Making Private Healthcare More Affordable for Employees
With an increasingly global and mobile workforce, employers need to be able to differentiate the benefits they offer in order to attract and retain key employees. More than 48% of Australians1 now elect to purchase private health insurance, making the availability of affordable corporate health plans a highly attractive benefit for employees.
Increasing health care costs are putting greater pressure on the public health system, which in turn forces people without cover to be on longer waiting lists. For an employer, this adversely affects productivity, morale and can increase absenteeism.
Bev Simmons of Mercer Marsh Benefits™ explains that the rising cost of healthcare is a shared concern for many individuals and families.
“Australians, by and large, see the value in health insurance and they’re reminded of it through strong advertising campaigns by the insurers. They’ve also seen the incremental increases to their health insurance premiums and many are feeling the pinch.
“Annual premium increases for the next few years are now forecast to outpace inflation at 6-7% due to a combination of rising premiums and a reduction in government rebates.”
Bev also cautions that late joiners to private health insurance are hit with an additional lifetime levy, while singles earning over $90,000 without cover also face tax penalties.
A key driver for these cost increases is the rise in chronic diseases across Australia, with 5.1% of Australian adults having diabetes (compared to 4% in 2007-08) and 62.8% of Australian adults being overweight or obese (compared to 61.2% in 2007–08)2. The cost of managing chronic diseases has put a huge strain on the healthcare industry, with a flow-on effect of ultimately increasing the cost of private health cover for individuals.
Whilst these broader industry issues cannot be easily resolved without policy action, the demand for competitive health care plans and options by employees can, at least in part, be met by companies offering a voluntary health plan negotiated through corporate avenues. This not only allows them to provide employees with access to a more competitive product than what is available to them at a retail level, but also differentiates the company from other employers, thus becoming an effective strategy for retaining and attracting key staff.
According to Bev, approximately 40% of employers recently surveyed by Mercer Marsh Benefits™ do not offer a voluntary health plan. “This is missed opportunity to provide a highly competitive benefit to employees, at no cost to the employer,” she adds.
As an example of what can be done, Mercer Marsh Benefits™ recently developed a new voluntary health insurance plan with HCF, securing competitive corporate rates to provide significant savings for their clients. The new offering enables employers to provide compelling and competitive employee health benefits whilst reducing costs. Every corporate plan has its benefits, and a key benefit for the HCF Corporate Plan is that if an employee elects the $250 hospital excess option, HCF has agreed upfront to waive this excess. This unique offering provides significant saving against comparable no-excess products.
Bev sees products like the new HCF plan as a potential game-changer in the market, emphasising that such plans were traditionally only available to larger employers with 1,000 employees or more.
“Employers may wish to explore options from various insurers, and ultimately choose to partner with one to be the health insurance provider for its employees,” says Bev. “Employers should assess the insurers’ premium stability, product flexibility, superior service culture, and support services. Of course, the premiums and benefits need to be competitive.”
For more information
For more information about selecting an appropriate corporate healthcare plan or issues across the private health insurance industry, please contact your Mercer Marsh Benefits™ representative or click contact us.
1 Private Healthcare Australia (PHA), as at December 2014.
2 Based on Australians aged 18 years and over, the 2011-12 Australian Health Survey www.abs.gov.au
This page contains general information, does not take into account your individual objectives, financial situation or needs. For full details of the terms, conditions and limitations of the covers, refer to the specific policy wordings and/or Product Disclosure Statements available from Marsh Pty Ltd on request. Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) arranges the insurance and is not the insurer.