Voluntary cash plans are an ideal solution for employers who want to keep their staff fit and healthy but who cannot afford to provide healthcare benefits for all their employees. Unlike the company-paid sector, however, voluntary schemes require a lot of input from the employer, intermediary and provider to ensure that employees buy into the product.
The take-up level of voluntary benefits in general tends to be fairly low. Childcare vouchers, for instance, only pull a 2% to 5% take-up despite their large potential return for the employee. Cash plans hold their own against the competition, but take-up varies massively between organisations from a mere 1% to a respectable 70%. The main factor contributing to this difference is the level of engagement with employees.
Colin Boxall, director of healthcare at intermediary firm ADVO Group, says: “Key in take-up is the commitment from the employer and the choice of provider. If benefits are promoted and supported by both then much a better level of success is achieved. For smaller clients it is often uneconomical for an intermediary to deliver staff presentations, especially when multi-sites are involved. The choice of insurer and their willingness to engage directly with the workforce allows a greater take-up and up sale of benefits and addition of family members. The direct contact also creates the buzz that drives further sales.”
Most providers are happy to do the promotional activity needed to sign up staff. They will send a sales team to companies around the country to explain and inform employees of the healthcare cash plan scheme and its benefits. Rather than giving employees advice, which would need to be carried out by a regulated individual, the sales team demonstrates what the product is and lets the employee decide whether to take it up. This type of face-to-face communication is much more effective than posters, flyers and emails.
Jack Briggs, intermediary sales and marketing director at Simplyhealth, says: “It comes down to the time, care and energy spent on promotion by the provider, employer and broker. A flyer and insert is not enough anymore – there need to be people on the ground. When we put sales representatives in the workforce we get an infinitely better response. The promotion has to be active to be successful.”
The sales team will initially focus on optical and dental benefits in the presentation because it is more or less guaranteed that people will use them. However, Paul Gambon, head of sales at Medicash, says it is important to sell the whole package because different things attract different people.
“The broker needs to pick a scheme that is relevant to the workforce demographic and consider which benefits will appeal to them. In the past we have brought in dental capitation, Best Doctors, discounted gym membership and alternative therapies – more people use these and want to try them,” says Gambon.
THE CHANGING WORKFORCE
Changes in the workplace have meant that being able to speak to employees is much harder than in the past. Companies have replaced canteens with snack machines, there are fewer communal areas and more employees work from home. Some employers are also reluctant to let their staff take time out to listen to a cash plan presentation.
Jill Davies, chief executive of Westfield Health, says: “We used to go into a public sector office, such as the civil service, BT or the Post Office, and this allowed us to engage with staff to tell them about health insurance policies. Once I went to a manufacturing plant at midnight and the staff switched off the machines to listen – I signed up 200 people. Now the way people work is different. Efficiency and cost savings are the order of the day. We still want to do worksite marketing, but it’s about getting the employer to allow us.”
Intermediaries can play a vital role in encouraging employers to allow the provider to give a presentation. Brian Hall, sales and marketing director at BHSF, says some employers understand the need for face-to-face communication because the broker has explained this to them. The provider is then able to build a partnership with the employer.
“The majority of our voluntary schemes see us as a partner. They understand our sales methods, they mystery shop us and they understand what we say. Having made that effort they are happy for us to go in on a quarterly basis and speak to their employees,” says Hall.
The degree of engagement which employers allow varies widely. Some can be persuaded to allow a 15 minute presentation during the employees’ lunch break, whereas others will organise staff on an appointment basis. The latter is the ideal situation and it can be extremely fruitful as long as the employees show up to their appointments. For providers it is usually about striking a balance between visiting the company regularly and not taking too much time out of the employees’ working day.
“We monitor the frequency with which we are going to organisations,” says Medicash’s Gambon. “If we went in once a month we would be pushing our luck and we have actually found that if we don’t visit as frequently people are more inquisitive. At some organisations we can get a row of people waiting to join the scheme. They might have seen their friend with some designer specs and found out about the cash plan by word of mouth.”
There are some organisations for which worksite presentations are not suitable because of time constraints, employees working from home, and so on. Cash plan providers therefore offer other forms of marketing such as posters and leaflet dispensers in communal areas, and flyers to go out with pay slips.
Philip Wood, director of sales and marketing at Health Shield, says: “Not all companies are the same, which is why Health Shield offers a variety of communication channels, anything from posters and flyers to worksite visits and editorial for staff magazines. Worksite presentations are probably the strongest form of communication – nothing can replace somebody talking through and actually answering questions about the scheme.”
Providers suggest that brokers should do research to see what communication methods will work best. Some organisations will get one hit on their intranet per month whereas others will have staff going on it everyday. Companies may also have health awareness days which lots of employees attend – these are a good place for providers to market the cash plan.
Another way of improving the level of take-up in voluntary cash plan schemes is if the employer takes up the product themselves. The employer will tend to have more enthusiasm for the product and will therefore help promote it. It can also be helpful if the company makes a contribution to the scheme.
“We are increasingly seeing, and would like to see more of, cash plans with an element of contribution made by the employer,” says Simplyhealth’s Briggs. “If they contribute it can be very effective because the employees will recognise this and be warmed up to the concept. Intermediaries should try to see if they can get a commitment from the employer to make a contribution. If the employer has paid part there is a higher chance that employees will dip into their pockets and pay for an upgrade.”
Some intermediaries prefer to install a company-paid cash plan and have the option of voluntary contributions in addition. Steve Herbert, head of benefits strategy at employee benefits consultancy Origen, says this engages the employees at outset because they have a benefit they can use.
“It can also be used to dovetail with private medical insurance excess and offset other costs – for instance Display Screen Equipment regulations on eye care – to create a viable business case for the employer,” he says.
The take-up of voluntary cash plans needs improving but it is only if the provider, broker and employer spend time promoting the scheme that employees will be persuaded of its value.