Russ Piper, chief executive of Sovereign Health Care, one of Britain’s leading providers, believes more employers will favour health care cash plans as an attractive staff benefit in light of the introduction of compulsory pension contributions.
Mr Piper added said he believed many businesses would seek lower cost, better value-for-money benefits for staff rather than having to negate ‘perks’ altogether with the added expense of having to contribute to employee pensions. He added that he thinks cash plans funded by employers for workers, such as his own organisation’s Asset cash plan, would prosper.
Mr Piper said:
“Benefit packages are often crucial for employers to attract and retain the best staff available. This is particularly important now, as the improving economic climate means competition among businesses for good quality labour is already heating-up and looks certain to intensify in the next few years. We saw further evidence of this in the recent figures covering the final quarter of 2014, which showed UK employment was close to 31 million, the largest figure since records began in 1971, with over 73 per cent of people in work, the joint highest ever rate.”
Sovereign have implemented their own cash plans with the aim of making everyday health care more affordable and accessible. They enable tax free money to be paid back which can be used towards expenses such as dental fees, optical bills and physiotherapy costs. Funded by either private individuals or employers for their staff, policyholders are able to claim back a proportion of their treatment expenses within a few days.
Mr Piper said the cash plans could be used by employers not only as a recruitment tool but also as an alternative to bonuses and salary increases and to reward length of service or performance related benefits. They can also help to improve productivity, by encouraging staff to be proactive in managing their health and have problems diagnosed before deteriorating and requiring time off work or affecting their performance.
A Mintel report, Health Cash Plans UK, published last October reported a 150 percent rise in the number of employer-paid cash plans since 2007. It also suggested that costs to employers of auto enrolment could prompt some to replace previous private medical insurance (PMI) with cash plans in order to save money.
Mr Piper said:
“We agree with this conclusion, but price is only one of the key differences between cash plans and PMI policies, which are designed to pay out for more acute conditions. Cash plans, in contrast, are intended to help cover everyday health care costs and are community priced – premiums are the same for everyone regardless of age, medical history or usage.”
The introduction of pension auto enrolment began with the largest employers in 2012. All employers will have to place current staff and new joiners into pension schemes and pay contributions by 1 February 2018.
Employers included will have to contribute a minimum of one percent of an eligible employee’s qualifying earnings until September 2017. After which the minimum contribution rises to two percent from October 2017 and then to three percent a year later.