An increasing number of firms are broadening access to healthcare benefits. The extra costs can be offset by improved productivity and staff engagement, as Sam Barrett explains

health savings

Go€† back 30 years and the only healthcare benefit you’d find in the workplace was medical insurance for the executives. But, with employers waking up to the benefits of healthy staff, it’s beginning to be a must-have for the entire workforce.

This shift in thinking has been accelerated by the recent economic downturn, according to Chris Bailey, head of corporate consulting at Mercer.

“Only giving health benefits to senior employees is old-hat thinking,” he explains. “During the recession there was a real feeling of all being in it together, and now that things are improving employers want to keep that sentiment in place by offering everyone the same benefits. It’s much more democratic but it also leads to greater appreciation from the staff.”

This thinking has already led to some high-profile changes, especially in the banking sector. For example, HSBC has implemented an all-employees benefits strategy, including medical insurance for everyone, regardless of their role.

Wider advantages

As well as wanting to be more democratic on the reward front, employers are also much more aware of the impact that health can have in the workplace.

“There are some very significant pluses,” says Carl Chapman, head of wellbeing at Barnett Waddingham. “A healthier worker is likely to be more productive, take less time off sick, and be more committed. This results in improvements in customer satisfaction and the company’s ability to attract and retain employees. It’s powerful stuff.”

As an example – according to data from cash plan provider Health Shield, one of its customers reported a fall in its sickness rate from 7% in the warehouse and 4.5% in the office to 2.3% and 0.5% respectively, after it introduced a cash plan giving speedy access to physiotherapy, consultations and other health and wellbeing benefits.

Investing in comprehensive healthcare can also lead to reductions in other areas of spend. As well as less sickness absence, healthier people tend to have fewer accidents in the workplace.

This results in lower claims, and therefore lower premiums, on benefits such as medical insurance and group income protection, but also on cover such as employers’ liability.

Cost pressures

When it comes to putting together a healthcare-for-all strategy, all sorts of products can come into play. Where a benefits budget is under pressure, low-cost options such as cash plans and wellbeing initiatives can deliver good value for money.

Take a cash plan as an example. Although these can cost less than £1 a week, they’re highly appreciated as staff members can use them to cover everyday healthcare costs.

For instance, for the £1 a week Health Shield’s Essentials Health Cash Plan, an employee is in line for dental, optical and chiropody benefits of up to £60 a year each.

On top of this, there’s £160 for physiotherapy and other therapies, £200 towards a specialist consultation and scans, £80 towards health, wellbeing and screening, plus benefits such as a virtual GP and a 24-hour counselling helpline.

This range means that it’s not unreasonable for an employee to use their plan at least two or three times a year, potentially claiming much more than the £52 their employer spent on the cover.

Some strategies can cost even less. For example, a company that wants to promote healthy eating could change the contents of its vending machines to something more healthy or replace them with fresh fruit.

This could be done without any additional expense but would help to improve employee health as well as sending out positive signals about the company’s philosophy.

Tackling workplace issues

Benefits can also be used to target workplace issues. This is particularly the case with some of the wellbeing benefits that can help a workforce to lead healthier lives.

They can also be used to drive down absence. For instance, fast access to treatment on medical insurance can reduce the length of time employees are off work waiting on the NHS.

Bailey says that in some instances something as simple as a virtual GP service can help to keep staff in the workplace. “Waiting to see a GP can mean a whole day or more out of the office,” he explains. “Providing a service where they can phone or webcam a GP leads to less absence and will becoming increasingly relevant as the workforce ages.”

The profile of a workforce can also have a bearing on which benefits will be most effective. Although medical insurance is regarded as the premium healthcare product, its value to an employee is likely to much lower if they don’t need to claim. Then, rather than see it as a means to access private treatment, it’ll be regarded as an expensive P11D liability.

This may be worth taking into consideration when deciding which benefits are most suitable for a younger workforce, who tend to make fewer medical insurance claims. Instead, they might prefer a cash plan, or health and wellbeing initiatives such as discounted gym membership or on-site exercise classes.

Tailoring benefits

Employers who really want to maximise the effectiveness of healthcare benefits can tailor them to their workforce. Those with more than around 250 staff members can do this on their medical insurance. Similarly on a cash plan a larger scheme will open up bespoking options.

Some cash plan providers will consider tailoring for much lower numbers, too. For example, through its Mosaic scheme, Westfield Health will let companies with 20 or more employees tailor their plan. Providing at least two of the core benefits – optical, dental, therapies and consultation – are selected, they can design their own plan from more than 20 services on offer.

Using a healthcare trust is another way to tailor benefits. Richard Saunders, sales director at Healix Health Services, says that although many employers have simply replicated medical insurance benefits when they moved to a trust, it’s possible to be as creative as you like.

“An employer can completely revamp their health benefits, making them relevant to their workforce and their objectives. I’ve seen companies add flu jabs, health screening and critical illness payments to personalise their benefits,” he adds.

Another key advantage of using a trust is control over the claims fund. Any underspend can stay within the trust, helping to reduce the cost of providing the benefit. Saunders says this can work well where claims are low.

“We saw an employer recently who was spending £200,000 a year on a cash plan but staff were only claiming between £40,000 and £60,000 a year,” he explains. “By putting the benefit in a healthcare trust, the employer was able to use the under-spend to fund other benefits.”

Your pension obligations could also serve to benefit your healthcare strategy. As auto-enrolment has resulted in more companies introducing flex platforms, it’s become easier to provide other benefits, including healthcare, this way.

By doing this an employer can offer their staff a base level of cover with the option to fund any increases they might want.

Saunders adds: “Let workers decide what they want to upgrade and they’ll have exactly the healthcare benefits they want. This can lead to higher levels of appreciation, which in turn makes a healthcare strategy much more effective.”

Wellbeing and healthcare will be key topics THIS WEEK at Reward Live. For the full programme, please CLICK HERE.