Expensive Health Insurance for Older Workers

Employers could face ageism claims if they fail to find health insurance for older workers.

Some employers may phase out benefit for all employees.

Employers who provide health insurance as a benefit to staff could face claims of age discrimination if they fail to find cover for older workers, says Reynolds Porter Chamberlain LLP (RPC), the City law firm.

According to RPC, it can be prohibitively expensive for employers to provide private medical insurance to cover treatment costs or permanent health insurance (PHI) policies (which provide an income for employees unable to work due to ill-health) for employees over the age of 65. It may be impossible to find PHI at all.

Geraldine Elliott, head of the employment group at RPC says:

“There is a big gap in the permanent health insurance market which makes it very difficult for employers who offer this benefit to satisfy their obligations to treat workers of all ages equally. With the uncertainty as to when older workers will retire and the claims risk they are likely to generate, insurers are often unwilling to extend cover to them.

Although treating staff differently on the basis of their age can be justified under age discrimination legislation, employers can only do so in order to pursue a legitimate aim and if the means it is using are proportionate.

On this basis, firms may be unable to justify not providing permanent health or private medical cover to staff who are over 65 simply because it is too expensive. There must even be a question mark over whether they would be able to justify it if cover is unavailable altogether.”

Says Geraldine Elliott:

“The danger is that to be on the safe side firms may consider scrapping this benefit altogether, or it may act as a disincentive to retain or hire workers once they have reached 65.”

To avoid being left with an uninsurable risk, RPC proposes solutions such as companies self-funding treatment or self-insuring PHI cover for workers over the age of 65 who fall ill. Alternative benefits can be offered but employers must take care that any alternative is of equivalent value, to protect themselves from discrimination claims.

However Geraldine Elliott points out that smaller companies may be in a more precarious position as they may not have the resources to self-insure.

NOTE: A quick search on helpucover.co.uk come up with these results on how much you have to pay per month for a £1000 per month benefit on a policy that starts immediately:

30 years old = £30.00
40 years old = £54.10
50 years old = £82.10
65 years old = £109

ENDS

Issued by Mattison Public Relations on behalf of Reynolds Porter Chamberlain