The ins and outs of PMI

In-patient and out-patient only schemes offer ways of controlling employers’ healthcare costs says Sarah Lewis, healthcare & protection manager, Premier Choice Healthcare

With the difficult economic conditions refusing to budge more and more employers are looking to tighten their belts and considering ways to reduce costs. Unfortunately, private healthcare is a benefit that is sometimes seen as a “nice to have” rather than a necessity and so is usually the first to be looked at. But with insurers reducing the discount for excesses, the cost reduction options for employers are limited. That leaves the only options open to them being a significant reduction in benefits or removing it altogether.

A new breed of PMI has started to emerge as a result of this pressure – the in-patient and out-patient only scheme. These schemes are designed to fit in-between cash plans and full PMI, plugging a gap that has been waiting to be filled.

Advances in medicine mean more and more operations and procedures that would have meant a short spell in hospital as an in-patient are now being completed on an out-patient basis.

Although these types of treatment are on the increase, the cost reduction option usually available to an employer, namely £1,000 out-patient benefit, has not changed for years and is simply not enough. As a result employees who need to claim are finding themselves out of benefit very quickly and therefore considering their PMI inadequate.

The logical step for an insurer is to introduce a scheme that provides cover for this type of benefit only – and by doing that, offering a significant cost saving to the employer as well as capping their exposure to high in-patient claims.

On the other side of the coin is the in-patient only scheme. Again, insurers have seen the rise in out-patient / day-patient claims and the associated costs and so want to give the employers a scheme that only covers the major problems that require in-patient stays.

Both of these schemes provide options to employers that may currently have full PMI schemes for “senior managers & directors”, and want to offer something similar to other employees at a lesser cost, and also those employers that are feeling the pinch but still want to take care of their employees.

As a benefit, PMI is up there as one of the most sought after staff benefits, alongside pensions, bonus & annual leave.

But a problem remains with the perception of PMI. Many people understand that the moment they leave their doctor’s surgery and start the journey of diagnosis, treatment and recovery, they are looked after and covered by their PMI scheme. To have diagnosis / out-patient only schemes throws up the fear of ‘what happens if I need to go into hospital?’

When speaking to clients about this type of scheme, the main objections raised are when it comes to in-patient treatment being required – the complications and confusion employees will face trying to transfer back into the NHS and ultimately back onto the NHS waiting list defeat the object of helping employees get the treatment available to them quickly.

It’s the same with the in-patient only schemes – the waiting lists on the NHS for physiotherapy and scans can be months, therefore leaving an employee without access to treatment and opening the company up to higher absences.

Will these products become mainstream or just pass away unnoticed? Well, this depends on the intermediaries changing their perceptions of PMI, getting behind these products and having confidence in them. They do have their place in the market and they are a useful tool in looking at different options and giving employer’s choice.

Opinion seems to be that they will work best if sold alongside another product – a cash plan & in-patient only scheme or diagnosis / out-patient.

Whatever your view, product innovation is always positive and gives employers more options helps intermediaries to provide a more tailored approach.