Cost effective PMI

Private medical insurance (PMI) is a popular benefit which is strongly valued by employees, but it can be seen as an expensive benefit to offer for employers.

PMI gives employees and their family members, if covered, access to private medical treatment and can aid employers in helping to reduce sickness absence.

PMI policies can range from those which have other additional benefits, including mental health and dental and optical cover, to a standard offering which provides simple but effective private medical cover.  There are so many different options which can be tailored to each individual Company’s requirements based on their budget and employee population.

In today’s market with budgets being stretched, employers may take the view this is not something they can offer or continue to offer employees. However, there are measures which can be taken by employers in order to keep benefit costs to a minimum whilst still providing a benefit appreciated by employees.

Cost saving measures can include the type of underwriting on a policy, limiting the Hospital Network, limiting the outpatient benefit, increasing an existing or implementing a policy excess.

Having a policy excess is one of the most common cost controls of PMI and means that the employee would have to pay part of any eligible treatment costs that would otherwise be paid by the insurer up to the amount of the policy excess. Generally, these range from £100 – £500 and can be applied per claim or per policy year.

Having a policy excess can enable employers to offer employees access to a range of benefits whilst limiting the employer paid premium by having the employee contribute towards the cost of their treatment.

On the other hand, each cost saving measure can also be a policy enhancement so if an employer is looking to make their benefits more comprehensive, implementing or reviewing their existing PMI scheme could be a good place to start.

If you are looking to enhance your current benefits package or are looking for ways in which to reduce your benefit spend and wish to discuss further, then please contact Steph Budge or your usual AAB contact.

To find our more about Steph and the Payroll and Employment Taxes team, click here.