Not all health insurance is equal, and in fact not all of it is health insurance at all. There’s a huge difference between buying your employees ‘access’ to private health care, and buying them a health insurance plan – something that will pay for health services when you need it to.
But if you’re new to the market - or even renewing in a hurry - it can be hard to spot the difference and to know what to look for.
We know that post-pandemic, with the NHS struggling, interest in private health care is on the rise. And despite (or because) of the financial climate, businesses of all sizes are increasingly recognising the importance and potential of health benefits in attracting and retaining staff, and maintaining productivity and business continuity.
At Equipsme, we’ve seen a huge leap in interest in our plans over recent months, from huge manufacturing firms with thousands of employees, to self-employed freelancers and everyone in between.
In making that decision to buy health insurance there’s a lot to think about, and potential pitfalls to avoid. Here are 7 things we think you should be looking out for when choosing company health benefits.
1. Healthcare v health insurance
Healthcare is not the same as health insurance, and if a provider is avoiding the word, the likelihood is you’re not looking at an actual insurance plan. It could be you WANT something that’s opening a door to private cover rather than paying for it, but it’s important to understand what your employees are and aren’t going to get.
2. Beware of caps and limits
Always read the small print, especially when it comes to caps and limits. Claims may be subject to NHS waiting times or even cover described as ‘discretionary’ – which could mean it’s ultimately up to the provider to decide whether or not to pay out after the fact.
Clearly, some health insurance benefits have some sort of limits – it’s common sense. At Equipsme for example, we have a limit on the number of physiotherapy sessions someone can take in a year of cover. Just make sure you’re taking the time to check the details and make sure your employees are really getting the support they need. It might be in budget, but does it actually represent good value.
3. A long claims black-out period
It’s pretty normal for health insurance plans to have a run up before cover kicks in – it’s actually a pretty sensible way to ensure people who are suddenly really ill don’t rush out to buy a policy and then claim for very expensive treatment. At Equipsme, for example, there is an exclusion of three year pre-existing conditions for physio, diagnosis and treatment.
But if that no-claims period lasts 6 months into the first year of cover, for any new condition, all you’ve really bought for your employees is a GP helpline, discount codes, support helplines – oh and a newsletter. So your employees may not have any real value until month 7.
4. Plans that want employees to pay up front
Expecting your employees to pay up-front cash for their healthcare may make it less likely they’ll use it - and if so, deny you all the benefits of increased engagement, improved productivity, and decreased absences you were probably looking for in the first place.
Even if reimbursements can be both guaranteed and processed in a matter of hours, many people’s bank accounts may not be able to take the hit. As many as one-in-four UK adults are either in financial difficulty or have little to no savings, and being out of pocket, even for a day or two, is just not feasible for everyone.
5. Family cover-sharing that dilutes
Lots of people value company health insurance because they can include their family, and have a health safety-net for their partner and children they wouldn’t be able to afford to buy themselves. But look out for plans that mean adding family just divides the employees’ entitlement between everyone else put on the plan.
So if they’ve got £200 of optical allowance and a spouse and 2 kids, each person only actually gets £50. You’re not getting them more cover, you’re getting them diluted cover. That’s not something we do at Equipsme, by the way.
6. Missing diagnosis cover
Some plans won’t include diagnosis. So while hospital surgery might be covered, your employees are waiting for diagnosis on the NHS before their plan will actually kick in, using a cash plan or paying for it themselves. There may also be treatment bandings and maximum payments so again, employees might need to stump up any shortfall.
When fast diagnosis is so key, and NHS waiting lists so long, that’s a gap that could cost individuals – and your company – dearly.
7. Introductory deals you won’t be able to afford 5 years down the line
Yes, you’ve got a great deal in year 1 but what happens in year 2 and beyond? What happens if there are large claims and will prices increase as your team get older? How much will you actually be paying 5 years down the line – can you afford it, and will your employees be happy to pay higher P11D tax? Just remember that there’s more to consider than the great deal you’re looking at in year 1.
Traditional PMI, especially for SMEs, tends to go up each year as employees get older and medical inflation is applied. It’s not unheard of for costs to increase by more than 10% each year... Compound that over 5 years and something costing £100 in year 1, now could cost £146 or more per employee in year 5. Employees will also pay higher P11D costs as things increase.
By contrast, Equipmse prices on our employee plans for companies have only increased by 3.5% (compound p.a. average) over a similar 5 year period. In trying to open up health care to more businesses and more people, affordability and sustainability have always remained cornerstones of our vision. We can’t guarantee prices won’t change in the future but we are trying to challenge conventional pricing methods.