The pros and cons of employee health cash plans

Employee health cash plans (often referred to as business health plans) have been around for centuries. They’re a fairly common workplace benefit, with their inception dating back to as early as the late 1800s – more than 50 years before the NHS made medical care affordable to the masses.

In our ultimate guide to employee health cash plans, we present a well-rounded argument for and against corporate health cash plans. See, a lot has changed since the 1800s, but even more so since pre-pandemic times. 

While health and wellbeing skyrocketed in the face of uncertainty, so too has personalisation. People want access to initiatives and experiences that work for them. Health and wellbeing are ultra-subjective, and what works for one employee doesn’t necessarily work for another.

That doesn’t necessarily rule out health cash plans – after all, they’ve been around for a long time. What it does mean, however, is that employers must consider new opportunities, new avenues and better solutions. 

Below, we’ll kick things off with ‘what is a health cash plan?’ before helping you figure out if they are suitable for your team. Finally, we’ll get into the pros and cons of business health plans. Without further ado, let’s get started!

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What is a health cash plan?

Generally speaking, a health cash plan is a scheme in which employees pay a monthly fee for access to routine medical services. For example, an employee may pay £15 per month, but (when used to its full extent) the employee could receive access to dental and optical services that largely surpass their monthly payment. 

What’s more, a corporate health cash plan can be reimbursed. It’s common practice for the employer to cover this monthly payment. This creates a win-win scenario for employees, who can keep their hard-earned cash with the addition of medical services like dental, optical, physio and more.

Ultimately, business health plans are about claiming back more than it costs. We can’t really dissect the ins and outs of a corporate health cash plan without getting into the pros and cons, so we’ll leave our definition at that. 

Now, you might be thinking “I know what they are, but how on earth do they work?” 

Not to worry, let’s take a look!

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What else is included in a health cash plan?

In addition to the ones we’ve mentioned above, here’s a longer list of what you can expect from business health plans:

• Mental health support
• Prescriptions via the NHS
• Dietary advice and support
• Maternity payments
• Hearing tests
• Health screenings

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How does a health cash plan work?

Like its definition, the workings of business health plans are rather straight-forward. Let’s say you’re visiting your dentist next week, and you expect to pay £50 for a regular check-up. 

You (as an employee) will make a payment to the practitioner and keep the receipt. Depending on the cash plan provider, you will then need to fill in a form or submit the information on the receipt into a system. The cashback will then likely be refunded in your next pay.

It’s really as simple as that. You probably already understand the workings of a health cash plan – given your background in HR – however, you can pass this description on to your employees to give them a greater idea of a corporate health cash plan.

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Do I need a health cash plan for employees?

Now for the biggest question of them all, does your business really need a corporate health cash plan? Every business is different, To help you decide whether a cash plan is right for your business, we've put together the pros and cons of cash plans below.

Going off face value, we would say a health cash is an ideal solution if you’re only looking to offer limited routine medical support. From eyecare to dental care, physio to other services, business health plans help employees with the bare minimum.

The question is, are health cash plans truly delivering what employees want in the modern workplace? This is something we’ll explore towards the end of this guide. Instead, let’s jump into the pros of health cash plans. 

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The pros of a corporate health cash plan 

We’ve included what we believe to be the most important points for deciding whether a cash plan is the best thing for your team. Investing in your employee wellbeing benefits is a serious matter, and we want to help you make the best choice.

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Low cost

We’re a strong believer that small businesses can offer big benefits. The expenses involved in health cash plans make it a great option for any business on a small budget. According to EmployeeBenefits.co.uk, the average employer-paid health cash plan falls around the £100 mark per year. 

Back in 2020, the UK spent more than £410 million on health cash plans, with £146 million coming from employer-paid schemes. To put it simply, business health plans are big business, but offering it as an employee benefit doesn’t come at a huge cost.

Typically, there are different premiums to health cash plans for different levels of cover, and in some cases, employees may opt in or out of their employers cash plan; making it more affordable or more expensive to the business.

That said, although a corporate health cash plan can be a financially savvy solution, it loses that appeal if it becomes underutilised by the workforce. If there’s one thing a business doesn’t want, it’s underutilised benefits.

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Business health plans help those who need it most

It’s fair to assume that cash plans are more attractive to those that need it most. Things like dental exams and eyecare can be costly and hard to plan for, so claiming for it on a business health plan makes it more accessible to employees on lower incomes. 

This point must be acknowledged, especially given the economic climate we’re seeing unfold in Britain. As the recession continues and the cost of living rises, people are spending less. 

Health cash plans mean that employers can help their team afford the basic medical services they need to stay happy and healthy. And as we’ve discovered, it doesn’t break the bank for the employer either. It’s a win-win scenario for both parties involved in the workplace.

What we must also remember, is that what keeps the cost of cash plans low, is that many, or most, people do not use the service, either because they can afford these services, or forget they exist.

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It covers some of your obligations as an employer

There are many rules and regulations when it comes to employing someone in your business. For example, the Health & Safety Executive states that employers must pay for eye tests for “DSE employees”, or in other words, anyone who spends more than an hour a day looking at a screen for their job.

Many cash plans cover eye care up to a monetary limit, so they can provide employers with an easy solution to some lesser known regulations. Meeting the right regulations is very important, not only from a legal point of view, but in attracting talent to work for your company. 

Ultimately, nobody wants to work for an organisation that doesn’t provide an acceptable work environment or the basic level of health and wellbeing support. If anything is true, a health cash plan helps cover your company for some of your obligations as an employer, plus other services that your team may regularly use, i.e dental services.

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The cons of a corporate health cash plan 

As you can see, there’s a lot of positivity to be said about health cash plans. However, we’re now going to dive into some of the cons; things that may dissuade you from opting for one, entirely.

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Cash plan providers are praying you don’t use the health cash plan

Let’s get things started with a bang! Believe it or not, cash plans are praying you don’t use their schemes, or at least not all the time. This is a big one for some people. You may know that Spotify pays artists for every song played on their platform. 

So if every Spotify user played music all month long, my guess is their finance team may look quite worried. The same is true for health cash plans. If everyone with access to a health cash plan used it to its full potential, cash plans probably wouldn’t survive more than a couple of months.

As we’ve mentioned above, the expenses behind health cash plans makes them lucrative for providers, yet affordable for businesses. It’s this risk of over-utilisation that could crumble the whole business model they exist on. 

Any benefit (including health cash plan providers) that rely on some degree of underutilisation, does not get the seal of approval as an employee benefit from us, especially when it comes to people’s health and wellbeing. In essence, if health cash plans aren’t supposed to be used to their fullest, then the health and wellbeing of employees isn’t the priority — it’s cost-efficiency. 

The worry is that with business health plan providers praying your employees don’t claim, it could really mean they act maliciously – making it less than simple to claim reimbursements, or even avoiding support tickets.

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Account management and team support

When you pay for a service, like a HRIS or Learning Management System (LMS), you rightly expect that there’ll be a team to help you get up and running successfully. Even if that doesn’t always turn out to be the case!

With employee benefits, we believe that providers should generate as much excitement and engagement as possible within your team about their new benefits. Unfortunately, with health cash account management is non-existent, as more people “claiming” would decrease the profitability of your account.

That cash plan providers employ actuaries and refer to their reimbursements as “claims” show that little is being done to hide the fact that cash plans are just insurance products with low claim limits. Which is completely fine - great even - if that’s what you’re looking to provide your team.

It almost seems like the more we explore the cons of business health plans, the clearer it becomes that “claims” aren’t preferred by providers. Who’s to say, that without proper account management, your company is receiving the best possible experience. 

Granted, a corporate health cash plan is an affordable option, but no business should want to fork out more than £2,500+ annually at £100 per year, per employee – and that’s for the basic package – when they aren’t receiving any support from said health cash plan provider.

The reason we believe this point deserves your attention is because we take account management seriously here at Heka. It’s what helps increase utilisation of our platform, drive engagement, build excitement and ensure our customers get the most out of their experience with us.

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Personalisation doesn’t exist with business health plans

Finally, let’s discuss personalisation. In the modern workplace, personalisation is a necessity. It dictates everything from your employee experience to your benefits package. Without true personalisation, companies – and their cultures – become stale. 

Think about it, employees expect a personalised onboarding experience, they expect health and wellbeing initiatives for their own interests, they expect benefits that work for them, not their colleagues – in a nutshell, they expect a lot, and rightly so. 

What we’re trying to say is, personalisation is the essence of a happier, healthier workforce. Your employee benefits cannot be limited to routine medical services. Our health and wellbeing go a lot deeper than that. 

There’s no argument that business health plans offer a much needed service. After all, it’s a better use of an organisation’s cash than an office ping-pong table, free beer on Friday or pizza on a Tuesday. Those kinds of benefits really are a waste of resources, and don’t support employees with their health and wellbeing.

If employees were so satisfied with health cash plans, platforms like Heka wouldn’t be around to support hundreds of teams across the UK with exactly what cash plans lack; variety and personalisation. What we’ve discovered through our own research and conversations with c-suite leaders is that people want access to personalisation and abundance. 

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Our conclusion on health cash plans 

That’s a wrap! So far, we’ve explored what a cash plan, whether it’s the right decision for your business, and the pros and cons of these schemes. All that’s left to do now is offer our conclusive thoughts on business health plans. 

Now that we’ve taken into consideration each three points for both the pros and cons, we, as an employee wellbeing platform, believe cash plans are outdated. They are a very traditional form of workplace benefits, and while we admire their focus on health and wellbeing, it just doesn’t do enough for the modern employee. 

As we’ve just explored, personalisation is key. Employees want the chance to choose, to try something new. As most of us know, health and wellbeing is a journey. We must always try to find what makes us healthier and happier, and the limited experience of a health cash plan doesn’t support this idea.

We’re also strongly against the idea that an employee benefit should aim to limit its use. Our lovely team here at Heka are always actively reminding users to try a new experience or product, and we make tailored suggestions in the app for users.

That’s because the more our users make the most of their allowance, the healthier and happier they are. In fact, we designed Heka to be used as much as possible, and are delighted that 92% of our members book experiences regularly.

When it comes to health cash plans, companies deserve dedicated account managers. And it’s lack or neglect for support – in our opinion – shows the true colours of business health plans. 

Conclusively, with the rise of technology comes better solutions. The corporate health cash plan has been around for centuries. It is effective, affordable, but with it comes a handful of negative reasons not to choose one. 

Instead, we recommend something like Heka, a modern and sophisticated service that supports a remote-first, hybrid or office-based workforce, wherever they are and with whatever they need for better health and wellbeing. 

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A modern solution to employee wellbeing

Before you go, we’d love to tell you more about us! Heka is an employee benefits platform offering thousands of health and wellbeing experiences across more than 50 categories. 

We’ve built Heka with personalisation in mind, and always update our list of leading partners in the wellbeing space. Truly speaking, there’s something for everyone in your organisation. Whether that’s healthy vegan meal kits, mental health counselling, outdoor activities or fitness classes, we’ve got it all. 

Each month, our users are rewarded credits to their Heka accounts via their employer. This allows them to book from more than 3,000 experiences. Once they’ve spent up their credits, it’s just a matter of days before they receive another allowance in the following month.

It’s essentially a regular deposit of wellbeing credits to spend as and when they like, on whatever they fancy that month. We highly recommend speaking to our team of experts, who will be more than happy to walk you through our platform, and introduce all the great benefits of Heka — just click the button below! 👇

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