Health insurance pitfalls companies need to avoid

Health benefits can play a critical role in retaining existing staff and attracting new talent to your organisation, but there are some common mistakes leaders need to ensure their organisation avoids.

Financial adviser Carmen Lapthorne of Lifetime says health insurance is still seen as one of the most attractive staff benefits a company can offer.

In New Zealand, eight out of 10 employees rated medical insurance as an important benefit a company needs to provide, according to the Wellness in the Workplace Survey 2017 undertaken by Southern Cross.

She says that while health insurance can seem like a big expense for companies to offer, an absent employee typically costs their employer $600 to $1,000 a year due to sickness.

“Health insurance goes a long way to reduce absenteeism showing that providing health benefits for your employees doesn’t just look after your staff’s well-being, it helps your company’s bottom line too.

“Encouragingly, more Kiwi employers are understanding the benefits of keeping employees healthy and looked after, which includes real investment in their team’s wellbeing. More companies are signing up for group health cover, introducing wellness programmes and paying for flu vaccinations as part of their comprehensive approach to help staff stay healthy, engaged and productive.”

Despite this, there are still four common mistakes she sees employers make regularly. 1. Thinking no cover is better than entry-tier cover: Lapthorne, who specialises in the health insurance sector particularly employer group schemes, says companies that want the best for their staff may be put off offering the base tier of medical cover and wait until they’re in a better financial position to offer a more comprehensive cover rather than signing up for basic group health insurance. “This, in my opinion, is terribly short-sighted. Health insurance is such a powerful incentive – offering such value to existing staff and serving as a dealmaker when attracting top candidates – that it would leave you at a disadvantage to overlook it. Every little bit helps, and it’s completely acceptable to provide an entry-level of cover to your team. Because healthcare is such a competitive industry with great products all vying for business, employers could be surprised at how good a deal you can get once you start looking and comparing options.” 2. Not communicating the full value of benefits: She says it’s not enough to offer health insurance, business leaders need to make sure they’re highlighting all the policy benefits to staff. “We’ve often found that businesses generally don’t make a big enough deal about the health cover they offer, to such a point that it makes you wonder if staff realise it’s even available to them, let alone the range of benefits the group policy may offer. Employers need to make sure staff are aware and understand the full range of benefits available to them and communicate the valuable contribution these policies provide. 3. Forgetting their family: Lapthorne says when you weigh up the cost-to-benefit ratio, it becomes a no-brainer to include an employee’s family.

“Costs to include children on a health plan are minimal, and it’s often cheaper in terms of rate to insure a family than it would be to insure an individual. In addition, because no medical underwriting takes places, this offers impressive value to staff. Healthcare often matters more to employees with families.”

She says if you’re working within a tight budget, you may want to cover the cost of adding any children and introduce copayments should a staff member want to add their partner. 4. Not allowing staff to tailor cover to their needs: “To maximise the full benefit of rewarding your staff with health insurance, it’s important to give them the freedom to add on extra cover if they need to. This can be done in a number of ways: you could give staff the option of several plans adding up to the same value or could allow them to consult with the financial adviser to tailor the existing plan to better suit their needs.

“For example, a female staff member may want to increase breast cancer coverage by adding specialist tests to her plan as an out-of-pocket expense. Allowing staff to customise their health plan to meet their needs will make it a more powerful retention tool,” she says.