI policy and the amount saved on the premium could then cover, or significantly reduce, the cost of implementing a cash plan. Any future PMI excess claims for the initial specialist consultation can then be paid by the individual using their HCP. The two products work well together, offering an increased number of benefits to the employee and at little or no extra cost.
Implementing new employee benefits can be perceived as an administrative burden but HCPs are one of the most simple and cost effective options available to employers. All that is required are basic employee details, and the provider will deal with all the welcome packs and product information liaising directly with the employee. No medicals are required for employees to be covered, saving time and resources.
It is also important that intermediaries take their treating customers fairly (TCF) obligations seriously, as failure to offer a full range of solutions to a client may result in the relationship being damaged if the client later discovers more options which they were not initially made aware of.
Many decision makers access supplementary advice themselves so it is critical that intermediaries are fully up to date with a comprehensive product knowledge. Advisers also need to ensure that they are aware of the unique selling points (USPs) specific to different providers which are not necessarily limited to the obvious optical and dental cover. For example, Medicash provides access to expert medical opinions through their association with Best Doctors.
The recession has given organisations the opportunity to re-evaluate their expenditure and how they look after their staff.
Employers need to realise that employees are the key to an organisation’s success and it is essential that their health and wellbeing remains a top priority during the economic downturn. Discussing healthcare cash plans and demonstrating their value for money and flexibility should be top of the agenda for any intermediary wanting to survive the recession; and doing so will result in a healthy outcome for all.
Peter Lauris is sales and marketing director at Medicash
