A recent analysis has highlighted that smaller organisations have cut the level of benefits offered to employees in order to reduce costs. Benefits that have taken a hit include health options such as private medical insurance and other wellbeing strategies. Both small and medium sized businesses are keeping the employee benefit options available however they are reducing the level of cover available in an attempt to reduce overall costs.
UK SMEs are doing this through tactics including increasing the excess on their PMI cover as well as increasing the deferred periods on group income protection. This is because the cost of private medical insurance has risen recently as a result of medical inflation, which has forced the premiums up by an average of 10% between 2010 and 2011. On average, the annual cost of a PMI premium per member was £1,532 in 2011, an increase from £1,499 in 2010. Businesses are constantly looking at ways to reduce unnecessary costs due the current economic climate, whilst still remaining competitive in terms of what they can offer their key employees.
According to the results, a large number of businesses still choose a no excess option however, other options including a £100 excess are becoming increasingly popular when it comes time to renewing policies with around 25% opting for this.
Donna Biggs of Mercer, specialists in HR consulting, has pointed out that businesses doing so need to make sure that introducing an excess will not delay treatment for employees if they cannot afford the excess, which could result in the person having to take more time off work as a result.
According to Biggs a number of SMEs are now considering health cash plans as a way for employees offsetting excess costs while keeping the premiums saving for the employer at the same time.
Income Protection and Group Life policies
Employers have been decreasing income protection costs by increasing their deferred periods to around the industry standard times of 26 weeks and reducing the payout amount in basic benefits.
As well as these cost cutting tactics, some employers are also looking at group life policies as a way to reduce costs, although it is not happening as much as it is with PMI or income protection policies. Historically four times an employees annual salary would be covered; however there is an increasing number of SMEs opting for two times salary. Further to this, it appears that some employers are also trying to remove partner options such as spouses pension schemes but the changing the multiples of salary paid to balance out the change.
Stuart writes on behalf of AXA PPP healthcare who offer who provide health plan options for both individuals and businesses