An increasingly popular benefit for employees, health cash plans are a type of insurance policy which pay employees tax free cash back towards everyday health care such as dental treatment, eye tests, glasses, contact lenses and physiotherapy.
What is a health cash plan?
Health cash plans provide people with financial support that encourages them to manage their health proactively by easing the cost of staying fit and healthy.
Individuals can claim tax free cash back towards everyday health expenses such as dental treatment, eye tests, glasses, contact lenses and physiotherapy, simply by submitting a claim form and receipts for treatment.
What is included?
Aside from cash back on everyday health care, employer paid cash plans often include access to an Employee Assistance Programme (EAP), which offers confidential support and counselling on a range of personal or work-related issues, from marriage to divorce, birth to bereavement, legal issues to debt management.
Together, it provides an invaluable combination of financial and emotional support to help employees in all aspects of their life. EAPs often include a 24 hour confidential helpline, online support, face to face counselling and access to money management, legal, financial and general citizens’ information services.
What are the costs to employers/employees?
Health cash plans are available as an ‘employer paid’ or ‘employee paid’ benefit, with varying levels of cover, so there really is something to suit every type of business. Some employer paid cash plans start from just £5.00 per employee, per month.
The premiums paid by the employer are a potential P11D benefit for anyone earning at least the minimum tax threshold per annum. The value of benefit is determined by the premiums paid and not the benefits derived from the cash plan policy itself. Tax is charged at the normal rate of tax for each individual employee i.e. either basic or higher rate.
Premiums paid by the employer are also a legitimate business expense, and are chargeable against profits to potentially reduce corporation tax.
Crucially, cash plans are available at a fraction of the cost of Private Medical Insurance (PMI) and they are often community-priced, which means the same price for everyone regardless of age or medical history, and premiums don’t increase if you make a claim.
How do you implement it?
To set up an employer paid scheme is easy; in fact, many of our customers are surprised at how straight forward it is. All that’s needed is a signed application form and a spreadsheet detailing the names, home addresses and dates of birth of the employees to be covered, and at which level. Most of our preferred providers will provide a dedicated account manager to give ongoing support after the scheme has gone live.
Most providers support in communicating the benefits of the health care cash plan being implemented and how easy it is for employees to make a claim. This includes a welcome pack at their home address and we provide face to face implementation presentations offered at the workplace.
As employers you aren’t involved when your employees make a claim – they deal directly with the cash plan provider.
What are the impacts on employee health?
Health cash plans encourage employees to seek treatment and faster diagnosis so they can return to work quicker or prevent absence in the first place, which remains a huge issue for employers in any sector. By supporting an employee’s health and their finances, employers can help reduce pressures employees’ face outside of work, improve their mental wellbeing and, in turn, boost performance.
Stress is the biggest cause of workplace absence in the UK according to the Health and Safety Executive. The senior policy advisor Dame Carol Black, cited by the Stress Management Society, calculates that for every £1 you invest in staff wellbeing, you could generate a return of £3 in improved efficiency and productivity – an eye-catching figure for any commercial organisation.
The benefit of cash plans is especially pertinent when you consider the rising cost of NHS treatment. The cost of an NHS dental check-up is now £22.70 rising from £62.10 for additional treatment up to £269.00. It is no exaggeration to say that having a cash plan can be a lifeline for some employees when it comes to affording their everyday health care, and employers should not be afraid to shout about the benefits.
Removing or reducing the barrier of affordability in securing prompt treatment is a benefit for both employers and employees.
How do you demonstrate the return on investment?
In monetary terms, health cash plans can offer significant savings compared to putting standalone provisions in place, giving staff access to a wide range of benefits under one roof – and because the premiums are classed as a business expense, they can reduce corporation tax too, as mentioned previously.
There are wider returns too, of course, because it pays to look after the health of your workforce. Aside from the moral and legal obligations of employers, a healthy workforce is a productive workforce. Absence through sickness costs UK businesses around £16 billion, with an average cost of sickness calculated at £554 per employee, per year, and an average annual absence of 6.9 days per employee. It is easy to see how the returns could soon start to add up by reducing absence in your business.
Pre-existing conditions may not be covered within the plan. Some conditions may be excluded and will be subject to the Terms & Conditions as set out under the policy.