The impact of the government’s Health and Work Service on group health benefits

This autumn, the government plans to introduce its Health and Work Service (HWS), which aims to get employees on sickness absence back to work as soon as possible, avoiding long-term sickness benefits.

Impact of government on health benefits

If you read nothing else, read this…

  • The Health and Work Service aims to help employees on sickness absence to return to work.
  • The service could help providers and employers to create new wellbeing initiatives.
  • But conflict could arise when an employee goes through the referral process.

The service aims to provide occupational health advice and support for employees, employers and doctors to help staff who have been off sick for four or more weeks to return to work.

Tom Gaynor, employee benefits director at Met Life, says: “Employers, intermediaries and insurers have to be open-minded to possible suggestions [from the HWS] that will benefit the employee and the workforce.

“It is a welcome change. Absence is something that is genuine and a real cost to employers.”

The HWS will also give employers a tax exemption of up to £500 a year per employee for medical treatments recommended by the service or employer-arranged occupational health services .

This will be funded by the abolition of the statutory sick pay percentage threshold scheme on 6 April 2014. This could affect whether employees receive an allowance, and promises to slash the amount employers spend on sick pay each year.

John Ritchie, chief executive officer at group risk provider Ellipse, says: “This is a welfare cut that has been wrapped in an invisibility cloak. I remain sceptical that this service will make much of a difference to anything.”

Impact of health reforms

Martin Anwyl, managing director of health and productivity at Buck Consultants, says more details need to be released before the effectiveness of the reforms can be understood.

“Details are needed in terms of level of support, response rates, capacity planning and service levels to see the complete picture,” he says. “A tender driven by price and the ability to deliver the service may lead to a two-tier occupational health provision. This could mean that employers looking for higher service levels will continue to pay for their existing service and lose the benefit of receiving statutory sick pay.”

The reforms might cause employers to rethink their group income protection offering. Robin Hyndley, head of accident and health for the UK and Ireland at Ace Group, says: “This creates opportunities for developing new wellbeing initiatives and return-to-work funding products.

“It could be in an employer’s interest to move from traditional income protection or comprehensive private medical insurance cover and stimulate demand for new alternatives.”

This could include group personal accident and critical illness cover. But the key factor will be how these and other group health benefits interact with the assessment process and how they could fund treatment, says Hyndley.

The challenge for insurers is how the HWS works with HR functions to link and integrate health and wellbeing initiatives with insurance benefits. Ellipse’s Richie says: “The lack of growth in income protection tells you something is wrong with the offer. The HWS will lead to a lot of redesigning.”

In recent years, insurance products have had to adapt to give staff access to wellness programmes to help employers manage health risks better. 

Gaynor says: “There are already solutions in place with robust group income protection plans. If employers are able to incorporate any elements of wellness to help staff get healthy before long-term absence has become an issue, then group risk benefits will start to represent a strong return on investment.”

Employee referrals

But research published by Jelf Employee Benefits in March 2014 found that 58% of respondents intend to build referrals to the HWS into their absence management policies.

However, Elliot Hurst, director of health consulting at Axa PPP Healthcare, warns that conflicts could arise when the service refers an employee.

“There could be an issue that would impact the service when a doctor refers an employee to the service and produces a return-to-work plan,” he says. “But, at the same time, the employer can refer the absent employee to its own health service. There is no regulatory need for the employer to comply with the HWS recommendations.

“It will be an issue because whoever the supplier of the service is, is only there on behalf of the government. It won’t deliver treatment, only advice.

“There should be no reason why the HWS cannot produce a plan to refer an employee to get support from the benefits programmes the employer has in place.”

Healthcare reform criticism

Like many healthcare reforms, the HWS has attracted criticism. A survey by PMI Health Group, published in January 2014, found that 86% of respondents are not confident about the government’s health and work assessment and advisory service .

Mike Blake, director of PMI Health Group, says: “It’s a big job. To provide a nationwide service and to get the quality [employers] need is a big task. Employers probably think they don’t need it that much.

“But if it goes to plan, then, of course, organisations will have this service in addition to what they are doing at the moment.”

The introduction of the HWS could be a good thing for employers needing to save costs, but the challenge for group health benefits is how they work with HR policies to integrate health and wellbeing services to help reduce employee absence and provide early intervention.

Met Life’s Gaynor adds: “It could be a catalyst for organisations to start to look at their different benefits, to deliver a programme around wellness and intervention.”

Case study: Deloitte supports employee health with multi-pronged approach

Deloitte

Professional services organisation Deloitte uses a multi-pronged approach to ensure staff receive appropriate healthcare support.

Its health and wellbeing strategy is divided into three areas to help tackle sickness absence: physical wellbeing, mental wellbeing and the working environment.

Stevan Rolls, head of HR at Deloitte, says: “Undoubtedly, the range of benefits we offer will have an impact on absence . We want our employees to remain healthy in the workplace, physically and mentally.

“Our approach is divided into three, which is what we have built around. It’s not all about provision, it’s also about providing high-quality offices, assessments and having flexible-working policies in place.”

As well as offering a range of healthcare benefits, including group income protection, private medical insurance and assessments, Deloitte aims to offer employees support tailored to their needs.

“It’s very dependent on an individual’s circumstances; it’s an almost tailored provision,” says Rolls. “We have health champions that are available for staff to talk to and who mentor employees because of their experience. It might not lead to treatment, but it helps to talk to someone confidentially.”

Rolls believes the HWS will support Deloitte in helping employees get back to work. “Like any employer, our intention is to try to get staff back to work as quickly and as successfully as possible,” he says.

“If the government is able to provide assistance and put a framework around that, it can only be helpful.”

Deloitte also runs a ’black dog’ campaign in partnership with the charity Sane, which helps raise awareness of mental health , and Rolls plans to continue growing the employer’s health and wellbeing strategy in the coming months.

“Over the last three to four months, we have tried to raise awareness about mental health and tackle absence,” he says.

“We will continue to look at wellbeing and make sure employees are aware of what is available. This is a regular item on our agenda.”

Viewpoint: What do employers need to know about the Health and Work Service?

Jenny Gulliford

The proposed Health and Work Service (HWS), a government initiative focused on supporting employees to return to work after a period of sickness absence, could make an important difference to UK employers.

The voluntary service is open to all employees that have been on sickness absence for more than four weeks , an estimated one million people a year. So it is no surprise that many employers and employees have been asking how this will affect them.

The main output of the HWS is the creation of a return-to-work plan, in most cases based on a phone assessment by a health professional. The focus of this will be advice and signposting to external services, and it will not provide interventions.

The introduction of the HWS will have a number of implications for employers.

Firstly, employers with existing occupational health services will have access to an additional external set of recommendations to help them implement effective interventions. Some employees will already feel they get appropriate support from their employer, and will not want to use this service. The decision is up to them.

Secondly, as an advice service, the onus will remain on employers to implement the return-to-work plan . Help is available through schemes such as Access to Work, and it has been announced that there will be a tax exemption of up to £500 a year per employee for interventions recommended by the HWS or an employer-arranged occupational health service.

Finally, small and medium-sized enterprises (SME) will be able to access advice that may previously have been too expensive. SMEs have always been seen as the primary user of this service. In theory, they should find it highly beneficial.

The HWS is due to be rolled out at the end of 2014.

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Jenny Gulliford is a researcher at The Work Foundation

Estimated annual long term sickness absence (source DWP)

Source: Department for Work and Pensions (DWP)