Employee Benefits – Private Medical Insurance

Employee absenteeism is a well-renowned issue for employers. According to the Office for National Statistics, 137 million working days were lost because of sickness or injury in the UK in 2016, the equivalent of 4.3 days per worker.

Many studies have shown that businesses who provide some form of wellbeing strategy can help to reduce these statistics at the same time as achieving better performance, lowering absence rates and improving productivity. Through the implementation of a structured wellbeing strategy, organisations can also address the issue of presenteeism, which can manifest itself in several ways; these include going to work when unwell, putting in long hours, taking too few breaks or being unable to ‘switch off’ outside of normal working hours.

In addition to having a detrimental impact on an employee’s health, through the potential for symptoms to worsen due to a lack of proper rest and recuperation, presenteeism has also been shown to have negative effects on productivity, engagement and staff retention. Furthermore, with 88% of employees admitting to going to work when suffering from a minor illness, the potential for ill health to spread to other employees is an ongoing concern.

Whilst absenteeism due to ill health is inevitable within any organisation, there are steps that businesses can take to help reduce the impact that this has on their bottom line. One option is to offer private medical insurance as a means of helping employees with health issues to access medical assistance faster and, as a result, get better quicker and return to work in a shorter period of time.

Offering PMI as part of an overall workplace benefits package has also been shown to attract and retain talent. According to a survey conducted by EEF in 2015, PMI was voted the most popular benefit offered to almost two-thirds of employees.

What is Private Medical Insurance (PMI)?

PMI is a health insurance that offers employees access to treatment for curable, short-term illnesses/conditions and accidents. This is usually in the form of specialist consultations, diagnostic tests and a blend of in- and outpatient procedures. Back pain, skin disorders and musculoskeletal conditions are some of the most common conditions claimed for.

Whilst PMI did not traditionally cover pre-existing or long-term conditions, some businesses are opting for policies that operate under a medical-history-disregarded basis to enable employees to seek medical support for a wider range of conditions.

What does it cost?

Employer paid PMI is treated as a benefit in kind and classed as an allowable business expense. As such, employees pay tax and NI on premiums while employers can get corporation tax relief on premiums. The average cost of PMI is dependent on several factors, including, but not limited to, the employee’s age, the scheme size, the employer’s claim history, whether they operate under a medical-history-disregarded basis as well as other limitations that they may choose to impose such as only offering PMI when the same treatment on the NHS has a minimum six week wait or restricting which consultants an employee can see. The cost can typically range between £200 and £1,500 per employee per annum.

There are a number of Private Medical Insurance providers in the market and which one is best for your business will depend on the individual characteristics of your organisation. If you would like advice on how to implement a PMI as part of your workplace benefits scheme, please contact Finura.

Articles on this website are offered only for general informational and educational purposes. They are not offered as, and do not constitute, financial advice. You should not act or rely on any information contained in this website without first seeking advice from a professional.

Sources:
https://www.employeebenefits.co.uk/harmful-presenteeism-employee-health/
https://www.employeebenefits.co.uk/issues/december-2017/terry-woolmer-employers-can-make-pmi-cost-effective/
https://www.cipd.co.uk/knowledge/fundamentals/people/benefits/group-risk-factsheet#
https://www.employeebenefits.co.uk/issues/may-2016/buyers-guide-private-medical-insurance-2016/
https://the-happiness-index.com/cut-employee-absenteeism-costs-2018/

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