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Valuing private medical insurance as an employer benefit

5 April 2018

High medical inflation rates during the past couple of decades and more recent hikes in Insurance Premium Tax (IPT) have seen a lot of discussion about whether private medical insurance (PMI) is still affordable as an employee benefit. 

Indeed, one could be forgiven for supposing that there is a trend for cost-conscious employers to do away with a product that, as well as incurring them a significant outlay, creates a P11D liability for employees and often requires them to pay an excess at the claims stage.

But the statistics suggest that nothing is further from the truth. Research results published by Employee Benefits magazine found that 79% of employer respondents in 2017 offered PMI to employees and that 73% offered it to partners and dependents. The corresponding figures for 2016 were 71% and 62%.

Amongst the 79% offering the product in 2017, 45% were doing so for all staff and 40% for some staff. These figures contrast markedly with the respective ones of 28% and 38% for 10 years earlier.  

A key reason why demand has been demonstrating such resilience is that employers are increasingly appreciating the benefits that PMI offers in combating absenteeism in addition to its attractions as a perk with a high perceived value to help with recruitment and retention.

Whilst the NHS has an enviable record for dealing with accidents and emergencies and serious conditions like cancer, its inability to cater for non-life-threatening operations in a timely manner has been increasingly exposed.  

Indeed, over four million people are currently on NHS waiting lists for planned hospital care in England ¹, and the waiting list for hip, knee and other orthopaedic operations alone is over half a million.²

Someone without PMI requiring a hip or knee replacement may find they have a choice of waiting many months in excruciating pain for an operation on the NHS or using their savings to fund a private operation that could easily cost in the region of £10,000 to £15,000.¹  

A small business which has a couple of key employees unable to afford the costs of such an operation could find its very survival threatened because they would be unlikely to be able to come to work. 

Even employees who do manage to attend work with more manageable conditions like hernias, haemorrhoids or varicose veins will still be experiencing considerable discomfort likely to result in significant presenteeism costs.

The impact that they may have on fellow workers should also be considered. Having someone around the office who is permanently bad tempered can have a highly detrimental effect on morale.

But offering a PMI scheme can help ensure that those with debilitating conditions only have to take the minimum time possible off work as it enables them to jump the NHS queue and have a private operation.

The fact that the operation can be scheduled to suit the workloads of both the employee concerned and their work colleagues has other clear benefits to the bottom line, as does the potential ability of the recovering employee to make some contribution to the workplace via email or phone from a private hospital room.

The cover PMI provides for initial specialist consultations, scans and complementary therapies like physiotherapy and osteopathy should also not be underestimated from an absenteeism perspective.  

There are, however, a bewildering array of PMI schemes out there to choose from. Some, for example, offer the ability to cut costs by having little or no outpatient cover, by only covering operations when the NHS waiting list is longer than six weeks or by involving an element of co-payment – where the employee pays for a proportion of the initial claims cost on an ongoing basis.  

It is therefore essential that employers consider their options in conjunction with an expert intermediary like Chase de Vere to ensure that they select the scheme most suited to the needs of their workforce and to the budget that they have available.

If you would like to find out more about the potential benefits of a PMI scheme or about how we can help you select the best scheme to suit your particular requirements then please do not hesitate to contact us on 0345 300 6256 or complete this simple form and we’ll call you.

Sources:

¹ The Guardian  

² The Telegraph