If you read nothing else, read this…
• By law, employers must pay for eye tests and glasses for employees who use visual display units (VDU). Of those with an eyecare policy in place, most reimburse through expenses or issue eyecare vouchers.
• To meet their duty of care, employers can choose to use health cash plans, which also offer broader benefits to the workforce.
• Although staff pay income tax on employer-paid cash plan premiums, employers may be able to negotiate with their tax office for a reduction relating the eyecare element.
Cash plans can offer broader eyecare benefits than the legal minimum, says Sally Hamilton
Employer funding of eye tests, and glasses, if prescribed, for staff who use visual display units (VDUs) for much of the working day is a legal requirement. But is it worth meeting those obligations by buying health cash plans for the workforce or forking out for tests and spectacles when required?
According to research published by Specsavers Corporate Eyecare in November 2011, 42% of employers reimburse eyecare costs through expenses and 33% buy eyecare vouchers. The survey also found that 20% of employers have no eyecare policy in place.
Under a corporate-paid health cash plan, staff claim back the cost of the test and glasses, up to set limits, directly from the provider. This effectively removes administration hassles for the employer.
Using a cash plan to meet their duty of care around eyecare also enables employers to offer a much wider employee benefit for their workforce. Howard Hughes, head of business marketing at provider Simplyhealth, says: “In our £1-a-week plan, there is £60 a year for optical claims. But for the same £1 a week, an employee can also claim up to £60 for dental treatment, £150 for physiotherapy and £100 towards a health screen.”
The drawback of employer-paid cash plans is that, as a P11D benefit, employees must pay income tax on the annual premium. But Hughes thinks the P11D tax charge, which is £10 for a basic-rate taxpayer on a £50 annual premium, is worth the cost. “When you add up the value of the benefit, this charge is quite small,” he says.
Employees can also reclaim the cost, within annual limits, of prescribed glasses unrelated to VDU use, such as reading glasses or prescription sunglasses. Through other corporate eyecare options, they will need to pay for such eyewear themselves.
However employers meet their duty of care to provide paid-for eye tests, the onus is on employees to organise the tests and, in organisations which do not have a formal scheme in place, to ask for the cost to be refunded. But Hughes says: “You may provide cash plans but you cannot take a horse to water. The same goes for employers that hand out eyecare vouchers. They could end up sitting in a desk unused.”
Jim Lythgow, director of strategic alliances at Specsavers, agrees there is no guarantee staff will use the perk, but says vouchers will always be valid. “They have an expiry date but we let individuals renew them,” he says.
Specsavers’ VDU vouchers cover an eye examination and glasses if required for VDU use.”By pre-ordering vouchers, employers can fix their budget,” Lythgow says. “Most employers still reimburse through expenses, which could cost up to £200 if an employee needs glasses, whereas they could fix it as low as £17 a person for an eye test and glasses [from a select range] with vouchers.”
Employers that use cash plans to meet their duty-of-care obligations should choose their plan carefully, says John Dean, director at benefits consultancy Punter Southall. “They need to check the scheme pays 100% of the optical claim. We like cash plans because they offer extras, such as covering children and paying out for those who need non-VDU glasses. But employers must remember cash plans are a taxable benefit.
“If they have a good adviser, they should be able to negotiate with the local tax office to reduce the tax on the eyecare element. Some staff may say they cannot afford to pay any tax, so employers would have to offer vouchers or refunds through expenses.”
Some employers may decide a cash plan is too expensive. For instance, one that costs £70-a-year per employee will cost an organisation with 1,000 staff £70,000 a year. Dean says: “They might prefer to work out what they pay out for eye tests and glasses in a typical year and compare the cost.”
Read more on health cash plans