Cashing in on NI savings

Employer’s NI savings can be diverted to improve health and wellbeing as they face pensions auto-enrolment says Health Shield executive director, sales & marketing Philip Wood

With pensions auto-enrolment now being rolled out to companies with between 50 and 249 employees, more and more employers will be grappling with the new rules and requirements. But, although introducing the new regime can be time-consuming, many employers are regarding it as an opportunity to review their benefits packages, with employee health and wellbeing regarded as a popular addition.

Evidence of this can be seen in research from Group Risk Development. In its Group Risk Employer Research, which was conducted last October, it found that 24 per cent were looking to increase their employee benefit spend. In addition it found that a further 20 per cent of employers were looking to add a health and wellbeing benefit.

This desire to beef up healthcare benefits is not surprising. As a result of the government’s Health, Work and Wellbeing initiative, employee health is a hot topic. Under the proposals, employers have a key role to play by creating healthier workplaces and helping employees stay healthy and in work.

There is government support for employers looking to achieve this. As well as introducing the Health and Work Service, which will provide occupational health advice and support where an employee is expected to be off work for at least four weeks, it is also offering tax relief of up to £500 a year per employee for medical treatment designed to help an employee return to work.

But while these government initiatives will be valuable when someone becomes unwell, a more proactive approach to keeping employees healthy could deliver much greater benefits to employers. Healthier staff take less time off work and with the CIPD’s Absence Management Survey 2013 putting a figure of £595 on the average cost of a day’s absence, keeping employees healthy and in work makes sound business sense.    

One way to achieve this is through a healthcare cash plan. These offer a range of benefits that can help an employer manage health and wellbeing in the workplace. As well as encouraging employees to look after their health, many of the benefits can help to reduce the risk of absence. For example, the regular check-ups available through the dental and optical benefits help to detect the early signs of serious health problems including diabetes, high blood pressure and mouth cancer. Similarly, a course of physiotherapy could sort out a musculoskeletal problem quickly while a call to an employee assistance programme could prevent someone going off sick long-term with a stress-related illness.

Healthcare cash plans also offer great value for money, especially when compared to other products such as private medical insurance. A premium of just 85p per week can enable an employee to enjoy annual benefits worth more than £700, including £50 towards dental, £50 for optical and £150 for physiotherapy.

Additionally, and in spite of the cost, as most employees will be able to claim at least once a year, healthcare cash plans are a highly valued benefit. This helps to drive up employee engagement and reduce staff turnover. 

Although cash plans make sense for those employers looking to increase their employee benefit spend on the back of the introduction of auto-enrolment, even those organisations keen to control budgets may be able to introduce a company-paid scheme on a cost neutral basis.

At the beginning of April the government introduced the Employment Allowance, enabling an employer to cut its National Insurance bill by up to £2,000 a year. This can be a significant saving, especially for a small or medium sized business.

This reduction in National Insurance contributions also enables an employer to invest in its business, with employee health a top priority. Given that an entry-level company-paid cash plan can cost less than £50 a year, an employer cutting its National Insurance bill by £2,000 would be able to provide cover for at least 40 employees without having to find any additional budget.    

Further cuts to an employer’s National Insurance bill are also scheduled. In April 15, employer National Insurance will be abolished for employees under the age of 21, giving even more scope for employers to redirect the spend to a high value health and wellbeing benefit.

As auto-enrolment continues to be rolled out across the SME sector, it’s a great opportunity for advisers to discuss healthcare cash plans with their clients.