How can a health and wellbeing strategy incorporate private medical insurance effectively?

Incorporating PMI

Need to know:

  • Private medical insurance (PMI) should not be looked at as an isolated product, but should form part of an integrated healthcare strategy, offered in alignment with benefits such as occupational health and employee assistance programmes (EAPs).
  • The communication of PMI as part of a health and wellbeing strategy should be targeted at different employee cohorts to emphasise how it can assist with different healthcare requirements.
  • PMI claims data is a useful tool for measuring specific health trends within a workplace, which can then help employers to create a targeted healthcare proposition for staff.

The long-standing presence of private medical insurance (PMI) within reward packages is testament to its popularity among employees: research by Ellipse, published in February 2017, found that 48% of employee respondents rank PMI among their top three most valued benefits. It is perhaps unsurprising, therefore, that the Employee Benefits/Staffcare Benefits research 2017, published in May 2017, found that 79% of employers offer PMI as part of their employee benefits package.

However, employers can look at how to use PMI to greater effect within a wider health and wellbeing strategy to both improve outcomes for employees and generate a return on investment, says Rachel Riley, managing director, global brands and major enterprises at Western Provident Association (WPA). “[PMI is] a vital part of a health and wellbeing strategy, but it does need to evolve,” she explains. It has to […] progress to fit the needs of the marketplace […] and the challenges financially going forward.”

Strategic approach
Employers can draw on annual or six-monthly PMI claims data to measure and analyse specific health trends within the workforce. This will allow the organisation to take a more proactive approach to its PMI spend and employee wellbeing, perhaps with a tailored or flexible policy that matches the needs of staff and wider business goals. Alistair Dornan, head of health management at Capita Employee Benefits, says: “It’s such a quick win for organisations to use that data more effectively and begin to design and direct the journey of the wellness programme.”

Employers should also ensure they do not look at PMI purely in isolation, but instead feature it as a component in an integrated health management ecosystem, says Dornan. This would include all of an organisation’s healthcare providers working closely together to share data and refer employees seamlessly between healthcare services. “[Employers] can integrate healthcare into a wellness strategy if they can re-design the care pathways those people are on,” says Dornan.

An example of this would be acknowledging that there can be a correlation between musculoskeletal conditions and stress. If an employee is off with a bad back, employers could promote counselling or an employee assistance programme (EAP) alongside physiotherapy. “Encouraging employees to seek proactive support rather than reactive treatment is a great thing,” adds Dornan.

Personalising healthcare
It is important that employers question what they want to achieve from their PMI offering, especially when considering the objectives of an over-arching health and wellbeing strategy, says Adrian Humphreys, head of group risk and healthcare at JLT Employee Benefits. These objectives can often be coloured by an organisation’s culture or financial constraints, and be reflective of a specific workforce demographic. For example, younger employees saving for their first house might not want the expense of a full PMI package, but they may want access to elements such as scans. Employees with families may require more extensive healthcare coverage that includes dependants, so they can get quick access to treatment for their children. Facilitating prompt care and treatment for employees’ children could also reduce the worry and stress parents may experience, thereby improving productivity. Directly addressing how PMI can have an immediate impact on an employee’s specific situation can also be an effective way to increase take-up.

Lower-cost versions of PMI are also evolving to accommodate a greater variety of employee needs and to make private healthcare available to a wider demographic. This could include PMI that focuses on the main drivers of workplace absence, featuring treatments for musculoskeletal and mental health conditions, as well as some cancers. Another option would be a diagnosis-only product that could provide a set number of consultations and scans up to a certain cost.

Mitigating tax increases
Carefully planning a health and wellbeing strategy can help to mitigate the costs of the increasing insurance premium tax (IPT), which rose from 10% to 12% in June 2017. Glen Parkinson, managing director, health services division at Axa PPP Healthcare, says: “If [employers] can create an environment and provide necessary support to encourage and engage [the] workforce to stay fit, active and healthy, then the need for them to be able to claim on the private medical insurance does start to reduce.”

IPT could reach the 20% VAT rate in the near future, predicts Riley. Organisations could make use of excesses or implement a six-week rule plan, which encourages employees not to use PMI if the same treatment is available via the NHS within a six-week period, in order to reduce PMI costs and their exposure to IPT, says Parkinson.

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Although it can be seen as being quite restrictive, medical underwriting is another tool that could be used to minimise claims costs. Other arrangements to help reduce the cost of PMI are a corporate excess scheme or a healthcare trust, which are not subject to IPT.

PMI may be a mainstay among an organisation’s healthcare benefits, however, employers can find creative ways to increase its impact and reduce costs by effectively integrating it into a wider health and wellbeing strategy.