Aon Employee Benefits has warned that rising costs associated with Private Medical Insurance (PMI) are creating pressure on employers to find extra budget without seeing any further advantages for staff.
Increases from Insurance Premium Tax (IPT), medical inflation and the impact of high cost cancer treatment may make employers question the affordability of PMI arrangements altogether, the consulting firm said.
Employers' costs are also increasing because of high medical treatment charges, particularly those related to cancer.
Additionally, costs from employer-sponsored medical plans are expected to rise; an Aon global survey on medical trend rates estimates that the average cost increase will rise by 9.3% in the UK this year.
Rachel Western, principal at Aon Employee Benefits, said: "There is a three-way increase on PMI costs creating an incentive for employers to review funding and administration approaches to help mitigate cost increases without having to degrade benefit levels.
"PMI is already largely a benefit for higher-paid employees - our concern is that if associated costs continue to increase, it will become even more of an elite offering. Insurance Premium Tax (IPT) has gone up in the last two Budgets from 6% to 9.5% and then to 10%.
"With IPT at significantly higher levels in some EU countries - in excess of 20% - there is growing concern that further rises may be forthcoming."
Western advised that Healthcare Trusts have historically been targeted at the larger corporate but smaller corporate schemes should now seriously consider this style of funding.