Imagine you’re an HR Director reviewing your employee benefits and workplace eyecare provision ahead of renewal. Your health cash plan has been a real success, with employees regularly using it to help cover everyday healthcare costs, particularly eye tests and glasses. It’s exactly what you’d hoped for when you introduced the benefit.
Then the renewal quote arrives, and the premiums have increased. Claims activity has contributed to the rise, and suddenly a benefit that was working brilliantly for employees is creating an unexpected challenge for your budget.
It’s an interesting dilemma, and one that raises a bigger question. When it comes to workplace eyecare, are employers always using the right benefits to cover the right costs?
When a successful benefit becomes a budgeting challenge
Health cash plans have an important role to play in employee benefits. They offer financial support towards everyday healthcare expenses, from dental appointments and physiotherapy to optical costs, helping employees manage expenses that might otherwise put pressure on their household budgets.
But there’s a distinction that can easily be overlooked. Health cash plans are insurance-based products, which means claims experience can influence future premiums, depending on how the scheme is structured and priced. High usage is clearly a positive sign of employee engagement, but it can also introduce uncertainty when renewal time comes around.
For employers trying to balance meaningful benefits with predictable expenditure, that uncertainty isn’t always ideal. Particularly when some of the costs being claimed are neither unexpected nor discretionary.
Take workplace eyecare. In organisations where large numbers of employees spend their days using computers, regular requests for eye tests are hardly surprising. They’re a foreseeable part of supporting a screen-based workforce, and in certain circumstances, they’re also a legal responsibility.
So, if an employer already knows they’ll need to provide this support, does it make sense to fund it through an insurance-based benefit where claims experience may affect future costs?
Not all eyecare is an employee perk
It’s easy to think of eyecare as another addition to the benefits package, but for many employees, there’s more to it than that.
Under the Health and Safety (Display Screen Equipment) Regulations, employers have a legal duty to provide and pay for an appropriate eye and eyesight test when a qualifying display screen equipment (DSE) user requests one. If the test identifies a need for special corrective glasses specifically for DSE work, the employer must also cover the cost of a basic suitable pair.
This isn’t a discretionary benefit or a reward for employees. It’s a statutory requirement, and that distinction matters when deciding how workplace eyecare should be delivered.
Health cash plans can certainly help employees with their wider optical expenses, but using them as the primary route for statutory DSE eyecare risks blurring the line between what an employer is required to provide and what an employee receives as an additional benefit.
It also raises another question, one that is particularly relevant at a time when financial wellbeing remains high on the HR agenda.
Are we overlooking the tax implications?
When employers introduce benefits, the focus is understandably on what employees will gain. But the way those benefits are funded can also affect their tax position, and that’s where the conversation becomes more interesting.
Employer-funded health cash plans will generally be treated as a taxable benefit in kind, depending on the scheme arrangements. Qualifying employer-provided DSE eye tests and special corrective glasses, on the other hand, can fall within specific tax exemptions.
It’s important to distinguish between the tax treatment of the health cash plan itself and that of an individual eyecare claim. Employees aren’t necessarily taxed separately every time they use their optical allowance. However, if an employer is providing a taxable health cash plan partly to meet an obligation that could be fulfilled through tax-exempt eyecare provision, it’s worth considering whether the overall arrangement is as efficient as it could be.
This is particularly relevant when we think about financial wellbeing. Employers invest considerable time and money helping employees make their finances go further, yet sometimes opportunities to improve financial outcomes are hidden in the structure of the benefits themselves.
The question isn’t simply whether employees have access to eyecare. It’s whether they’re accessing it in the most appropriate and financially sensible way.
What if employees didn’t have to use their benefits for something they’re already entitled to?
Consider an employee who spends most of their working day in front of a screen. They need an eye test and, as a qualifying DSE user, request one through their employer.
If the employer has a dedicated workplace eyecare arrangement, the process can be straightforward. The employee receives the appropriate eye test, the employer meets its legal responsibilities, and the cost is managed through a clearly defined eyecare budget.
Now imagine the employee needs glasses specifically for DSE work but decides they’d prefer a more expensive pair of designer frames. That’s where additional benefits can come into their own. The employer can cover the cost of the basic suitable pair required under the regulations, while the employee chooses whether to pay the difference or, where their scheme allows, use their health cash plan towards the additional expense.
The employee still has choice, but they’re no longer relying on their wider healthcare allowance to access something their employer is legally required to provide.
It’s a subtle shift, but an important one. Instead of asking one benefit to fulfil two different purposes, employers can separate their statutory responsibilities from the additional support they want to offer.
And in doing so, they may find they’re making better use of both.
Clearer costs, better choices and benefits that work harder
For HR and reward teams, the challenge isn’t simply to offer a competitive benefits package. It’s to make sure that package remains affordable, sustainable and relevant to employees’ needs.
Dedicated workplace eyecare provision can help bring greater clarity to that process. With an appropriate solution in place, employers can gain better visibility over the cost of meeting their DSE obligations, making it easier to forecast expenditure and manage budgets without relying solely on an insurance-based arrangement.
That doesn’t mean health cash plans should disappear from the picture. Far from it. They can continue to offer valuable financial support for a wide range of healthcare expenses, including additional optical purchases that fall outside an employer’s statutory responsibilities.
The difference is that employees have more freedom to decide how to use those allowances.
And that’s an important part of financial wellbeing that sometimes gets overlooked. We tend to associate financial wellbeing with pensions, savings, debt management and support with the cost of living, but it also comes down to the everyday decisions that affect how much money employees have available.
If someone has a limited annual optical allowance, wouldn’t it be better for them to retain that allowance for additional needs or personal preferences, rather than use it to cover an eye test their employer should already be funding?
When employers start looking at benefits through that lens, the conversation moves beyond simply providing more. It becomes about delivering greater value from what’s already available.
A smarter approach to workplace eyecare
There’s no question that health cash plans have earned their place in employee benefits strategies. They provide flexibility, support everyday healthcare needs and can make a genuine difference to employees’ finances.
But flexibility doesn’t necessarily mean every healthcare expense should be funded in the same way.
Workplace eyecare is a good example of where a more considered approach could benefit everyone. By separating statutory DSE eyecare from optional optical benefits, employers can create a clearer distinction between legal obligations and additional employee support, while potentially improving budget predictability and making more efficient use of tax exemptions.
Employees, meanwhile, can access the eyecare they’re entitled to without unnecessarily drawing on allowances intended to give them greater choice over their wider healthcare needs.
At EyeMed UK, we believe workplace eyecare should be straightforward for employers to manage and easy for employees to access. More importantly, it should form part of a benefits strategy that makes financial sense for both.
Because when a benefit is being used so successfully that it’s creating additional cost pressures, the answer isn’t necessarily to reduce what’s on offer. Sometimes, it’s simply worth looking at whether there’s a better way to deliver it.