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So how much was that last year?

7 January 2019

So how much was that last year?

The Employee Benefits Healthcare Research 2018 in conjunction with Healthshield, was published back in September of this year. It’s a great piece of insight into the market and you would do well to refer to this.

There are many stats in there. 96% of companies responding provide an EAP as a core benefit. 63% have strategies and benefits in place to support employees’ mental wellbeing, and 87% cite costs as the main influence on their decision to buy, or continue to offer, healthcare benefits.

I would think that 87% figure is about right, but what I can’t square off is that 39% of the respondents to this survey (162 in total) said that they do not know the approximate cost of providing healthcare benefits.

On the one hand, how can such a large number cite costs as the deciding factor, when evidently a major chunk of the market doesn’t track how much they are actually paying. And that was asking for an approximate cost!

Could this be a symptom of having various plans that need to be aggregated? Maybe it’s the fact that there is an acceptance that once the benefit is there, its just going to go up every year and there is nothing can be done about it. Medical inflation depending on who you believe, runs at anything from 6-9% globally, so this lack of awareness is only going to cause issues in the long run.

With only 1% of employer respondents likely to decrease their medical benefits over the next 12 months, getting a handle on costs, through knowing the benefit, recognising the usage in each area, and analysing claims reports where possible, can only serve to benefit employees in the long run as well. As costs continue to rise, remember so does the P11d benefit that employees are charged, and sometimes it doesn’t take much for people to switch off.

With medical premiums heading north at 6-9% and predictions of pay rises for the next 12 months coming in at around 2%, this could be a problem when employees are also being asked for more under auto-enrolment pensions as well. There are many demands on their money.

But back to employers. A detailed analysis of benefit spend can provide so much insight when looking at the return on investment benefits provide. Pension costs for many are new, for others they have spiralled out of control within DB schemes, leading to their closure. This information was so compelling that action had to be taken.

That’s what you are looking for when you do this analysis. Overlay the usage, the costs, the results of the annual surveys that you do on engagement and this provides you with a picture where costs and design can be aligned. This can lead to evolution in the benefits which is driven by good data.

This for me comes back to the protection of benefit budgets and simple renewal of benefits. That’s great, as they do have to be protected, but in so many ways they need to change at point of calculation (when your CFO asks you) as that is what will draw the attention to the possibilities of the cost redistribution that can occur over time. Through that understanding and forward-looking view, design can evolve as will cost.