www.gruprisk.rg.uk Grup Incme Prtectin (GIP) Claim Case Studies What is GIP? GIP is a plicy taken ut by emplyers t cver their prmise t prvide sick pay t emplyees if illness r injury prevents them wrking fr a prlnged perid. Benefits may be paid up t a set age, such as State pensin age, r up t a fixed perid, such as 3 years. In the event f a claim the benefit is paid t the emplyer wh then passes it n t the emplyee thrugh the PAYE system in the same way as salary. The benefit will be a prprtin f the emplyee s salary and als frequently includes cver fr pensin cntributins. GIP plicies prvide mre than a financial benefit with: Early interventin Engagement Cntinuatin f ther emplyee benefits Integratin with pensin Assciated prducts Early interventin Enables the emplyee t get back t wrk as sn as pssible which benefits: The emplyer - reduced absence and assciated csts, will nt be deprived f the skills and knwledge f valued emplyees, access t early interventin and return t wrk service expertise etc. The emplyee - faster return t health (and wrk which is generally cnsidered t be gd fr peple), scial exclusin avided. April 2013 Emplyers: manage sickness absence and back-t-wrk csts plus prvides rehabilitatin supprt Emplyees: financial prtectin during lngterm sickness GIP can be much cheaper than the cst individuals wuld pay fr cver and the majrity d nt have t prvide health evidence. The State - less expenditure n Emplyment Supprt Allwance and means-tested State Benefits bth befre and after retirement, mre incme thrugh tax and NI. The ecnmy - incapacitated emplyees will nt be living at the breadline and s will have mre mney t spend r invest. The insurer - the increased expenditure n early interventins shuld lead t reduced length f claims and mre cmpetitive pricing. GRiD represents a mixture f advisers, reinsurers and insurers wh between them deal with the placing and insurance f the vast majrity f cver in the Grup Incme Prtectin (GIP) market.
www.gruprisk.rg.uk Engagement Insurers ask t be ntified f an emplyee s absence at a very early stage usually within six weeks f absence cmmencing. The insurer wrks with the emplyer and the emplyee t identify interventins that wuld help t get the emplyee back t wrk at the earliest apprpriate pprtunity, helping the emplyer reduce absence csts including the hidden csts such as lst prductin and replacement cver fr absent emplyees. Interventins take place at the time they are mst effective. The mst cmmn causes f claim fr bth ESA and GIP are mental health and muscul-skeletal cnditins, yet with the right help and supprt many peple will be able t return t wrk. Insurers will treat each case individually ensuring that interventins such as physitherapy r Cgnitive Behaviural Therapy (CBT) are instigated at the time they are mst effective. It is wrth nting that the insurer will ften cntinue t supprt the emplyee fr a while after they return t wrk (t help ensure it is a sustained return t wrk). The emplyee and the emplyer benefit frm the expertise, thrugh medically trained rehabilitatin cnsultants, and range f rehabilitatin services prvided by GIP insurers. Many emplyers are nt experts in dealing with incapacitated emplyees they will nt knw what t d r where t turn t get the mst apprpriate help and advice. GIP insurers are experts in this area and prvide invaluable supprt. The insurer is als seen as independent f the emplyer. The emplyer, emplyee and insurer wrk tgether t develp graduated return t wrk plans enabling the emplyee t gradually build up their hurs and activities. During this time insurers will pay a prprtin f the full benefit t supprt the return t wrk. This will frequently invlve investigating reasnable adjustments which will help ensure emplyers meet their requirements under the Equality Act. The insurer assesses the claim t ensure that benefit payments can cmmence prmptly. In additin insurers may be able t signpst the emplyer and emplyee t relevant supprt services fr claims where early interventin may nt be apprpriate (e.g. where the emplyee has been diagnsed with cancer). Cntinuatin f ther emplyee benefits Integratin with pensin Assciated prducts GIP plicies wrk in cnjunctin with ther emplyee benefits. As the emplyee wh is receiving benefits remains in service they will cntinue t qualify fr ther emplyee benefits prvided by the emplyer e.g. grup life cver can be maintained and this is especially imprtant fr thse wh are absent due t illness r injury. GIP plicies can be designed t integrate with emplyer pensin arrangements. An emplyee wh is receiving benefit thrugh GIP remains in service, with cntributins nging t their pensin (if cntributins are als insured). If the incapacity lasts until pensin age the pensin can start as the GIP benefit stps. GIP insurers may prvide access t assciated prducts designed t imprve the health and wellbeing f emplyees and prevent absence in the first place - fr example mst GIP insurers prvide access t an Emplyee Assistance Prgramme (EAP) which typically prvides a lifestyle helpline t help emplyees deal with things like childcare, stress and debt.
www.gruprisk.rg.uk Case study A Mr A had been wrking in an IT rle when he was diagnsed with a severe depressive illness. He was hspitalised and subsequently attended an intensive day patient prgramme. As a result f his illness he was absent frm wrk fr mre than tw years. His emplyer had a GIP plicy which ensured that Mr A received a mnthly incme during his illness (please see financial benefits prvided by insurers belw) s that he did nt have financial wrries n tp f his illness. Rehabilitatin supprt prvided by GIP insurers GIP insurers wrk with emplyers and their emplyees t achieve early returns t wrk when it is safe and apprpriate t d s. In this case the insurer prvided supprt t Mr A during his illness and gave advice n the steps he culd take t assist a return t wrk. Regular meetings were held between the insurer, Mr A and his emplyer (the plicyhlder). At the apprpriate time the insurer: - instigated a discussin arund a return t wrk - was instrumental in drawing up a tailred graduated return t wrk prgramme (e.g. initial emphasis n lw pririty tasks and reduced hurs) - undertk preparatry grundwrk fr the return t wrk (e.g. meetings with relevant parties t ensure that expectatins were managed and gals understd) - mnitred prgress with upgrades (e.g. mre tasks and mre hurs) taking place when apprpriate - prvided Mr A with supprt during the return t wrk prgramme (e.g. weekly telephne calls encuraging a fcus n the psitives and achievements) - ensured nging supprt was in place t manage any setbacks. Over time Mr A became mre cnfident that he culd achieve the upgrades and suggested further upgrades himself. After the return t wrk was cmplete the insurer cntinued t prvide telephne supprt t Mr A fr several mnths. During Mr A s graduated return t wrk, the insurer paid a prprtinate benefit fr example if he was earning 25% f his pre-incapacity salary the insurer wuld pay 75% f the full benefit. If his earnings increased t 50% f salary, the insurer wuld pay 50% f the full benefit. In additin Mr A s emplyer may insure r self-insure pensin scheme cntributins ensuring that, in the event Mr A had been unable t wrk again, he wuld receive a pensin in the same way as if he had nt been ill and absent frm wrk further reducing reliance n the State.
www.gruprisk.rg.uk Financial benefits prvided by GIP insurers As this is a real case study it wuld nt be apprpriate t reveal Mr A s actual salary but are instead shwing a ntinal salary and the mst cmmn benefit design f 75% f salary less ESA. He is cntracted-in fr NI cntributins. Factrs as at April 2013. Pre-incapacity incme Befre he became ill Mr A was earning 30,000 p.a. He was nt receiving any State benefits. He cntributed 6,782 in tax and NI cntributins. In additin his emplyer was paying NI cntributins f 3,077. State incme State csts Incme tax 4,112 Emplyee NI 2,670 Emplyer NI 3,077 State Benefits 0 Ttal 9,859 0 Incme during incapacity with GIP insurance The benefit under his emplyer s GIP plicy was 17,293 (75% f salary less ESA); this is paid t his emplyer (the plicyhlder) wh then deducts tax and emplyee NI cntributins thrugh the PAYE system befre paying the net benefit t Mr A. Mr A wuld als receive ESA f 5,207 a ttal incme during incapacity f 22,500. He wuld still be cntributing tax and NI cntributins f 3,757 and his emplyer wuld be paying NI cntributins f 1,324. State incme State csts Incme tax 2,612 Emplyee NI 1,145 Emplyer NI 1,324 State Benefits 5,207 Ttal 5,081 5,207 Incme during incapacity withut GIP insurance Withut his emplyer s GIP plicy Mr A wuld rely slely n the State his incme during incapacity wuld be cntributry ESA payable at a rate f 5,207 fr 365 days. He wuld nt be cntributing tax r NI cntributins. State incme State csts Incme tax 0 Emplyee NI 0 Emplyer NI 0 State Benefits 5,207 Ttal 0 5,207 At the end f 365 days Mr A s cntributry ESA wuld stp and nce any savings had been used up he wuld be entitled t means tested benefits. We understand that at the present time the State Benefits culd include: Means-tested ESA Husing Benefit Enhanced Disability Premium Mrtgage interest relief Severe Disability Premium Child Tax Credit Cuncil Tax Benefit
www.gruprisk.rg.uk Case study B Ms B was in her early 50 s and wrking as an accuntant when she was diagnsed with multiple sclersis. As her disease prgressed she became mre and mre fatigued and under medical advice began wrking shrter hurs t reduce her symptms. Her emplyer had a GIP plicy and the insurers paid a prprtinate benefit (as Ms B was wrking n a part time basis). Sme mnths later as her disease cntinued t prgress she suffered physical limitatins with her mbility and t alleviate her symptms she reduced her hurs again. At this pint the insurer increased the prprtinate benefit payable. Her cnditin subsequently wrsened and Ms B had t stp wrking altgether. At this time the insurer began t pay the full mnthly benefit and expects t cntinue ding s right up t the expiry age f the plicy. Case study C Ms C s emplyers ntified the insurer nce she had been absent fr eight weeks due t lw md. It was established that Ms C had recently suffered bereavements, relatinship breakdwn and a number f ther difficulties and that the resulting stress had led t deteriratin in her cnditin. She was tearful, anxius and experiencing panic attacks, disturbed sleep and impaired cncentratin. Ms C was under the care f her GP and had been prescribed anti-depressants and medicatin t help with the panic attacks. The insurer instigated a management prgramme which included a curse f six Cgnitive Behaviural Therapy (CBT) sessins. The sessins started within three weeks and tk place frtnightly. Cntact was maintained with Ms C t ensure that she was prgressing as expected and had the supprt she needed. Ms C s emplyers were kept updated with prgress and pssible future actins and utcmes. Ms C engaged well and after the secnd CBT sessin return t wrk ptins were raised. Fllwing discussins between the insurer, the emplyer and Ms C a graduated return t wrk plan was drawn up which started shrtly after the furth CBT sessin. Returning t wrk after a perid f sickness absence can be stressful in itself and supprt was prvided during this perid and beynd t ensure Ms C culd cpe in the wrkplace. The emplyer als mnitred the situatin t make sure that the return t wrk was nt causing additinal stress. Ms C cntinued the CBT sessins and her hurs were gradually increased ver a perid f ten weeks until she returned t wrk full time. Summary f the benefits f GIP t: Emplyees - faster return t health (and wrk which is generally cnsidered t be gd fr peple), scial exclusin avided, able t maintain a reasnable standard f living in relatin t pre-incapacity earnings thereby aviding mney wrries (which culd hinder recvery), pensin prvisin maintained etc Emplyers - reduced absence and assciated csts, will nt be deprived f the skills and knwledge f valued emplyees, access t early interventin and return t wrk service expertise etc State less expenditure n State Benefits and services, tax payments received Ecnmy the emplyee still has mney t spend r invest