Funding Return to work - a real alternative to traditional PMI
Employers are increasingly facing a dilemma at the crossroads of Human Capital and Compensation & Benefits strategy. The dilemma revolves around the extent to which Medical Benefit programmes are driven by the need to recruit and retain key people or if they are principally a tool to enable employees to return to work quickly after illness.
Human Capital strategy is about understanding the value of each employee to the business, there is a natural assumption that every employee plays a vital part in creating value. So one of the key influences on Human Capital agenda should be the health of those assets.
Compensation & Benefits strategy has traditionally come at the health issues from a perspective of how benefit packages can be provided that are meaningful, cost effective and competitive in the peer group.
Our work on Health Strategies has highlighted a number of issues around this dilemma for employers in providing medical benefits:
- Mellon have found that HR professionals increasingly view the priority for providing medical benefits as being to facilitate rapid treatment, recovery and return to work.
- Rates of sickness absence tend to be higher among employees who are in the lower grades or bands of employment. These are traditionally the employees who are not eligible for company funded medical insurance.
- High rates of absence in this group of employees can have significant adverse effects on business performance since these are the people who are usually making the products or delivering services to customers.
- Extending relatively costly medical insurance to a larger population is unlikely to find much support in the FD's office.
So how to resolve the dilemma of reducing absence rates for those employee groups not covered under the medical benefits arrangements?
A few employers are now looking at setting up programmes where there is a business case for doing so, that involves paying directly for investigations and treatment in the private sector in order to facilitate an accelerated return to work. There are healthcare providers who have developed the capability to administer such programmes. Indeed, some arrangements have been around for a few years, however the impetus towards such arrangements is growing as the huge cost of sickness absence becomes better understood.
The key issues for an employer to consider in setting up a return to work funding programme are:
- Early identification and intervention in an episode of sickness is vital in order to make the case for funding an accelerated return to work.
- Ensuring that procedures for gaining access to funding are consistent and transparent and that decisions about whether funding is granted or not needs to be clearly and objectively evidenced.
- Setting up a model for the cost justification for funding in each case.
- Is the absence data robust enough to estimate the amounts required for funding the programme?
- What action can be taken to minimise the impact of Benefit in Kind taxation on payments for treatment?
- Communicating the introduction of a programme to employees, HR and line managers as part of a strategic approach to health management rather than as a traditional 'benefit'.
For further information, please telephone your usual contact at Mellon - Human Resources & Investor Solutions:
Tel: +44 (0)118 955 7700
Fax: +44 (0)118 955 7701
Email: healthcare@mellon.com
Web: www.mellon-hris.co.uk
Abbot's House, Abbey Street, Reading, Berkshire, RG1 3BD, UK
Mellon Human Resources & Investor Solutions (Healthcare) Limited is a member of the General Insurance Standards Council