Cross-subsidising medical aid contributions is a long-standing practice in South Africa and is and one of the benefits companies can use to make themselves stand out as employers of choice. This approach allows employers to support their employees in managing healthcare costs, which can be particularly burdensome in a country where healthcare expenses continue to rise.
However, despite this subsidy, medical aid remains unaffordable for many individuals, especially those in lower income brackets and even for middle-income earners. The reality is that even if half of the cost is subsidised by their employer, many employees find it challenging to allocate a significant portion of their income toward medical aid contributions.
The challenge of affordability
The affordability challenge is exacerbated by the annual increases in medical aid contributions, which frequently exceed the rate of salary increases. For instance, a medical aid plan that costs R2,000 a month will still require the employee to pay R1,000 a month should the employer subsidise at least 50%. For someone earning a modest salary, such as entry-level employees, this R1,000 can represent a substantial chunk of their monthly income, making it an untenable option, this means that the employee then loses out on this benefit if the only employee benefit option is medical aid.
Furthermore, medical inflation has continued to soar, leading to dramatic increases in the cost of even entry-level medical aid plans. These plans, which were once within reach for some, have become prohibitively expensive. The rising cost of living, coupled with stagnant wages, has forced many individuals to reconsider their insurance cover. With limited options available when employers subsidise the costs, employees often find themselves in a difficult position, needing to balance health needs with financial realities.
The need for alternative solutions
Given these challenges, it has become increasingly important for businesses to explore additional more affordable healthcare options in the mix. While this may introduce some administrative tasks, the decision ultimately boils down to whether the cost of the employee not being able to perform their tasks optimally outweighs the costs of a Health Insurance solution. The key is to find the balance between keeping people healthy and productive, which necessitates a shift towards enhancing accessible health products.
There is an obvious and direct correlation between employee health and productivity, and so the primary objective of employee healthcare benefits should always be to maximise employee health. Including alternative subsidised healthcare options, particularly for lower-income earners and those looking to step down their cover, allows employers to provide greater choice and flexibility. This not only benefits employees but can positively impact the company’s bottom line.
Health insurance products offer a cost-effective solution that enhances access to healthcare at a fraction of the cost of medical aid. While this type of insurance is not as comprehensive as medical aid, it is significantly more affordable. When subsidised by employers, health insurance can cost employees just a few hundred Rands a month, making it a feasible option for many.
Depending on the provider and product suite, health insurance can supply access to primary or day-to-day healthcare services, including optometry and dentistry, as well as cover for in-hospital procedures in a private hospital. This accessibility empowers employees to seek the treatment they need without the additional stress associated with financial strain and affordability, the outcome being a healthier, happier, and ultimately more productive and profitable workforce.
The importance of employee health
Healthy employees are more engaged and productive, which ultimately benefits the employer. Ensuring that employees have access to preventive care and timely treatment, allows companies to reduce absenteeism and increase job satisfaction This creates a mutually beneficial situation where employees feel their health needs are supported, and employers benefit from a stable, healthy and productive employee base.
Moreover, as the landscape of healthcare continues to evolve, businesses must remain agile and responsive to the changing needs of their employees. This includes recognising the importance of mental health and wellness programmes as part of a comprehensive employee benefits package. By prioritising employee health, companies can foster a positive workplace culture that attracts and retains top talent.
The role of employers in promoting wellness
Employers play a crucial role in promoting employee wellness beyond just providing healthcare benefits. By fostering a work environment that encourages healthy habits, employers can positively impact the overall well-being of their workforce. This can include initiatives such as:
- Providing healthy snack options and encouraging regular breaks
- Organising fitness challenges or subsidising gym memberships
- Offering mental health support and resources
- Promoting work-life balance and flexible work arrangements
- Educating employees on the importance of preventive care and regular check-ups
When employees feel supported in their health and wellness goals, they are more likely to be engaged, motivated, and productive in their work. This, in turn, contributes to the overall success and competitiveness of the organisation.
The impact on employee retention and recruitment
Offering comprehensive and affordable healthcare benefits can significantly impact employee retention and recruitment. In today’s competitive job market, potential employees often prioritise companies that demonstrate a commitment to their well-being. By providing a robust healthcare benefits package that includes subsidised medical aid and health insurance options, employers can position themselves as an employer of choice.
Moreover, retaining talented employees becomes easier when they feel valued and supported by their employer. By investing in their employees’ health, companies can foster a sense of loyalty and commitment, reducing costly staff turnover rates, which ensures continuity in their workforce.
The ongoing challenges surrounding medical aid affordability in South Africa highlight the need for innovative solutions that prioritise employee health and well-being. By expanding the range of healthcare options available to employees, businesses can enhance access to necessary medical services while also addressing the financial burdens that many individuals face.
As the healthcare landscape continues to change, it is crucial for employers to stay informed and proactive in their approach to employee benefits. By investing in the health of their workforce, companies not only contribute to the well-being of their employees but also position themselves as desirable employers in a competitive job market. Ultimately, the goal should be to create a healthier, more productive workforce that can thrive in the face of ongoing economic challenges.
Incorporating health insurance into employee benefit packages is a cost-effective strategy to achieve this objective. While it’s not necessary to complicate matters with an array of product options, offering more affordable choices aligned to the employee segment is crucial. Partnering with an independent advisor or engaging with different product suppliers can assist businesses in understanding the broader spectrum of available products and selecting a basket that will offer the best balance between benefit and affordability for all parties concerned.
Reo Botes is the Managing Executive at Essential Employee Benefits.