With private medical insurance a stretch for many firms, Lee Andre makes the case for introducing cash plans into the workplace.
Private medical insurance (PMI) has been a prominent benefit for many years.
The majority of course would, if they could, opt into the reassurance of knowing that, if necessary, medical treatment would be available instantly and easily.
But it is undeniable that for the majority PMI is out of reach financially and companies that once provided it for their top management are now looking to other benefits.
The Health Cover UK Market Report 2011, from healthcare analyst Laing and Buisson, showed that the health cover market has continued to be scarred by economic depression in 2010, as the number of private medical cover policies in the UK (insured and self-insured) fell significantly by 3.8% to reach 3.96 million at the start of 2011.
According to the report, the recession's impact on demand is clear across both companies and individuals with the number of PMI policies funded by companies decreasing by 3.3% last year to 2.95 million, while individual paid policies fell by 5.1% to 1.01 million.
Economist Philip Blackburn, author of the report, argued that these figures demonstrate the clear vulnerability of the health cover market during the economic downturn.
"Reduced real spending on UK private medical cover in the last two years mirrors the sharp contraction of the UK economy during 2009 with a lag of at least six months.
However, volume demand (policy numbers) shrunk further than spending, as average prices for medical cover continued to edge upwards, pushed by significant real claims cost inflation in 2008 and 2009."
Health cash plans, which can cover everyday healthcare bills such as dental and optical care, complementary medicines and personal accident cover, are taking advantage of this provision gap opening up.
There is room for cautious optimism. It is reasonable to argue that the difficulties faced by the fiscally challenged NHS to maintain a full service over the next few years are likely to result in increased demand for cash plans, as consumers seek the reassurance of health cover.
MAKING SENSE OF CASH PLANS
Indeed, with economic circumstances putting pressure on sales of PMI, health cash plans are fast becoming the preferred alternative to, or as a complement for, cheaper PMI schemes.
While less widely known than PMI among the general public, cash plans have a long heritage, reaching back to the 1870s and predating the NHS by 70 years.
They were originally created as a form of health insurance for those who couldn't afford doctors fees, and in their earliest form were referred to as Hospital Saturday Funds because workers contributed a small amount on payday, which was traditionally a Saturday, to pay for local medical care as and when they needed it.
Cash plans have come a long way since their localised beginnings and are now an increasingly popular method among advisers attempting to ‘bridge the gap' between difficult to access public health services and relatively expensive PMI.
Policy-holders can claim back partial or full reimbursement for a range of healthcare treatments including optical and dental visits, hospital stays and even alternative therapies.
For a comparatively small weekly premium, starting at about £1 per week, policy holders can be reimbursed the cost of health expenses up to each plan's maximum annual amount for each benefit.
In effect, while PMI can be seen as alternative to public health services, health cash plans complement them.
