The most attractive and effective health and wellbeing packages are those that have been carefully tailored by employers to suit the profile of their workforce, argues Sam Barrett
Employers are tapping into the UK’s obsession with health and fitness, putting together benefits packages with healthcare perks, such as private medical insurance, cash plans and health and wellbeing advice, to attract potential recruits.
Richard Halley, head of sales at HSA, says: “Anything health related is high profile and can do wonders for the employer’s image. It shows they care and employees, both current and potential, appreciate this.”
Medical insurance often appears in the top three most wanted benefits in employee surveys and was the most widespread core healthcare benefit, offered by 56% of employers, in this year’s Employee Benefits/HSA Healthcare Research 2008.
A whole range of benefits and wellbeing initiatives now fit under the healthcare banner and sit alongside the traditional perks of medical insurance, income protection and cash plan options. These include health screening, employee assistance programmes, healthy-eating options in the canteen and subsidised sports or gym membership. Ronjit Bose, senior manager for product development at Standard Life Healthcare, says: “There are a lot of healthcare perks to consider and the list is growing.”
Throwing together a mix of these benefits to maximise appeal is an option, but Karen Gamble, regional director at benefits consultants Heath Lambert, recommends that employers consider their employee profile before forking out on benefits. “Think about the type of employee you want to attract. Their seniority and age can affect which benefits appeal,” she says.
As an example she points to gym membership. While this perk might appeal to people starting out in their careers, it is less important for employees in senior positions. “The higher up the ranks, the less it’s required. Employees in senior management often don’t have the time to go to the gym and may prefer benefits such as medical insurance,” she explains.
Employers should also consider employees’ income and the treatment of perks for tax purposes. For lower-paid employees, private medical insurance (PMI) can come with a nasty sting in its tail. The benefit, which costs an average of £450 a year per employee, is taxed as a benefit in kind. HSA’s Halley says: “Employees can resent paying this extra tax for their PMI, especially if they never claim. This is less of a problem on cash plans as premiums are lower and claims frequency is high.”
He says that in some lower-paid working environments cash plans, which provide cash back for a range of medical expenses often including optical, dental and physiotherapy treatments, are becoming the norm. “Cash plans are very popular in call centres. There isn’t much opportunity for employees to increase their pay so a plan that helps with the cost of healthcare can make a tangible difference.”
However, Gamble says that some higher-paid employees might not appreciate being offered a cash plan. “The benefits are good, but if they’ve seen the advertisements saying they cost £1 a week they’re not going to be overly impressed with your offer,” she explains.
In putting an attractive healthcare package together, employers will also have to take into account the cost of the perks. Some benefits have a considerably lower price tag than others. For example, a cash plan can be as little as £1 a week per employee, while medical insurance is almost 10 times the cost. In addition, the cost of a cash plan is likely to be the same for at least two or three years, while the cost of medical insurance will escalate in line with medical inflation, which can be as much as 10% a year.
One way round this is to allow employees an element of choice over the healthcare perks they select. HSA’s Halley says: “You can offer healthcare benefits on a voluntary basis or provide a low level of cover and give employees the opportunity to upgrade. This is easy to do, but the impact is less than if they’re paid for by the employer.”
However, where the employee meets the cost of the perk, it helps get round the benefit-in-kind taxation issue.
Whatever is offered, employers should identify how they can effectively outline the healthcare benefits to prospective employees during the recruitment process. Peter Lauris, sales and marketing director at Medicash, says: “A job advertisement could refer to healthcare benefits but I wouldn’t go into any more detail than that as people don’t necessarily understand the products. This could mean they end up thinking you’re offering more, or less, than you actually are,” he explains, adding that the interview is a better place to outline the package.
Employers should remember that not only do healthcare perks help to attract the best employees, they can also help cut sickness absence rates through early intervention, as in the case of PMI and income protection, or help employers meet their duty-of-care requirements around eyecare and workplace stress through, for example, a cash plan.
Additionally, there’s also evidence that a range of healthcare perks can help the bottom line. For example, when Royal Mail revamped its benefits, it reduced absence from 7% to 5% and saved more than £227 million in direct costs.
While the right mix of healthcare perks might help employers attract the right person, it will also ensure they keep staff healthy and productive.
Case study: Staffords
Staffords, a national office equipment repair and maintenance specialist with a head office in Liverpool, put in place an employer-paid cash plan to help tackle poor attendance. It employs around 70 people including engineers, field and workshop repairers, and office and call centre staff.
Dave Latham, Stafford’s business development director, says: “We’d been experiencing poor attendance for a number of years and we wanted something that could address this but would also be a benefit that staff would appreciate.”
After assessing a number of options, he chose a cash plan, Medicash’s Reward scheme. The employer-paid cash plan provides a range of benefits such as dental and optical treatment, and stress helplines plus health screening every three years. “The health screening has been particularly useful. It detected a couple of health problems, including an employee with diabetes. He’d been undergoing tests with his GP for a year but diabetes had been completely overlooked. His condition would have worsened if it hadn’t been picked up in the screening,” he adds.
Latham also believes offering a cash plan helps to give Staffords the edge over its competitors. “When we advertise for staff, we always include the health plan in the advertisement. Cash plans aren’t commonly available among our competitors and prospective employees do like the fact they’ll receive it,” he says.