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The benefits of employee health benefits



Paul Avis, corporate development manager at Ceridian UK, reviews what employee benefits work best in reducing employee absence, as well as how they can help in increasing attendance.

Beyond being paid a salary to attend work, many employers spend a fortune on employee benefits and, in some cases, this can be a waste of money. Often forgotten about, under-used, introduced too late and generally operating in a non-cohesive way, employee benefit use can be very poor in many organisations.

The aim of this article is to assess what benefits are best in reducing sickness absence, how they should best be used and how, through proactive communication of the entire spend, employee morale can increase which in turn will enhance attendance.

Private medical insurance and other mechanisms

With traditional private medical insurance (PMI) potentially costing up to £800 per employee, this is not a growing market and tends to be limited to executive only schemes or those with historical/TUPE terms and conditions.

The problem is that whilst billions have been pumped into the NHS, there are still waiting lists, so how can employers get employees back to work to both restrict occupational sick pay, reduce workload on attending colleagues and also gain their productivity?

Setting up rules is one option: the employer will pay for treatment only when the cost of it is less than the sick pay. This can be contentious for lower paid employees, and consideration should be given to the benefit in kind/P11d implications and defining a clear prognosis, i.e. the cost of occupational sick pay (NHS waiting time plus recuperation time) can be subjective and so an occupational health triage is recommended.

Some PMI insurers have developed six-week plans where employees are only treated when the NHS waiting list is longer than six weeks, whilst others will pay a fixed percentage of costs up to a certain amount. Others have built up mechanisms where the employer pays for administration of the PMI claim and also for a ‘stop loss’ insurance but then self insures up to that amount which again reduces full PMI costs. The industry is trying!

Cash plans

One very successful and growing area of budget PMI is the growth in cash plans. These have inbuilt dental and optical refund mechanisms and so are a highly visible benefit because they should be used regularly by employees but, of more importance to the employer, they can also fund for a certain amount of out-patient consultancy time and will even pay for PET/MRI/CT scans.

With consultant waiting lists sometimes at three months and six months for scans, for an initial budget of £1 per employee per week, cash plans are both affordable and make perfect business sense. Some also have in built Employee Assistance Programmes (EAP) that provide unlimited help-line usage and face-to-face counselling.

Wherever possible, it is always better to have a modular EAP rather than an integrated one as the modular one will have rolling communications to employees to encourage usage (many forget especially where it is in a 16-page booklet!), bespoke management reports and account management.

Replacing the EAP component with some personal accident cover or a GP 24/7 helpline ensure that such cost elements are reflected in the service provided. If employers cannot afford a modular EAP on top, to maximise usage promotion internally on a DIY basis can do this and in turn promotion is very important for employer protection against work based stress claims.

Group Income Protection insurance (GIP)

Salary continuance for prolonged disability could be perceived to be an encouragement for employees to take time off but with all insurers pleading for claims forms at three to six weeks (most have 13 or 26 waiting periods before the benefit gets paid) the insurance has become an out-sourced vocational rehabilitation programme as much as a safety net for when catastrophe strikes.

Insurers will consider paying for private medical treatment, working on Disability Discrimination Act (1995) compliance when adaptations will help get the employee back to work and deal with the diverse range of stakeholders, for example line manager, family, clinicians and so on, to facilitate a return to work.

Whilst this may be seen as altruistic, the insurers have a financial motivation to act to prevent an absent employee from becoming a claimant and so their services, whilst appearing free, are as much motivated by claims mitigation as they are by doing the right thing by the employee.

Some insurers are becoming innovative in this area by offering free or bundled associated services such as offering a second opinion service for chronic cases, employer legal support on sickness absence with staff handbooks, letters etc, whilst others have chargeable additions such as out-sourced absence management services.

Out-sourced sickness absence services

The latter acts as glue for all of the health-related benefits, services and HR policies and procedures, for example, by signposting employees to the EAP and PMI on day one, providing the GIP claims forms at week three or six, reinforcing the absence policy with routine prompts to line managers and so on.

In addition, on the first call in they also capture whether the absence is work related and this can immediately trigger free vocational rehabilitation from the employer liability insurer if this is offered. Once again the aim is claims mitigation but many employers are unaware of this support for work-based absences.

The other benefit of the first call is that they take the presenting issues and this can then inform the next stage of healthcare expenditure, for example flu vaccinations, manual handling/ergonomy/physio for back/neck pain and so on. This ensures that employees feel that the employer wants them at work and is willing to invest in their wellbeing.

In addition, by the absence management service sending out line manager action requirements, each and every absence is acted on and nobody is missed. This can reduce absence indifference or entitlement mentality, which in turn will increase morale; there is nothing worse for a good attender who constantly sees a non-attender not being managed. Until one day they feel it is their turn to be off!

Even occupational health referrals can be seen as a benefit if the employee communications are right and the system can prompt the line manager to act in the right way with the right paperwork.

From sickness, absence and disability management to employee wellness

Traditional health screens where big lorries arrive on sight and undertake a range of tests are still in existence but are now supplemented by on-line systems, which have a range of indices that assess mental as well as physical health, and then provide a customised action plan for each and every employee.

Forcing employees to be healthy is a thin line that few employers try to cross and so letting employees drive their own wellbeing in an informed way should not be under-estimated.

Having completed the on-line screen employees are encouraged to act on it at motivational events and then have either email or telephonic prompts to see if they have made the relevant changes to their personal health.

Whilst in its infancy, this market is gaining in popularity and as a result employers now have mechanisms to offer employees a personal road to health. Communicating such positive messages can also be achieved by wrapping all of the benefits into a flexible benefits system.

Historically these have been extremely expensive but with costs again starting from £5 per employee per annum and with functionality that includes total reward statements (capturing all expenditure rather than just salary), their ambition is that the visibility of healthcare benefits is never missed and that employees are constantly aware and using each fragment in a consistent way when needed.


Employers can spend up to 30 per cent of salary costs on a badly financed final salary pension scheme, but all of the benefits denoted above should cost no more than 1 to 2 per cent of salary. The pension may benefit them in 20, 30 or 40 years rather than at day one – why pay so much for a deferred income when the current income is at threat if an employee goes off sick tomorrow?

Pensions are transferable – the employee leaves and they take the money with them, and with people routinely moving jobs employers must re-think their approach to benefits and make them both immediate and relevant.

Having the kind of healthcare benefits described above, that are used on a daily basis, and are there for times of catastrophe or where support is needed, provide not only an employee benefit, but an employer benefit too.

Increasing legislation, the need to improve employee productivity, and rising insurance costs all imply that a healthcare investment will always provide a positive return on investment.

And if that is not on the organisational agenda for good business sense then lets turn it around and ask: what happens to you when you are sick or disabled? When you know what will happen to you, how much you will get, from whom and how long for, then we really are talking about a motivated and productive workforce!

For further details please contact: Paul Avis, corporate development manager, Ceridian UK, on 0800 733337.

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