No longer provided as simply an employee perk, employers are switching on to the business benefits of healthcare cash plans and how they can play a crucial role in improving the bottom line and defending against the many knock on costs associated with managing employees.

The healthcare market has evolved considerably, especially in recent years, and the rate of change shows no sign of slowing in the future. As a result, great changes are happening in the way that employers consider and offer healthcare benefits.

Born in the 19th Century, healthcare cash plans were designed to provide the working classes with an affordable savings plan that made overnight hospital stays and other healthcare treatments more accessible.

With the ongoing rising cost of healthcare treatments and decline in free immediate treatment on the NHS, cash plans remain an important part of corporate and individual healthcare provision today and could be argued to be more relevant than ever before.

Unlike private medical insurance (PMI), healthcare cash plans provide cash towards the cost of a wide range of everyday essential healthcare treatments such as dental and optical care, specialist consultations, health screening, physiotherapy and complementary therapies.

Designed to improve and enhance well-being, they are intended for use not only when the policyholder is ill – but also on a day to day basis when they are well.

Cost effective and easy to administer, they provide a simple solution to a proactive and inclusive healthcare strategy for an organisation of any size and can be offered to all employees regardless of status or length of service.

Having enjoyed a meteoric rise in popularity with employers for many reasons, they have become one of the fastest growing employee benefits.

But HR professionals are beginning to question whether plans are being offered simply as a reward for employees or being implemented as a strategic business tool by employers with one eye on productivity improvements to the bottom line.

Health related sickness absence
Health-related sickness absence is one of the biggest concerns for British business today. Costing in excess of £11.6 billion per annum, it is responsible for more than 166 working days lost, according to the Confederation of British Industry and AXA PPP healthcare, an average of £601 per employee per year, says the CIPD’s Employee Absence, 2004.

The increased pace of today’s working environment has affected the daily workloads of the majority of UK employees forcing them to cope with longer working hours, increased demands and greater pressure to achieve.

Combined with this, tighter budgets and decreased resources have put further strain on employees that is resulting in a growing number of cases of work-related emotional and physical illness and therefore time off work.

As a result, sickness absence has a serious impact on the bottom line and is an issue that is high on the ongoing agenda of many HR professionals.

Work-related stress in particular is a major concern. It is estimated that stress-related sickness absence alone costs British industry more than £5 billion a year through short and long-term absence, high staff turnover, reduced work performance, poor time keeping and adverse impact on other employees .

Stress is the main cause of long-term absence among non-manual staff. Alarmingly, more than 40% of people consider themselves more stressed than they were five years ago – with work cited as the biggest cause.

Eighty-three per cent of employers also feel that stress is interfering with productivity and is seriously damaging the ability of their business to retain staff and compete in an increasingly competitive marketplace.

Cash plans directly impact the bottom line when they help to prevent the knock on effect that stress can have on employees when tasked with picking up extra work from absent colleagues. Furthermore, they also help to reduce the occurrence of sick pay.

New H&SE Guidelines
Providing further food for thought, new Health & Safety Executive (H&SE) guidelines have made healthcare a legal priority for employers. It is now an employer’s duty by law to make sure their employees are not made ill by their work.

These new ‘duty of care’ responsibilities have forced employers to look in detail at their healthcare strategies and ensure appropriate measures are in place to look after employee wellbeing.

EAPs
As a result, more employers are looking towards Employee Assistance Programmes (EAPs) that include 24 hour confidential stress phone lines and the option for face to face counselling sessions to tackle these issues and ensure employees’ are provided for.

Working conditions
Under legislation, employers also have a duty of care towards employees’ physical well-being in the workplace. Employees that use a VDU or computer on a daily basis as part of their work have long been entitled to a regular eye test paid for by their employer.

Litigation
Employers who don’t take stress or health issues in the workplace seriously leave themselves wide open to the threat of litigation and compensation claims from employees who feel that they have suffered as a result of their work.

More than ever before, employers are being forced to sit up and think about healthcare provision as way of complying with modern policies before a costly lawsuit or litigation proceedings wipe pounds off the bottom line and damage credibility.

How HCPs can help
More than just a reward or perk, healthcare provision in the form of healthcare cash plans can help both employer and employee.

Inexpensive and cost effective, they can play a crucial role as a serious business tool by British businesses addressing health-related sickness absence, stress and the threat of litigation.

More than simply a perk, employers can use the plans to meet real business needs, not only improving health but also overall staff morale, recruitment and retention of staff.

More cynical observers will comment that many companies are simply introducing healthcare cash plans as a defence mechanism in order to comply with regulations and avoid litigation but the benefit for both employer and employee is evident.

As the employee benefits from improved access to regular healthcare, the employer can feel more confident that the associated business risks of a poor healthcare strategy are avoided.

After all, a workforce that feels that the employer is committed to its health and wellbeing becomes ultimately more committed and stable leading to better business success.

Raman Sankaran is director of strategic development at HealthSure and LHF Healthplan.