The majority (73 percent) of HR leaders agree that private medical insurance (PMI) has become a necessity in the workplace, with 40 percent of employers now offering it, up from just 14 percent a year ago, research has revealed.
A third of employees (33 percent) want PMI as a work perk, putting it at the top of the employee benefits wish list. And demand for employer-funded PMI rises to 42 percent for workers aged over 55, according to the survey with 2,000 adults and 500 HR leaders commissioned by benefits platform Zest.
Increased pension contributions were the second most in-demand work benefit with 32 percent of employee respondents asking for it, followed by demand for employers to contribute to energy costs at home with 24 percent.
Expensive PMI
In its Employee Benefits Report, the provider said it was unsurprising that PMI was the top benefit that employees want given that there are 7.6 million people on NHS waiting lists.
However, Matt Russell, CEO at Zest, said: “Lots of organisations cannot afford to offer a full suite of PMI. Then I think it’s about listening to employees and having discussions about what’s important to them.”
He said that one of the things he has seen employers offer was access to a private GP, which he said was not as expensive as full PMI, but gives people the ability to get a GP appointment very quickly.
Shift to ‘flex pots’
He added: “The big shift that we’ve seen, certainly for small organisations, is ‘flex pots’.
“A flexible benefits pot (flex pot) is, in simple terms, a pot of money you are giving your people. You give them X pounds to go and spend on whatever they want or you can put some parameters around that.”
Some organisations are happy for employees to spend their pot on any benefits they want, while for others, the pot of money is given to employees with the caveat that they spend it on wellbeing, Russell explained.
“Wellbeing could be anything from ‘I want to learn to skydive because that helps my wellbeing’ to buying some new glasses. I bought a pair of trainers with mine because jogging is really important for my wellbeing.
“We’re seeing organisations say: ‘Well, we can’t afford PMI, so we’ll maybe find a halfway house.’ That might be a private GP, or it could be a flex pot, or it could be an allowance per year, or it could be a wellbeing day.”
Talent drain
Getting the benefits offer right is critical for employers as the research found that 56 percent of employees would change jobs for better benefits.
Almost half (49 percent) of employers have upped their investment in employee benefits, but 41 percent of employees told the survey their workplace benefits are inadequate, rising to 47 percent for 18 to 34 year olds.
Just 39 percent of employees said that their benefits offer good value.
‘Irrelevant’ benefits
A large portion (47 percent) of employees think the benefits offered by their employer are “completely irrelevant” to their personal situation, which is an increase from 39 percent in 2023.
The report said: “Despite increased investment, this statistic perfectly illustrates that employers are still failing to truly understand the individual needs of their employees, and although they’re driving change, its currently at risk of heading in the wrong direction.”
Improving communication around benefits is key as only 50 percent of employees said they know which benefits their employer offers, which contrasts with 87 percent of employers reporting that their benefits are communicated clearly and simply.
“This disconnect highlights a major sticking point holding many employers back from more effective benefits packages. Without strong communication, employers cannot fully understand the demands of employees,” the report said.
“Until this is tackled, benefits packages will offer poor value for money for both employer and employee.”
