Research: which healthcare benefits are on offer

An employer’s size has a bearing on whether it offers perks such as private medical insurance to all or only some of its employees, says Debi O’Donovan


This year’s survey delved a little deeper than usual, not only to identify which benefits employers offer to employees, but also find to out whether these are offered to some or all staff, to give a truer reflection of the market.

An employer’s size makes a big difference as to whether a benefit will be, firstly, offered, and, secondly, restricted to certain staff. The largest employers with more than 10,000 staff are almost twice as likely to offer private medical insurance (PMI) to selected employees – 59% of the biggest organisations offer PMI to at least some staff, compared with 31% of organisations with 1,000-9,999 staff.

But they are less likely to offer it to all staff. Just 10% of the largest employers offer PMI to all staff, whereas 25% of those with fewer than 10,000 staff offer it across the board. PMI is still slightly more likely to be offered as a core benefit, rather than via a flexible benefits or voluntary benefits scheme.

Few organisations of any size restrict cash plans to certain groups of workers, but smaller firms are more likely to offer them to all staff. One in five (22%) employers with less than 500 staff offer a cash plan to all staff, whereas 5% of larger firms do so. The larger the organisation, the more likely it is to offer a healthcare cash plan via a voluntary scheme. Just 8% of those with fewer than 100 staff do so, rising to 37% of those with more than 10,000 staff. Sector also affects which perks are offered.

For example, the public sector’s strength is its focus on staff wellbeing through occupational health, counselling and health screening. The private sector relies more on insurance perks.

There is a big discrepancy in the proportion of public sector versus private sector employers offering PMI. One-third of public sector organisations pay for PMI for some or all staff, while 70% of private sector employers do so.


About 20% of employers run flexible benefits plans and these figures show the total overall proportion of employers that are offering particular healthcare benefits via flex.

This breakdown puts the size of the flex market into perspective. It also flags up the fact that healthcare benefits that can be commoditised are most likely to make it into a flexible benefits scheme.

Wellbeing and occupational benefits, such as on-site nurses and healthy-eating options in the staff canteen, cannot be flexed.


The shape of healthcare benefits offered via a voluntary benefits plan (where the employee, rather than the employer, pays for them) is markedly different from schemes where the benefits are paid for by the employer.

Less expensive benefits rule the roost, with cash plans coming up tops. However, it is clear that voluntary benefits are usually used in conjunction with core or flexible benefits, because PMI for dependents would not feature so highly if employees were not already receiving PMI for themselves.


It is well known that some employer-paid healthcare perks are offered only to limited groups of staff, usually senior managers or executives. For example, as many as 32% of our 2009 respondents restrict the employees to whom they offer private medical insurance (PMI), whereas 24% offer it to all staff.

Dig a little deeper and the true extent of the restriction becomes clearer. Half of our sample offer PMI to executives and senior managers, while 40% extend it as far as line managers.

Size matters, though, because the larger the employer, the more likely it is to offer PMI, and, in particular, the more likely it is to offer it to the top echelons of staff. Among those with workforces of more than 10,000, as many as 76% offer PMI to executives and senior managers, whereas only 27% of this group offer PMI to all employees.

Healthcare cash plans are traditionally viewed as the poor man’s PMI, so it is not surprising that the results show they are more likely to be offered to the general workforce than to very senior staff (who may already be covered by PMI, so might feel that cash plans are unnecessary).

Group income protection, in contrast to both PMI and cash plans, tends to be offered more evenly across all sectors of the workforce.


Both anecdotal and quantitative data shows that employers are reviewing benefits more thoroughly because of the recession. The Employee Benefits Research 2009, published in May, indicated that one-third (33%) of employers are reviewing benefits to obtain a better deal.

As our healthcare research shows, conducting an annual review is normal practice for two-thirds of employers when it comes to healthcare benefits.

However, as many as 21% leave it for two years or longer. Given the level of medical inflation and large variation in pricing, there are plenty of potential savings to be made if these employers were to review more often.


The recession is having an impact on employers’ strategies around healthcare perks. To reflect this, we expanded this element of the questionnaire in our 2009 survey.

The good news is that employers are still more likely to expand the number of benefits on offer than reduce them. They are also more likely to increase the number of staff covered than to restrict cover.

This points to the assumption that employers believe in the value of offering benefits to achieve key objectives, such as reducing absence and improving productivity.

But these growth areas are not as large as were expected a year ago. In 2008, 28% expected to increase the number of benefits on offer. A year on, that has dropped to 22%.

For the first time, we asked about reviewing fees and commissions paid to brokers. In the past year, much more attention has been paid to these structures and employers are wising up to the need to check these thoroughly to ensure they are getting the best deal for their organisation rather than the best deal for the broker. One-third (34%) of employers plan to review this – hopefully the other two-thirds are already clued up about what they are paying and are happy they have the best deal.

Click on the links below for more sections:

Research: who are the respondents; key findings
Research: attitudes to health and wellbeing
Research: what impact health and wellbeing perks have on sickness absence
Research: strategies to deal with employee stress
Research: healthcare costs and calculating return on investment
Research: how employers deal with legislation change