As the UK economy totters into recession, 2023 is set to be a tough year for employers and employees alike. But, with memories of the pandemic still fresh and talent hard to recruit, workplace health and wellbeing has never been more important.
“Employers are really concerned about employee health and wellbeing,” says Dave Middleton, chair of the Association of Medical Insurers and Intermediaries (AMII). “They want to make sure that employees are cared for and feel valued but, with budgets under pressure, they want value for money too.”
Broader strategies
With budgets under pressure, health and wellbeing strategies are having to work harder. “We’ve seen a switch from reactive to more preventative, holistic health strategies and I expect this will continue through 2023,” says Ed Watling, senior employee benefits consultant at Mattioli Woods.
This shift is also recognised by Middleton, who says he’s encouraging AMII members to talk about health and wellbeing rather than medical insurance. “Every area of health is linked,” he explains. “Employers need to offer a broad range of benefits to maximise the value of their spend.”
There’s also a drive to align an organisation’s health and wellbeing strategy with its diversity, equity and inclusion (DEI) policy. This has seen a move away from hierarchical benefits packages, with Reward and Employee Benefits Association (REBA) Employee Wellbeing Research 2022 finding that only a third of organisations now offer health insurance benefits based on seniority.
Health for all
It has also meant greater demand for new benefits, with women’s health one of the key focuses in the last few years. This trend is expected to continue and be broadened out to other areas of health in 2023 as more organisations look to ensure that everyone is treated equally.
As an example, Watling says that men’s health is getting more attention. “Employers want to be sure that anything that affects employee health is covered,” he explains. “It makes sense to take this approach: health problems affect productivity but offering inclusive benefits also makes it easier to attract and retain staff.”
Aligning health and wellbeing benefits with DEI may also require a change in the way organisations operate. Debra Clark, head of specialist consulting at Towergate Health & Protection, says that HR and benefits will need to work together to ensure that policies align with benefits. “There’s no point having fantastic menopause benefits if the organisation doesn’t even recognise it on its absence reporting system,” she says. “Advisers will need to work with employers to ensure that everything joins up.”
New challenges
Employers are also set to face new health and wellbeing challenges in 2023. The cost of living crisis will mean that many employees’ financial wellbeing will come under pressure.
Against this backdrop, demand for financial education and wellbeing tools is set to increase but there will also be room to promote cash plans and add-on benefits such as retail discount platforms, both of which put money back into employees’ pockets.
Hybrid working is another new health trend. Although many employees started working from home during the first lockdown, health issues relating to the more permanent shift to hybrid working are only beginning to emerge. “We haven’t seen the ripple of health problems associated with working from home yet,” says Clark. “Employers need to be aware of possible musculoskeletal issues, due to poor desk set-up, and mental health problems due to
the isolation.”
Interventions are available to support hybrid working, especially around ergonomic assessments, but employers should also consider how they interact with these remote employees. “Employers need to ensure all their employees feel valued and included,” adds Middleton. “This may require a rethink of how they stay in touch with them.”
Government action
The health insurance industry is also gearing up for more action from government. “We’re hopeful that, with more stability in government, there’ll be a renewed focus on health and disability,” says Katharine Moxham, spokesperson for Group Risk Development (Grid). “In the Autumn Statement, the government announced a review of the issues holding back workforce participation and there are several other initiatives underway that will help raise awareness of how employers can support employees with health issues and disabilities in the workplace.”
These include a guidance service that the government is piloting for employers looking to support employee health and disability. While the focus is on occupational health, Moxham says it is a welcome development that will help to bring products such as group income protection and medical insurance into the conversation.
The Access to Work scheme is also helping to highlight adjustments and support that can help people stay in work with a health issue or disability. “Covid-19 has helped employers look at work differently and recognise that more flexibility is possible,” Moxham adds. “Simple changes such as providing a parking space or changing someone’s hours can make all the difference. Raising awareness will help the health insurance and group risk sectors grow.”
Tax treaty
This focus on keeping employees healthy and productive is also likely to fuel the debate around the tax treatment of health benefits such as medical insurance and cash plans. Watling says there are still plenty of employees who opt out of medical insurance because of the P11d charge, with the number potentially increasing as the cost of living crisis takes hold.
As those opting out are most likely to be the healthier group of employees who don’t make regular claims, there are ramifications for the risk pool and pricing. “A P11d charge is fair enough when medical insurance is provided as a perk but, for many organisations, it’s now a benefit that’s offered to all employees to help keep them in work and productive,” says Watling. “I’d like to see more lobbying around this, especially as medical insurance also takes pressure off the NHS, which could help with the capacity issue.”
Cost review
Employers’ health and wellbeing budgets are also set to tax advisers in 2023, as many feel the squeeze from increased operating costs. This will be exacerbated by medical inflation, which Willis Towers Watson’s 2023 Global Medical Trends Survey predicts will remain around 10 per cent next year.
Although rising premiums can make for tricky client conversations, the line from advisers is reassuring. “We’re not seeing employers reduce their health and wellbeing benefits,” says Middleton. “If anything, they want to do more for their employees.”
Also helping to make discussions a little less painful is the fact that many of the emerging areas of health and wellbeing benefit are low or zero cost. Clark says that in some instances, all that’s required is a more proactive communication programme. “Employers need to make sure they’re keeping their messages simple and reaching all employees, especially now so many may be working remotely,” she explains. “There are also lots of additional benefits that employers and employees don’t know about: flagging these up can ensure
health and wellbeing benefits deliver real value.”
Although there may be financial pressures, with employers keen to support employee health, 2023 is set to be a busy year for advisers. Watling believes there may be some bumps due to the economy but he’s confident demand will stay strong. “The last 12 months have been exceptionally busy across all areas of employee benefits,” he says. “While there’s a labour shortage, I can’t see this changing: employers need to offer a compelling benefits package.”
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