Date
15 Jan 2024Category
Employee BenefitsA November 2023 analysis of NHS waiting times by the British Medical Association (BMA) revealed that more than 6.39 million people are currently waiting for healthcare treatment. Of these, nearly 3.18 million people are waiting over 18 weeks.
The average NHS waiting time (at 14.4 weeks) is almost double the pre-COVID waiting time in April 2019 and this is one of the many reasons why Private Medical Insurance (PMI) is a standout benefit in the UK.
We are seeing a significant increase in the number of businesses implementing PMI to help their staff take a proactive approach to health and reduce the burden on our public healthcare system – but it is not always straightforward.
PMI can be a costly benefit depending on the demographics of your workforce. There are lots of options with regards to the level of cover, excesses, and whether or not there is a moratorium excluding pre-existing health conditions for a period of time.
Some PMI schemes cover mental as well as physical health, and with mental health issues rising significantly, this has to be a consideration in addition to the traditional offering.
You may also consider adding family members to your scheme. This could reduce the number of days your employees need to take off to care for their partner or children – but could also become cost prohibitive.
You will generally have a good selection of providers to choose from, and often the more employees you have, the better the options will be for you as a company.
When it comes to tax, private medical is a Benefit in Kind (BiK), and therefore taxable on employees. Premiums are generally paid by the employer, however a P11D would still be required for the employee each tax year, and the cost of the benefits would still be taxable on them unless the employer has registered to payroll their benefits in kind.
An alternative would be to set up a PAYE settlement agreement (PSA) in order for you to cover the full cost of PMI without it impacting your employees. A PSA allows you to make one payment each year to HMRC to cover all the tax and NI due on ‘minor, irregular or impracticable expenses or benefits’ for your employees.
Alternatives to PMI might include a policy such as a healthcare cash plan, designed to cover the costs of everyday healthcare, such as dentist, optical and physiotherapy costs.
An employee assistance programme (EAP) is also a great way to offer your employees access to help, support and counselling, often reducing the need for more formal medical intervention by using preventative care measures.
Cash plans can be set up by an employer, or employees can take them out personally. As a benefit through employment, they are also a BiK taxable benefit. They are a non-taxable benefit on employees if they pay for
the scheme themselves, but if you offer membership as a benefit, the employee will pay tax on the cost of the premiums, unless you have a PSA in place.
The cost of providing a scheme is an allowable expense for you as a company, and therefore can be deducted for corporation tax purposes. A company scheme where the employee can benefit from a discounted group membership also often means this is at lower cost to employees.
In summary, there are several incentives for introducing PMI or an alternative scheme, with benefits to both the business and its employees. PMI is a powerful tool for recruitment and retention in a competitive jobs market, and it puts your employees on the front foot by providing improved access to medical treatments and specialist care beyond what the NHS might offer.
However, it’s important to conduct thorough research and consult with your employees and Employee Benefits Consultant to ensure that investment in any new employee benefit scheme aligns with your business objectives and the needs of your people.
If you have any questions in relation to healthcare based benefits or your rewards packages generally, please get in touch with a member of our specialist team or your usual Azets advisor.
Information correct at time of publishing, but may be subject to change in future. This article is for general information only and is not intended to be advice to any specific person. You are recommended to seek professional advice before taking or refraining from taking action on the basis of the contents of this article.
Azets Wealth Management is a trading name of Azets Wealth Management Limited, which is authorised and regulated by the Financial Conduct Authority. Registered Office: Bulman House, Regent Centre, Gosforth, Newcastle upon Tyne, NE3 3LS. Company Number 05674020. Incorporated in England. Azets Wealth Management Limited is a subsidiary of Azets Holdings Limited.
