Buck Bond Group
Harmonising your healthcare benefits: Nightmare project or dream opportunity?

Harmonising your healthcare benefits: Nightmare project or dream opportunity?

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Mergers and acquisitions are a routine aspect of modern corporate life. They can have a significant impact on your people and leave you faced with many questions regarding the reward and benefits outcomes; private medical insurance (PMI) in particular often presents a significant challenge, given the different levels of benefit provision available.

Do you need to offer employees of the same grade from different legacy companies the same benefits? Should you run schemes concurrently or put everyone in the same scheme? If harmonising schemes, how best to go about this? And, importantly, how do you communicate any changes with employees to minimise disruption and maximise engagement?

Why undertake harmonisation?
We often see clients who have several legacy populations on different PMI schemes with varying benefit levels, sometimes across several different insurers, as the result of M&A activities. Often, these schemes have been left running parallel for some time, as a result of limited resources to support harmonisation activity or in order to fulfil TUPE requirements.

While, for some companies, running concurrent schemes can be an appropriate long-term position, for many businesses, the disparate approaches to employee benefits and wellbeing value-added services, the extra administration burden of running multiple schemes, and often the additional cost involved, means that harmonisation is the ultimate goal.

Harmonisation is also a rare opportunity to take a real step back from your benefits and look at them with a fresh eye. You will be making changes regardless, so for a little more work, you could potentially make some more sweeping changes. If you were designing your benefit programme from scratch, what would it look like, and why? Is your current “main” PMI scheme exactly what you need, or is this a chance to make some substantial changes which will ensure that your benefit plan is aligned to your corporate objectives, fit for purpose, relevant, and up to date?

What is your endgame?
The key thing when thinking about harmonisation, is to realise that there are options – perhaps the most obvious being “taking the pain” in one fell swoop by choosing a date and harmonising all employees into one policy at that date. Taking this route can have many advantages; one programme of communications, a speedy approach to arriving at one benefit basis or scheme, and an instant reduction to administration requirements.

This approach isn’t the only option, however, and isn’t always suitable for all businesses. A phased harmonisation can sometimes result in better outcomes – reducing benefit differentials and the providers involved gradually over a number of years can soften the impact on affected employees, rather than making a once and done change.

The important thing is to discuss the options in depth, have a clear picture of the opportunities and risks of each approach, and agree what works best for your business – and, ultimately, decide what you want your final position to be – before the process starts. For many businesses, having one policy with one provider, with a “standard” benefit basis which all new employees join, and one or more closed sub-groups under the same umbrella policy which provide cover for legacy populations with different benefits (contractual or otherwise), can be a comfortable solution. This option reduces administration, takes advantage of economies of scale, whilst at the same time minimises disruption to employees. For others, the only solution which will achieve all their aims will be one fully harmonised policy.

How to start
Benefit harmonisation projects can be broadly broken down into the following stages:

  1. What do I want?
    Assess the opportunities and risks and agree your required outcome. This stage may include benchmarking the benefits against other schemes and agreeing what are potentially substantial changes for some or all employees.
  1. What have I got?
    Audit the current provision – a comprehensive benefit and scheme comparison will enable you to assess where key issues may arise for employees and highlight any potential issues with underwriting or continuation of current claims.
  1. What is available?
    More often than not, a wider review of the market will offer up best terms and give you the widest range of options.
  1. Decision making
    Once all options have been investigated (and if using an independent intermediary, a recommendation has been made), a decision will need to be taken, often including agreeing a final date for next steps.
  1. Implementation
    Within agreed timescales, and with ongoing monitoring of all stakeholders’ activities, the transfer should be seamless. It’s usually possible to put in place a transition agreement which ensures that all preauthorised treatment can go ahead as planned, even under a new provider.
  1. Communication
    Communication to both stakeholders and impacted employees is key and can ensure that employee engagement is maintained. Communications should be timely, clear, and concise, and offer the resources to enable employees with specific questions to raise them.
  1. Review
    As with any project, there should always be an opportunity to review what worked, and what could have gone better – after all, you may well have additional acquisitions in future!

In summary
While harmonising benefits can seem a daunting task, the rewards usually significantly exceed the challenges. An organised and structured approach is key, as are setting firm timescales and deadlines – and sticking to them!