Improving the effectiveness of employee health benefits through a healthcare trust

Corporate healthcare trusts can deliver greater flexibility, ownership, simplicity and, through its tax treatment, efficiency over traditional insured products. Used intelligently as part of a business’s wider wellbeing and benefits programme, a trust can reduce the impact of seemingly relentless medical treatment cost inflation on the employer and allow greater investment in preventative measures, helping to reduce costs further while improving the health of staff. Knowing what “wellbeing” means in the context of an employer’s workforce is not a straightforward matter, however.

Read more about how employer-funded medical benefit trusts work and some of the advantages that they can deliver here.

We have seen how the competing forces of medical cost inflation on the one hand, and workforces who place personal wellbeing over earnings and career progression on the other hand, have placed pressure on employers and influenced attitudes to how health benefits are funded and provided. That pressure shows no sign of decreasing.

How to set up a healthcare trust

Setting a trust up and operating it is straightforward, with a little expert legal advice at the beginning. Obtaining maximum efficiency from the arrangement will require an understanding of the range of benefits that it can deliver and those benefits’ effectiveness in maintaining workforce health and wellbeing. Data analysis and a clear concept of what “wellbeing” actually means in practice (and as an ongoing objective) are crucial factors for the employer to consider when designing and operating its trust. Those factors are unlikely to be easily comprehended or acted upon by the trust’s trustees or their benefit administrator.

Instead, the employer could look to an expert to accurately audit, measure and analyse workforce health. That expert would then use the data that is collected to help the employer uncover and connect the factors that are causing impaired performance in their business and, through it, define “wellbeing” within the context of that business (rather than as the generic and largely empty phrase that it has become through common usage in recent years).

Once built into the employer’s procedures for reviewing and funding the trust, a regular wellbeing audit can help HR and finance teams:

• Establish a baseline to determine the status of their employee wellbeing;
• Benchmark the performance within the business and against UK population data;
• Quantify the productivity loss due to impaired employee health;
• Provide the calculation basis to track RoI on interventions and initiatives (outside as well as within the trust); and
• Help employees make their own wellbeing choices.

Healthcare trusts are already a well-established choice for many larger employers, but they are collaborative arrangements, relying on trustees, administrators and advisers working with the employer in order to deliver high-quality benefits. The trust’s success depends on its efficiency and effectiveness, both of which could be enhanced through the strategic involvement of a specialist data analyst within the trust administration and governance process.

Employers who are interested in finding out if the self-funded medical trust option is right for them should assess their current benefit plan with input from their employee benefit consultant. It is also sensible to obtain legal advice at the start, on the structure of the trust, its benefit design and any contractual arrangements that need to be made with third parties but, once up and running, a well-established trust will often require very little outside legal assistance.

If you are an employer and have questions or concerns about setting up or reviewing a healthcare trust, or any other employee benefits arrangements, please contact Kevin Gude.

If you would like to find out more about healthcare trusts, Kevin will be hosting a webinar for employers discussing ways to mitigate staff medical benefit cost inflation, through the use of intelligent data assessment and aggregated analytics, and understand the impact of the benefits that they offer for both staff and business effectiveness. Sign up here.