How to implement affordable healthcare benefits in a cost-of-living crisis

Need to know:

  • The cost of providing or accessing benefits is always going to be a big factor for employers and employees.
  • Many healthcare benefits can be implemented at low cost to the organisation and no cost to the employee.
  • Redirecting benefit spend to schemes which are more valued will ensure employees are provided with appropriate support.

After the tumultuous events of the past few years, rising costs are a key concern for everyone at the moment. In October 2022, Willis Towers Watson published its 2023 Global medical trends survey, which found that the growth in healthcare benefits costs is projected to rise to a global average of 10% in 2023, from 8.8% in 2022.  In the UK alone, private medical insurance (PMI) costs are anticipated to rise by 8.8% in 2023.

The health and wellbeing of employees is always a business-critical issue, so how can employers implement budget-friendly benefits for both the organisation and the individual? Arjan Toor, chief executive officer (CEO) of Cigna Europe, says: “Whether employers have two, five or 500 employees, cost is always going to be a factor in one way or another. The ever-evolving world of work, budgetary pressures, increased medical inflation costs and the ongoing cost-of-living crisis all contribute to the greater requirement for affordable healthcare benefits.”

As priorities and circumstances change, healthcare needs to adapt with more affordable propositions that still allow employers to put the whole health of their employees first, adds Toor.

Impact of economy on health

The cost-of-living crisis has had a huge impact on health and wellbeing; employee assistance programme (EAP) provider Health Assured has seen a 40% year-on-year increase in finance-related calls to its helpline, says Bertrand Stern-Gillet, CEO. “That’s been the single biggest area of increase that we’ve seen,” he explains. “January is always a challenging period for individuals, but even more so this year.”

Concerns about financial situations can cause many problems for individuals, which, of course, will extend to the workplace; there are the serious worries about using the heating during a cold winter, paying household bills or perhaps having to use a food bank for essential supplies, and the knock-on effect that this can have on health. Consequently, lack of sleep, nutrition and worrying about money can lead to poor mental health, lack of motivation and productivity.

The increasing living costs affect many employees, so they may look to their employer for support. Laura Matthews, senior wellbeing and benefits consultant at Barnett Waddingham, and a member of Legal and General Group Protection wellbeing advisory board, says: “There are proven links between poor financial hardship and mental health. If [an employee] suffers with [poor] mental health, [they] are more likely to make poor financial decisions. Very much like mental health is a taboo subject, financial wellbeing, or money, is a taboo subject. We need to normalise conversations with money; it’s about encouraging a culture of openness, and it is very much about going against the grain in the respect that we should be more confident in talking about money.”

So what can employers do to support staff in these situations, especially when budgets for organisations and individuals are being squeezed at every opportunity? Employers have recognised the need for support and are offering help that will not need employees to pay out of their own pockets, says Mark Fosh, director of small and medium-sized enterprises (SME) at Howden Employee Benefits and Wellbeing.  “We are seeing a real growth with mental health concern,” he says. “We are seeing a rise in the employee assistance programme (EAP), digital GP services, counselling services and bigger things like [private] medical insurance [PMI] and everything that comes with it.”

EAPs can play an important role in a cost-effective healthcare and wellbeing initiative; the price is fairly low for employers but these offer a huge amount of advice and support. “The EAP gives an individual confidence that they are speaking to a professional and can be referred to face-to-face care if required,” says Fosh.

Subsidised gym membership, onsite gyms and classes, and wellbeing and exercise apps can also support the physical health of staff. Other low-cost options include education and training sessions; usually focused around financial literacy or debt management for example, these can all aid an employee’s mental wellbeing by removing some of the stress around finances.

“We talk a lot about creating a culture of support and understanding, because that’s free,” says Stern-Gillet. “It goes a long way if people in the organisation have that feeling that their leaders and their colleagues care about them, are invested in them and their problems, and will do what they can to help.”

Squeeze on benefits budgets

Providing supportive benefits during difficult times will also put pressure on employers’ budgets; according to research by Towergate Health and Protection in September 2022, 58% of employers said cost was the biggest barrier to providing health and wellbeing support for staff. Therefore, it is not necessarily about implementing new schemes, but perhaps looking at how money is best spent, says Matthews. “Organisations are taking more of a holistic view: understanding what they currently have, asking is it fit for purpose and where can they best redirect the spend,” she says. “Organisations are trying to do what they can through education and raising awareness.”

Benefits that may have been effective pre-pandemic may now be surplus to requirement as priorities have changed. Employers can push the benefits they currently offer through new communications to staff, reminding them exactly what is available through the workplace and how they can help their current situation. “It is absolutely essential to make sure that [the benefits] are understood, not only at an employee level, but also management level,” says Fosh.

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As an example, if an employee has a bad knee, their manager needs to be aware that they can remind them that a health cash plan includes a physiotherapy allowance. Many group risk benefits also have value-added schemes, such as an EAP, that employees may not be aware of and which come at no extra cost to the individual; it all comes down to the communication of the benefits.

So, while cost will always be a factor in what employers are able to offer to their workforce, there are a number of lower-cost options they could consider when looking to support employees’ health and wellbeing.