Comment: Cash plans – when cheap is good and simple is great

Cash Plans/Dental

Cash plans shouldn't be promoted as a mini-PMI – the product is worthy of its own place on the healthcare 'best in class' podium

Cash plans, for so long the Cinderella of corporate health, are now basking happily in the company paid limelight.

For over a century, large numbers (four million in the 1990s) of blue collar workers dipped into their own pockets for a basic plan that gives them money back on various health benefits

And that sums up how cash plans work. They are so simple that the corporate market, intermediaries and reward managers alike just glossed over this low cost, high value offering. We were suspicious of a product that encouraged claiming and appeared to represent a stable and predictable risk. We struggled to add value by advising on their purchase because we just didn't get it. How could something so uncomplicated and so cheap actually be any good?

But the past decade has changed our attitudes. It is estimated that company paid cash plans have increased by 25% year on year since 2007. Cash plans are sexy, popular and becoming a favourite item in the intermediary toolbox.

It is their simplicity and the fact that the majority of members will actually claim in any year that make cash plans so popular with employees and their families. Timely product development has provided powerful reasons for companies to fund this addition to reward packages. Using the diagnostic or consultation benefit to reimburse claims excesses has enabled reduction in private medical insurance premiums. Optical benefits and employee assistance programme add-ons can satisfy corporate duty of care while rewarding employees with money back on regular health costs. All for a few pounds a month with easy to understand upgrade options to boot. What’s not to like?

I hope that cash plans will continue with their meteoric rise in the company paid market. They are a fantastic staff benefit, suitable for all ages. As one satisfied corporate member said – "it’s just like being given free money to pay for things that I would normally have to fund out of my own pocket".

But a word of warning. Over complication and over development of this beautifully simple product could diminish its appeal. This shouldn't be promoted as a mini-PMI – it is worthy of its own place on the healthcare best in class podium. If there are too many bolt-ons or too many elements added to benefit the corporate client rather than its members, the feel-good factor that cash plans generate will be diminished. As Paul Gambon, head of sales at Medicash, says: "Simplicity is a crucial factor that we have in mind when developing our schemes".

Wise words. Keep cash  plans cheap and simple and Cinderella can stay at the Ball well past midnight.

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