Health cash plans can be a creative way to compensate staff and even raise company productivity when a pay rise is not guaranteed
While testing economic conditions persist in the UK and worldwide, there is good news from at least one sector: new research shows that the health cash plan industry is prospering as more and more businesses seek ways to enhance staff benefits in the downturn.
With more than one in 10 employers saying they do not expect to increase staff wages in 2012, bosses are having to be creative where employee benefits are concerned.
A survey of 230 UK employers by Aon Hewitt, the employee benefits consultancy, suggests that the average pay increase in 2011 was 3.1 per cent, well below the rate of inflation. Aon Hewitt predicts that pay rises for 2012 will be just 3.2 per cent on average.
For thousands of UK employees, a pay freeze will effectively mean a pay cut when the rising cost of living is taken into account.
Leading health cash plan provider Medicash says that more employers are exploring low-cost ways of expanding staff benefits and providing tangible alternatives to pay rises.
“We are seeing a steady year-on-year rise in the number of corporate paid cash plans as more employers understand how such plans can be used to positively enhance employee benefits packages,” says Medicash chief executive Sue Weir.
According to Laing and Buisson’s health cover UK market report 2011, the value of the UK cash plan market grew by 11 per cent between 2009 and 2010 from £602m to £670m, thanks to increasing investment in employer-funded plans.
Medicash predicts further growth for corporate paid plans in 2012 as the plans become a more regular feature in salary reviews.
A health cash plan provides employers or individuals with a range of health cover, including dental, optical, physiotherapy and employee assistance programmes. Plans can be used on their own or to enhance private medical insurance packages.
They can start from just £1 per week and offer a host of benefits not usually covered by traditional private medical insurance.
Sue Weir says: “If used correctly, a good plan can provide hundreds or even thousands of pounds worth of benefits for employees each year, which can feasibly be used by employers to ‘top-up’ salaries – allowing employees to see an immediate impact on their finances.”
Chester & District Housing Trust introduced a Medicash health plan for their employees in 2009 as part of a wider staff benefit and wellbeing strategy. The trust, which is part of the Cosmopolitan Housing Group following a £1.3 billion merger in December 2011, employs almost 500 people largely across the North-West of England.
Su Bramley, Cosmopolitan Housing Group director of corporate services and governance, says: “We initially introduced a cash plan as a way to strengthen our benefits package for colleagues while also helping us to address sickness absence, stress management and the general wellbeing of our employees.
“So far it’s been very useful, allowing us to offer valuable healthcare benefits which are more focused on catching and treating a problem before it escalates into a more serious private medical insurance claim.
“We have seen dramatic results in both staff productivity and morale since the introduction of our strategy and the health cash plan has played a significant part.”
The trust was ranked 27th out of 100 in The Sunday Times list of the top 100 companies to work for in 2011, which they attribute in part to their emphasis on employee health and wellbeing.
Su Bramley adds: “We have had a great response from colleagues since the implementation of the plan, which has helped to boost our status as a quality employer. For us, a health cash plan has made real business sense.”
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