Control your PMI costs: three tips
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Many employers want to do the right thing by their employees by providing benefits such as Group Private Medical Insurance (PMI), but increasingly cost is the key factor when considering the ongoing viability of cover.
While PMI providers use their buying power to secure cost savings through their hospital networks and the cost of older medicines may become cheaper, the development of new medicines, treatments and procedures often cost significantly more. All of these costs have to be met somewhere and ultimately where a PMI scheme has a high claims incidence it’s the end user i.e. the client and members who bear the brunt of increased costs, particularly where a scheme has a high claims incidence.
However, not all is doom and gloom. Employers are able to better control increases in a number of way. The following are just a few examples:
Introducing or reducing limits under a plan, while not always welcome, can result in cost savings to a greater or lesser degree and ensure a benefit can continue to be provided. Examples could include:
- Increasing an existing policy excess or introducing one - this tends to deter small claims and ensures that members only claim when they really need to
- Restricting outpatient benefit levels
- Restricting cancer treatment cover, or not providing it at all – instead sign-posting people to the NHS
- Introducing a six week option where private treatment is only available if it can’t be obtained on the NHS within this period
- Including dependants only at the employees’ own expense
Generally an employer who offers a PMI scheme will offer other benefits that could be better utilised to reduce claims spend. For instance, many employers offer Group Income Protection cover, where a HR department could:
- Direct individuals suffering from stress or mild mental health issues to an embedded Employee Assistance Plan, where telephone based or face-to-face counselling is often available.
- Where there is an absence from work, instigate an Early Intervention referral, which may result in medical treatment (or adjustments to the workplace) provided to allow an individual return to work. The insurer here sees the investment in treatment up front as beneficial in stopping an individual becoming a claimant.
PMI shouldn’t be considered in isolation. Here at Barnett Waddingham we believe that it is just one facet to help ensure that employees can be happy, healthy, efficient and productive in their role. Our approach to wellbeing is based on the ancient Greek philosophy of Eudaimonia; a person’s state of happiness and human flourishing which is supported by our modern six pillars ideology which covers elements around ‘my job’, ‘financial security’, ‘health’, ‘protection’, ‘support’ and ‘work/life balance’.
By addressing each of these six pillars from the perspective of the employee, it will have a positive impact on both employee and employer through increased productivity, reduced absence, fewer accidents, better employee engagement and retention and overall lower cost of benefit provision.
We believe that this approach will improve the wellbeing of employees but also increase their performance to the benefit of both employer and employee as well as creating a tangible return on investment and in particular help control PMI costs.
Regardless, we recommend that employers seek appropriate advice and support from a healthcare benefit and wellbeing specialist.