For many employers, upcoming private medical insurance (PMI) renewals may be causing anxiety and worry. Over the last three years, the average annual premium increases are well above 10% (opens a new window); with some year-on-year increases as high as 25%.
Current economic uncertainty, stemming in part from tariffs and a changing geopolitical landscape, is forcing many employers in Ireland to look closely at their outgoings. Employment costs continue to increase, and as pension auto-enrolment approaches, employers are assessing the best way to manage future PMI renewals, and the cost increases associated with them.
The increased cost of PMI has a double impact on an organisation:
Raised costs for funding the benefit.
Negative impact on employees take home pay as a result of increased benefit in kind (BIK) taxation.
However, a new strategy is emerging for employers looking to navigate and manage the impacts of rising PMI costs. Employers are considering moving away from offering one default plan, and introducing some choice for their employees.
Empowering employees to customise their PMI
Most employers offer mandatory levels of cover that many employees may not want, value, or need. In this scenario, employers pay a premium for the benefits, while employees have to pay the BIK on these higher levels of cover.
Insurer data reveals the varying benefits usage among employees, and the subsequent need for different levels of cover:
Day-to-day claims usage is 50% higher among females than males.
GP, chiropractor, massage therapy, and physio services uptake is highest in the 30-34 age bracket.
Out-patient consultants’ benefit usage increases with age, peaking at 75. For employers with younger employee demographics, this benefit is less utilised.
Minor injury clinics are most heavily utilised by children.
The statistics above demonstrate that some key elements of many health insurance plans are being utilised more by different cohorts of employees. Introducing plan choice can allow staff to select appropriate cover that aligns more with their needs. This can deliver a ‘win-win’ proposition: employers only pay for the cover their employees need, and staff only pay BIK for the cover they want or need.
Communicating changes to employees
As health insurance can be a complicated topic for your employees, it can often be challenging to effectively communicate the introduction of choice for their healthcare programme. How you ‘brand’ the options available is an important consideration to allow employees to easily identify which plan, or combination of plans, might be the right fit for them and their family.
Employees should be supported with appropriate resources, such as seminars and webinars that highlight the options available, along with key benefits and differences. These communication exercises should also provide employees with an opportunity to ask any questions they may have.
Moving away from one default plans can deliver a more cost effective, efficient, and engaging PMI scheme for your people.
For further discussion or information on an upcoming renewal and review of your options, please reach out to a member of our People Solutions Team (opens a new window).
