The release of the 2015 Wellness in the Workplace survey on Monday stated New Zealand lost around 6.7 million working days to absence in 2014.
Chartered accounting firm William Buck suggests this provides further backing for Peter Tynan’s support of Part Two of the New Zealand First Members “Affordable Healthcare” Bill; the removal of the FBT on health insurance. William Buck Director Leicester Gouwland points out that a June 2015 New Zealand Productivity Commission Working Paper states that there is little evidence of New Zealand’s productivity catching up with other OECD countries. He argues that the abolition of the FBT on health insurance offers an easy win.
Gouwland suggests improved healthcare access would make a real difference to productivity, pointing out that employees with private health insurance have access to faster healthcare treatment, and are less likely to avoid pro-active visits to the doctor. He believes that younger people in particular often do not take out medical insurance for three reasons: The cost, possible ignorance of the benefits of insurance and a youthful feeling of invulnerability. The cost factor means it is often the more vulnerable and lower paid who are at the greatest risk.
Only about a third of New Zealanders currently have healthcare insurance, and the number of employer group schemes is very small.
The Productivity Working paper estimates the cost to companies for the average annual absence of 5.1 working days at $616. However Gouwland has calculated that it costs William Buck over $250 per day for each sick day, without including the unrecoverable inefficiency cost of moving work to another team member.
The Wellness in the Workplace Survey Paper points out that 56.4% of employers would consider purchasing health insurance if the FBT was removed. The cost of FBT on health care premiums is approximately 43% of the GST inclusive cost, a significant factor for employers.
Gouwland asks why health insurance is singled out for the FBT vs. other health initiatives. The costs of complying with health and safety obligations are exempt from FBT. So is the cost of providing a flu vaccine to employees. Income protection insurance is tax deductible. Further, the government has encouraged other positive behaviours through tax incentives; the recently removed kick starter for KiwiSaver being a good example, so why is health insurance subject to FBT? Gouwland goes on to suggest that the government should consider removing the FBT on other proven employee wellbeing initiatives such as gym memberships.
A change would reduce the government’s FBT revenue. However the government’s coffers would gain through increased PAYE collected on the additional days worked, as well as the considerable savings for the public health system. Importantly, with a rapidly ageing population, the health system will be under increased pressure in the future, and enrolling younger people without pre-existing conditions would ease this problem.
Gouwland endorses the call by Southern Cross Chief Executive Peter Tynan for support for the New Zealand First bill, and encourages all employers to support the bill as well.
“The cost of health care will only continue to rise, and just like saving, the sooner people have medical cover, the sooner they will benefit. It is a win, win all round,” Gouwland states.