TL;DR
In today's competitive landscape, attracting and retaining top talent is paramount for UK businesses. As an experienced broker that has helped arrange cover for over 900,000 individuals and businesses, WeCovr knows that a standout employee benefits package is crucial. Company private medical insurance (PMI) is one of the most valued perks you can offer.
Key takeaways
- Chronic Conditions: Long-term illnesses that cannot be cured, such as diabetes, asthma, or Crohn's disease. PMI may cover an acute flare-up of a chronic condition, but not the day-to-day management.
- Pre-existing Conditions: Any medical condition an employee had before the policy start date. We will explore how different types of "underwriting" affect this later.
- Accident & Emergency (A&E) visits.
- Organ transplants.
- Drug and alcohol abuse treatment.
In today's competitive landscape, attracting and retaining top talent is paramount for UK businesses. As an experienced broker that has helped arrange cover for over 900,000 individuals and businesses, WeCovr knows that a standout employee benefits package is crucial. Company private medical insurance (PMI) is one of the most valued perks you can offer.
This comprehensive guide is designed for UK employers. We will compare company private healthcare and medical insurance options, demystify the complexities, and provide the expert insights you need to make the best decision for your business and your team.
Compare company private healthcare and medical insurance options for UK employers
Choosing the right private healthcare plan for your company can feel overwhelming. With multiple providers, complex terminology, and a wide range of cover options, it's easy to get lost.
The primary purpose of company health insurance is to provide your employees with fast access to high-quality diagnosis and treatment for acute medical conditions. In a time of record NHS waiting lists, this benefit has never been more valuable. It demonstrates a profound commitment to your team's wellbeing, helping to reduce sickness absence and boost productivity.
This article will break down everything you need to know, from the core components of a policy to the tax implications and the UK's leading providers.
What is Company Private Health Insurance?
Company private health insurance, also known as a group health insurance or business medical insurance, is a policy purchased by an employer that provides private medical care for its employees. It is designed to work alongside the NHS, offering a complementary route to treatment for specific conditions.
The fundamental principle of UK private medical insurance is that it covers the cost of treating acute conditions. An acute condition is a disease, illness, or injury that is likely to respond quickly to treatment and lead to a full recovery.
What Is Not Covered by Standard PMI?
It is vital to understand what company health insurance typically excludes. Misunderstanding these limitations is a common source of frustration.
Standard UK PMI policies do not cover:
- Chronic Conditions: Long-term illnesses that cannot be cured, such as diabetes, asthma, or Crohn's disease. PMI may cover an acute flare-up of a chronic condition, but not the day-to-day management.
- Pre-existing Conditions: Any medical condition an employee had before the policy start date. We will explore how different types of "underwriting" affect this later.
- Accident & Emergency (A&E) visits.
- Organ transplants.
- Drug and alcohol abuse treatment.
- Normal pregnancy and childbirth.
- Cosmetic surgery (unless for reconstructive purposes after an accident or eligible surgery).
Why Should Your Business Offer Private Health Insurance? The Key Benefits for Employers
Offering PMI is a strategic business decision, not just a perk. The return on investment is measured in productivity, retention, and a healthier, more resilient workforce.
- Reduce Sickness Absence: According to the ONS, an estimated 185.6 million working days were lost because of sickness or injury in the UK in 2022. PMI provides rapid access to specialists and diagnostics, meaning employees get treated faster and can return to work sooner.
- Attract and Retain Top Talent: In a competitive job market, a strong benefits package sets you apart. Private health cover is consistently ranked as one of the most desirable employee benefits.
- Boost Morale and Productivity: Employees who feel valued and cared for are more engaged and loyal. Knowing they have access to the best possible care provides invaluable peace of mind, allowing them to focus on their work.
- Demonstrate a Duty of Care: Providing health insurance is a tangible way to show you are invested in your team's long-term health and wellbeing.
- Access to Valuable Wellbeing Services: Modern PMI policies are about more than just hospital treatment. They include a suite of preventative and supportive services, such as:
- 24/7 Virtual GP access
- Mental health support lines and therapy sessions
- Gym discounts and wellness programmes
- Nutritional advice and health screening
How Company Health Insurance Works: A Step-by-Step Guide
For an employee, the process of using their company health insurance is straightforward and designed to be as stress-free as possible.
- Initial Consultation: The employee feels unwell and visits their NHS GP (or uses the policy's virtual GP service) to discuss their symptoms.
- Open Referral: The GP determines that specialist consultation is needed and provides an 'open referral' letter.
- Start a Claim: The employee calls their insurer's dedicated claims line, providing their policy details and information from the referral letter.
- Authorisation: The insurer confirms the condition is covered and authorises the consultation or treatment. They will provide a list of approved specialists and private hospitals.
- Treatment: The employee receives their treatment in a private facility at a time that suits them.
- Direct Settlement: The insurer settles the bill directly with the hospital and specialists. The employee only needs to pay the pre-agreed 'excess' on the policy, if any.
Core Components of a Company Health Insurance Policy
Policies are built from a core foundation with optional extras. Understanding these building blocks is key to designing a plan that fits your budget and needs.
| Cover Type | Description | Status |
|---|---|---|
| In-patient & Day-patient Cover | Covers tests and treatment when a hospital bed is required, either overnight (in-patient) or for the day (day-patient). This includes surgery, accommodation, and nursing care. | Core Cover |
| Out-patient Cover | Covers diagnostic tests and consultations with a specialist where a hospital bed is not required. This is crucial for getting a diagnosis. | Optional Add-on |
| Therapies Cover | Covers treatments like physiotherapy, osteopathy, and chiropractic care. | Optional Add-on |
| Mental Health Cover | Provides access to psychiatric consultations, therapy, and counselling. This is an increasingly popular and vital add-on. | Optional Add-on |
| Dental & Optical Cover | Covers routine check-ups, treatment, and prescription eyewear. This is often provided as a 'cashback' benefit. | Optional Add-on |
Adviser Tip: The level of out-patient cover is the single biggest factor affecting your premium. You can choose a set financial limit (e.g., £500, £1,000, £1,500) or unlimited cover. A plan with limited out-patient cover can be a cost-effective compromise, covering the initial diagnosis while still providing full cover for any subsequent in-patient treatment.
Understanding Underwriting: The Most Important Choice You'll Make
"Underwriting" is the process an insurer uses to assess risk and decide what it will and will not cover, specifically in relation to pre-existing conditions. This is the most critical decision you'll make when setting up a scheme.
1. Moratorium Underwriting (Mori)
This is the most common type for small to medium-sized businesses (SMEs).
- How it works: There are no medical questionnaires to complete when setting up the policy. Instead, the insurer automatically excludes treatment for any medical conditions an employee (or their family members on the policy) has had symptoms of, or received treatment for, in the five years before joining.
- The "Two-Year Rule": That exclusion can be lifted if the employee then serves a two-year continuous period on the policy without experiencing symptoms, seeking advice, or receiving treatment for that condition.
- Pros: Quick and easy to set up, less intrusive for employees.
- Cons: There can be uncertainty at the point of a claim, as the insurer will investigate the employee's medical history then. This can lead to unexpected declines.
2. Full Medical Underwriting (FMU)
This type is often used for smaller groups or individuals.
- How it works: Each employee completes a detailed medical history questionnaire. The insurer reviews this and states from day one precisely what conditions will be excluded from cover.
- Pros: Complete clarity for both employer and employee. You know exactly where you stand from the start. It can sometimes be cheaper if your team is generally healthy.
- Cons: A more time-consuming and intrusive setup process.
3. Medical History Disregarded (MHD)
This is the 'gold standard' of underwriting, typically only available to larger companies (usually 20+ employees).
- How it works: The insurer agrees to disregard all previous medical history and cover most pre-existing conditions (excluding some chronic conditions).
- Pros: The most comprehensive cover available. Excellent for employee morale and removes all ambiguity.
- Cons: It is the most expensive underwriting option.
An expert broker like WeCovr can advise on the most suitable underwriting method for your group size, budget, and company culture.
Underwriting Comparison Table
| Feature | Moratorium (Mori) | Full Medical Underwriting (FMU) | Medical History Disregarded (MHD) |
|---|---|---|---|
| Upfront Process | No medical questions | Detailed medical questionnaire | No medical questions |
| Pre-existing Conditions | Automatically excluded for 2 years | Excluded by name from the start | Covered from day one (most cases) |
| Best For | SMEs wanting quick setup | Smaller groups wanting cost clarity | Larger groups wanting premium cover |
| Claim Process | Insurer investigates history at claim | Straightforward | Straightforward |
| Cost | Standard pricing | Can be cheaper | Most expensive |
Comparing the UK's Leading Company Health Insurance Providers
The UK private medical insurance market is dominated by a few key players, each with its own strengths and focus.
| Provider | Key Feature / Focus | Target Market | Unique Selling Point (USP) |
|---|---|---|---|
| AXA Health | Doctor@Hand virtual GP, strong mental health pathway | SMEs and Corporates | Clinically-led approach with guided care pathways. |
| Aviva | "Expert Select" hospital list, competitive pricing | Broad, from SMEs to large corporates | Often very cost-effective with strong digital tools. |
| Bupa | Large direct settlement hospital network | All business sizes | Strong brand trust, heritage, and extensive network. |
| Vitality | Wellness and rewards programme | Businesses wanting to incentivise health | Points and rewards for healthy activity like walking. |
| The Exeter | Friendly Society with a member focus | Smaller businesses, self-employed | Strong customer service reputation and simple products. |
| WPA | Not-for-profit providential association | SMEs, professional bodies | Flexible policies and a strong focus on member service. |
An independent broker's role is to analyse these providers impartially, matching their products to your specific business requirements and negotiating the best possible terms on your behalf.
How Much Does Company Health Insurance Cost?
The cost of a company health insurance policy varies significantly based on several key factors:
- Average Age: Premiums increase with the average age of your employees.
- Number of Employees: Larger groups can often achieve lower per-head premiums.
- Level of Cover: A comprehensive plan with unlimited out-patient and mental health cover will cost more than a core in-patient only plan.
- Excess Level: A higher excess (the amount an employee pays towards a claim) will lower the premium. A typical excess is £100 or £250.
- Hospital List: Insurers offer different hospital lists. Choosing a more restricted list that excludes expensive central London hospitals will reduce the cost.
- Location: Your business's postcode affects the price due to varying private treatment costs across the country.
- Underwriting: Medical History Disregarded is the most expensive option.
Indicative Monthly Costs
The table below provides a rough estimate of monthly premiums per employee. These are for illustrative purposes only.
| Company Size | Average Age | Level of Cover | Estimated Monthly Cost Per Employee |
|---|---|---|---|
| 3 Employees | 35 | Core + £1,000 Out-patient | £40 - £60 |
| 15 Employees | 40 | Comprehensive (Moratorium) | £70 - £100 |
| 40 Employees | 42 | Comprehensive (MHD) | £85 - £125 |
The only way to get an accurate price is to get a tailored quote based on your unique team demographics.
The Tax Implications of Company Health Insurance
Understanding the tax treatment is essential for budgeting.
- For the Employer: The premiums you pay for your employees' health insurance are typically considered an allowable business expense. This means you can deduct the cost from your pre-tax profits, reducing your Corporation Tax bill.
- For the Employee: The value of the health insurance premium is treated as a P11D Benefit-in-Kind (BIK). This means the employee must pay income tax on the cost of the premium. You, the employer, will need to report this on a P11D form for each employee.
- Employer's National Insurance: As the employer, you will also need to pay Class 1A National Insurance Contributions (NICs) on the value of the benefit provided to the employee.
Example:
- A policy costs £720 per year for one employee.
- The employee is a basic-rate (20%) taxpayer.
- Their annual income tax bill will increase by £144 (£720 x 20%), or £12 per month.
- The employer will pay Class 1A NICs (13.8%) on the benefit, which is £99.36 per year.
Common Mistakes to Avoid When Choosing a Company Health Plan
Drawing on our experience as advisers, here are some common pitfalls to avoid:
- Focusing Only on Price: The cheapest policy is rarely the best value. It may have a high excess, a very limited hospital list, or poor out-patient cover, making it difficult for employees to use when they need it.
- Misunderstanding the Underwriting: Choosing a moratorium plan without explaining the "two-year rule" to employees can lead to disappointment and frustration at the point of a claim.
- Ignoring the "Value-Added" Services: Benefits like 24/7 virtual GPs, mental health support, and physio triage lines are often the most-used elements of a modern policy. Don't underestimate their value.
- Going Direct to One Insurer: Approaching a single insurer means you only see one set of prices and options. You have no way of knowing if you are getting a competitive deal.
- Not Using a Broker: An independent broker's service is free to you (they are paid a commission by the insurer). They do the market comparison for you, explain the options in plain English, and handle the admin, saving you time and money.
Switching Your Company Health Insurance Provider
If you already have a group scheme, it's wise to review it every year. The market is competitive, and you could achieve better cover or a lower premium by switching.
The process is made simple by "Continued Personal Medical Exclusions" (CPME) underwriting. This special term allows your group to move to a new insurer while ensuring that any conditions covered by your old policy continue to be covered by the new one. It gives you the freedom to shop around without disadvantaging your employees.
A broker like WeCovr specialises in managing these seamless switches, ensuring continuous cover and handling all the communication with the insurers.
Integrating Your Health Insurance with a Wider Wellbeing Strategy
A PMI policy should be the cornerstone of your company's health and wellbeing strategy. When you partner with us, your team not only gets access to top-tier medical care but also complimentary access to WeCovr's AI-powered calorie and nutrition tracking app, CalorieHero, to support their daily health goals.
Furthermore, clients who take out business health or life insurance with WeCovr often qualify for discounts on other essential business and personal insurance products, creating even greater value.
Frequently Asked Questions (FAQs)
Is company health insurance a taxable benefit in the UK?
Does company health insurance cover pre-existing conditions?
What's the difference between moratorium and full medical underwriting?
How many employees do I need for a group health insurance plan?
Ready to invest in your team's health and your company's future? The right private medical insurance plan can be a game-changer.
Navigating the market alone is complex and time-consuming. Let our experts do the heavy lifting.
Contact WeCovr today for a free, no-obligation market comparison. We'll provide tailored quotes from the UK's leading insurers and help you design the perfect, tax-efficient healthcare plan for your business.
