Too cheap for their own good?

The proliferation of free EAPs means half of British workers now have access to one. But has commoditisation downgraded their perceived worth? Sam Barrett investigates

With employee assistance programmes (EAPs) available free on everything from a cash plan to a group income protection scheme, they’re fast becoming a standard part of the benefits package. But, while more employees may have access to this benefit, there are concerns that their freebie status is undermining the value of the proposition.

The latest statistics from the UK Employee Assistance Professionals Association (EAPA) show just how widespread EAPs have become. Its latest Market Watch Report found that 13.8m people, equivalent to half the UK workforce, were supported by an EAP. This represents growth of 69 per cent since 2008 when just 8.2m employees had access to an EAP.

But, while this increase is a good thing, it’s only half the story. As a large number of EAPs are provided free alongside other products, a significant proportion of the 13.8m employees are probably not even aware they have access. Buck Consultants senior consultant, health and productivity Chris Evans believes the two factors are connected. “The ability to have an EAP without having to pay for it explicitly has devalued them with employers. This means they don’t promote them so employees don’t use them. It’s a shame as they do offer real value in the workplace.”

Inflexible freebie?

As well as being seen to offer only as much value as their freebie price tag, benefits professionals perceive other issues with embedded EAPs that can make them less effective than a full service model.

Firstly, the service provided can be more limited. Typical omissions include account management, data on utilisation and the option to bespoke the service for certain types of industries or employee profiles.

Additionally, as they’re linked to another product, this can cause problems as IHC senior consultant Paul Roberts, explains: “If the product is only available to a group of employees then you can’t extend the EAP to everyone. This can make it very difficult to promote it.”

Some insurers have taken steps to address this. For example Canada Life automatically extends its ‘free’ EAP to all employees on its schemes and other group risk insurers will do the same, either on a free or charged basis, depending on the demographics of the scheme. “It makes sense to do this,” says Canada Life Group Insurance marketing director Paul Avis. “Claims aren’t that frequent on group risk schemes so, by offering an EAP, the employer sees more value from it.”

Additionally, the early intervention provided through counselling on an EAP can help to prevent long term absence claims, reducing costs for the insurer and employer.

But, perhaps without the financial incentive, this approach is less common in the healthcare arena. WPA is bucking this trend though, extending its EAP to all employees where at least 50 per cent of staff have medical insurance. “We want to make it as easy as possible for our employers to promote the service. You need to be pushing the service constantly to get a good level of utilisation,” explains Jane Willcox, general manager at WPA.

Price pressure

With freebie EAPs popping up everywhere, there’s also been pressure on the price of the full service product. According to immediate past chair of the UK EAPA David Smith, while the average cost of a full service EAP for a company of 100 employees is £14 per head, in 2000 this would have been around £25 per head for a scheme of 200, with few providers prepared to consider smaller organisations. “The market has changed significantly in the last 12 years,” he says. “Costs have come down due to growth of the market, especially in the SME sector; more efficient management; and competitive pressure. It’s still profitable but the free embedded services could change this.”

At a cost of between £1.50 and £2.00 per head, providers rely on low usage to make the embedded services financially viable. But keeping this low profile may not be possible, with Smith pointing out that he’s seen employers move from a paid service to a free one and continued to have good levels of utilisation. “If too many employers migrate this way, it will put the providers under pressure.”

This puts the EAP providers in a difficult position. Although they need to consider their margins, they also need employers to appreciate the real value of their proposition. Axa PPP Healthcare director, health consulting Elliott Hurst questions whether the market is sustainable given these dynamics. “The industry has been driven to the bottom line at a time when employees need more support than ever,” he says. “It puts incredible pressure on the providers. What’s the incentive to provide face to face counselling on a free service when it doesn’t make sense commercially?”

If utilisation does increase on the embedded services, one solution may be to increase the cost being paid to the EAP providers. But while this would ensure they were profitable it would still leave organisations with a cut-down service that didn’t enable them to fully appreciate the benefits available.

Turnaround time

Although economic factors may be putting pressure on EAP providers, it could be time for the market to start doing more to demonstrate the value a full service can bring. While some employers have ditched their full service EAPs for freebies, Smith says he has seen employers move the other way too once they realised what they were missing.

“The real value of an EAP comes when all the elements work together,” he explains, adding that there could be mileage in the providers offering embedded services including the extra services. “If an employer is getting management reports showing utilisation they can target their health strategy more effectively and really help to reduce absence.”

Shifting to this isn’t simple though and there will be reluctance among many of the providers with embedded EAPs to spend more to be able to offer a comprehensive service. However, some will be more receptive, especially in the group risk market where the link between the EAP and claims is more established. For instance, Canada Life already pays its EAP provider, First Assist, an additional fee to ensure that all employees have access and promotional materials are available to increase usage. Avis adds: “Advisers also need to play their part in demonstrating the value of a full service. It is far too easy for the free services to be forgotten.”

But, although it is unfortunate that not every employee with access to a scheme may be enjoying the benefits on offer, some are impressed with the strategy taken by the EAP industry. “Through commoditisation EAP penetration is up to around 50 per cent and at a time when other healthcare products sit around 10 per cent, this should be applauded,” says Roberts. “The market now needs to focus on raising awareness so that these products evolve further as employers appreciate their value.”

Maximising the value of an EAP

Whether an employer purchases a stand-alone EAP or they take advantage of a free one embedded within another product, there are ways to ensure they get maximum value from it.

First, it’s important to have the right service in place. “Make sure you only offer employees access to one EAP,” says Buck Consultants senior consultant, health and productivity, Chris Evans. “The widespread availability of free EAPs means it’s easy to have more than one but compare the benefits and focus on the one that fits the organisation’s requirements.”

Having settled on an appropriate EAP, it is important to make sure employees are aware it is available. An annual promotion is not sufficient and employees need to have constant reminders that they can turn to the confidential helpline. Newsletters, case studies, posters, emails and wallet cards can all help raise awareness. “Make them part of a broader health and wellbeing strategy,” says Evans. “It’s much easier to promote if you make it part of the message rather than going for a product push.”

Axa PPP Healthcare director, health consulting Elliott Hurst also recommends highlighting the other benefits within an EAP. “The focus has been on stress but EAPs can help with everything from childcare issues to financial worries. If you can make employees familiar with the service, utilisation will increase,” he explains.

Another EAP service that can be overlooked, but can also be the key to improving take-up, is the support they can provide line managers. WPA general manager Jane Willcox says an EAP can be a really useful tool when a line manager is unsure how to deal with a difficult situation at work. “Increasing usage among line managers can be beneficial but it will also result in more employees using the EAP as their managers recommend it to them,” she adds.

The other benefit of promoting an EAP is that it supports the legal position on duty of care. The Court of Appeal ruling in the case of Sutherland v Hatton in 2002 suggested that an EAP could protect an employer from being sued for stress by an employee, although this decision was clarified in 2007 when the judge stated that employers would need to be more proactive in their approach to safeguarding employees’ mental health.