Healthcare Without Private Medical Insurance
Steven McKay, Mattioli Woods
So everyone’s probably well aware of the problems facing the NHS since COVID. As you can see here, the waiting lists in Scotland have more than doubled, and people waiting to key diagnostic test are up over 60%. And problems aren’t much better at primary care. Anybody’s who’s rung the EEN government trying to get a GP appointment will be well aware how difficult it is to see the GP. So unsurprisingly, that’s led to one in three employees demanding private medical insurance as their most important benefit.
So why not just provide private medical insurance? There’s a problem. People want it. Well, over the last eight years, while the NHS has been suffering, the cost of private medical insurance has spiraled as well. So if we were just to look at that over the three-year period, that’d be a 50% increase. We were actually seeing 20% increases year-on-year, which would take that from 50 to 60%. At the same time, employer NI has gone up to 50%. If you don’t know, private medical insurance is a benefit in kind, so that means people have to pay employer NI costs of that, and there must be tax due.
So what will the alternative. Health cast funds, probably a low-cost alternative will provide cash back to pay for things like routine dental, optical care and things like physio and chiropractic treatment. They are really easy ways to enter into health and well-being. But we do have a similar pose in that the cost increase taxable benefit income as well. The alternative is sits somewhere in-between the health cash buy by a private medical insurance. So these offer things similar to health cash funds, like diagnostic tests and access to consultations for physio. But they do also offer some small surgeries as well. So not serious things like cancer, heart disease, and joint replacement. They’re much more cost friendly than medical insurance, but they are a taxable benefit as well.
A lot of you in the room and lot of employers will probably offer some benefits to their team, whether that’s life insurance, income protection. Over the last five years, the free benefits have come to flat, in non-contractual stuff, has exploded. They’re offering things like virtual GPs, and so, as you saw, the star from the people who have access and congested GPs can be solved with PLAT. They’re also offering things like mental health counseling and so that’s a very important benefit because for a long time, about half of employers, mental absence is the leading cause of absence.
Also along with that, some offer things like physio therapy support, dental support, there’s even one that offers a fingerprint blood test that can give you early signs for 20 leading medical conditions. So really what I’m saying is, if we do anything, find out what we’ve already got. Don’t introduce anything until you’ve found out what you already have.
I believe we’ve already gone down that route, so I hopefully I don’t waste your time. Probably just a couple of minutes of it. But everything I’ve talked about can actually be applied to private medical insurance as well. So if you’ve got these well-being benefits from other policies, you can direct employees to use them instead prior to going down the private medical route. So they may be able to still get the help they need without hitting up your private medical benefits.
If you’ve got the flexibility within your private medical insurance policy to reduce or move benefits, that can be a cost-saving, but be very cautious about doing that if you’re going to replace that with a non-contractual benefit. You can potentially introduce an excess and a cash buy-back that covers that excess policy and still reduce your costs. So it expands your benefit offering, and reduces your overall cost as well.
And I’m not brave enough to say that boys are going to be 100% happy if you said, “Oh, PMI,” and they got this whole list of other things. So the biggest thing is making sure you engage with your employees and ask the right questions. So instead of asking, “Do you want private medical insurance?” And they’ll say yes. Ask about issues, asking about what problems they’re having. And the next part of that is communicate. Tell them what you did and why you did it, what problem were you addressing with the policies that you’ve replaced. And at the same time, and most importantly, equally importantly, tell them what you didn’t do and why you didn’t do it. So in the absence of information, people will get angry, resentful. And whatever you do, with almost 150 million absences or working days lost last year, you can’t afford to do nothing.
Watch Steven deliver this session over on Vimeo >>>>> DisruptHR Glasgow 6.0 – June 19 2025 on Vimeo
