With health insurance providers keen to stand out from the competition, added value benefits such as online health information and employee assistance programmes (EAPs) are fast becoming the norm. Add to this the benefit overlap between products, and employers can soon find themselves paying two, three and even four times for some elements of cover.
“It’s not good,” says Wayne Pontin, director of Jelf Employee Benefits, the intermediary. “This can be fairly common with EAPs in particular. A lot of the income protection [IP] providers have built them into their plans and you’ll also find them on cash plans and medical insurance. It does make duplication an issue.”
For example, among the group IP insurers that include an EAP as a standard part of the package are Aviva UK Health, Canada Life, Friends Life and Unum. Including an EAP is also common among the medical insurers, for instance Aviva has a stress counselling helpline as standard on its plans. EAPs are also included on corporate cash plans, including those provided by Westfield Health and Health Shield.
The inclusion of all these “free” benefits is something that irritates Mike Izzard, managing director of Premier Choice Group.
“They’re window dressing: you won’t get a reduced premium if you ask a provider to remove its EAP,” he says. “The providers bundle them in to make the product look better and this can cause confusion for clients. Rather than add these freebies they should really focus on the core benefits that employers want.”
For Pontin, part of the problem arises from the silo mentality that exists around advice.
“Duplication can easily occur when you have one adviser looking at medical insurance and related benefits and another looking at group risk,” Pontin says. “Employee benefits consultancies can take a more holistic view.”
He blames the Financial Services Authority (FSA) for creating the divide, and in particular the classification of medical insurance as general insurance rather than a financial services product.
“There should be a separate healthcare classification that incorporates all of these products,” Pontin argues. “That would make it much less likely that an employer would end up with two ‘free’ EAPs, one recommended by a medical insurance adviser and the other by a group risk adviser. The regulator has created this problem.”
Some providers do recognise the frustration that duplication can cause. For instance PruHealth offers an EAP as an option on its group medical insurance scheme as does Simplyhealth on its Simply cash plan.
Howard Hughes, head of employer marketing at Simplyhealth explains: “Companies can have EAPs independently or through other products so we made it an optional module rather than part of our core cover. We also separated out other benefits including hospital benefit and a new child payment as they could be included within other products.”
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But while Simplyhealth has taken steps to avoid some duplication, cash plans are probably the number one offender when it comes to offering benefits that can be found on other products.
Take Simplyhealth’s core cover as an example. This includes consultations, scans and therapies such as physiotherapy, which are available on medical insurance, as well as dental benefit, which could be included on medical insurance or a stand-alone dental insurance scheme.
But, while the benefits can be duplicates, the providers argue that cash plan benefits serve to complement rather than duplicate those on other products.
“Cash plans work differently to other benefits,” says Hughes. “You don’t have to have a GP or a specialist referral to use them.”
Physiotherapy is a good example of this. While receiving treatment through a medical insurance scheme can take time as it needs to be formalised by a GP, an employee with a cash plan can get treatment at the first sign of a twinge.
As well as giving speedy access to treatment, the cash plan benefit would also be available to help with the treatment of chronic conditions that are no longer eligible for medical insurance benefit. Additionally, by having this alternative pot of benefit, it can also help to pre-fund an excess and protect the claims experience on a medical insurance scheme.
With the cash plan benefits the old adage about getting what you pay for also holds true.
“We have a lot of clients with a medical insurance scheme or a cash plan plus a dental scheme,” Izzard explains. “It’s not a waste of money as they can access all of the benefit they’ve paid for if necessary but it would be good to be able to offer all the cover through one product.”
While some duplication is acceptable, offering the same benefit across a range of different products can cause confusion. Employees might not be aware of all of the sources of cover, making it essential that robust benefits communication is in place. This is particularly the case where cash plans are being used to cover the excess on a medical insurance scheme.
Tailoring cover is possible to avoid duplication but size is critical to the degree of flexibility a provider will entertain. For example, Pontin says that it gets easier to tailor cover once a scheme has at least 50 members.
“As a rule of thumb, if the organisation has enough employees to require an HR department, you’ll be able to avoid duplication,” he explains.
The introduction of more modular products, for instance from the likes of Aviva UK Health and AXA PPP healthcare, does mean that medical insurance is becoming increasingly flexible. Pontin says that even where a modular product is not offered, insurers are often happy to adjust cover levels for areas including outpatient, psychiatric and dental.
The picture in the cash plan market is markedly different with many providers unwilling to entertain bespoking other than at the very large end of the market. For example, Hughes says he would look for at least 1,000 employees before bespoking as below this level the premium does not justify the additional resource required.
Other cash plans are more open to tailoring plans. BHSF is well-known for its flexible approach to benefit design which Pontin says extends beyond the standard cash plan benefits and can include areas such as support with communication and staff handbooks.
Westfield Health also offers tailoring for smaller groups. Through its Mosaic plan, organisations looking to provide a corporate paid cash plan to at least 20 members can tailor their cover.
“One size doesn’t fit all,” says Jill Davies, chief executive of Westfield Health. “By tailoring benefits you can avoid duplicating benefits and give the employer a cost-effective product that meets their needs.”
There are some restrictions to enable it to offer this to such small groups. The minimum premium must be at least £1 a week; cover must be selected for all eligible employees; and the plan must include at least two core benefits, which are optical, dental, consultation and therapies. But, providing these criteria are met, cover limits can be flexed. For instance, the benefit limits on optical and dental are £30 to £250 a year, while consultation and therapy treatments run from a minimum of £100 to £750 a year.
But while there are options to help employers avoid benefit double vision, Pontin would like to see providers taking a more joined-up approach to the way healthcare benefits interact rather than blindly adding the same benefits across the board.
“There needs to be more recognition that there’s a decreased risk when a particular combination of benefits are in place,” he explains.
There are plenty of instances where this interaction does come into play. For example, if an employer has income protection in place, the availability of medical intervention to prevent health problems becoming long-term could mean fewer claims on the medical insurance. Similarly, an EAP could drive down claims on both IP and medical insurance.
“Where there’s this duplication of cover there should be a discount,” Pontin adds. “Some providers, especially those that offer a range of products, will do this but many don’t. I’d like to see this change.”