TL;DR
As an FCA-authorised expert with over 900,000 policies of various types issued, WeCovr understands the UK market for private medical insurance inside and out. This guide provides HR managers in large companies with a comprehensive framework for structuring a corporate PMI package that delivers real value for both your people and your organisation. An HR managers guide to structuring corporate PMI packages Navigating the world of corporate Private Medical Insurance (PMI) can feel complex.
Key takeaways
- Fast-track access to diagnostics: Employees can bypass long NHS waiting lists for consultations and scans.
- Prompt treatment: Quicker access to surgery and medical care means a faster return to work.
- Acute Conditions: These are diseases, illnesses, or injuries that are likely to respond quickly to treatment and lead to a full recovery. Examples include joint replacements, cataract surgery, or hernia repairs. *PMI is designed to cover acute conditions that arise after you join the scheme.*
- Chronic Conditions: These are long-term conditions that cannot be cured, only managed. Examples include diabetes, asthma, and high blood pressure. Standard UK private medical insurance does not cover the ongoing management of chronic conditions.
- In-patient: Requires an overnight stay in a hospital bed.
As an FCA-authorised expert with over 900,000 policies of various types issued, WeCovr understands the UK market for private medical insurance inside and out. This guide provides HR managers in large companies with a comprehensive framework for structuring a corporate PMI package that delivers real value for both your people and your organisation.
An HR managers guide to structuring corporate PMI packages
Navigating the world of corporate Private Medical Insurance (PMI) can feel complex. As an HR manager for a large UK company, you are tasked with creating a benefits package that not only attracts top talent but also supports the health and wellbeing of your existing workforce, ultimately driving business success.
This guide will demystify the process. We will walk you through the strategic benefits, core components, and customisation options of a corporate health insurance scheme, enabling you to make informed decisions that align with your company’s goals and budget.
Why Corporate Private Medical Insurance is a Strategic Asset for UK Businesses
In today's competitive landscape, a robust health and wellbeing strategy is no longer a 'nice-to-have'—it's a critical business tool. A well-structured corporate PMI scheme sits at the heart of this strategy, offering tangible returns on investment.
1. Winning the War for Talent
A comprehensive benefits package is a powerful differentiator. In a tight labour market, candidates often weigh up job offers not just on salary, but on the perceived value of the perks. Offering private health cover signals that you are an employer who invests in the long-term health of your staff, making you a more attractive prospect.
2. Reducing Sickness Absence and Presenteeism
Sickness absence takes a significant toll on the UK economy. According to the Office for National Statistics (ONS), an estimated 185.6 million working days were lost because of sickness or injury in 2022. PMI tackles this head-on by providing:
- Fast-track access to diagnostics: Employees can bypass long NHS waiting lists for consultations and scans.
- Prompt treatment: Quicker access to surgery and medical care means a faster return to work.
This not only reduces absenteeism (days off work) but also presenteeism—the issue of employees coming to work while unwell and operating at a lower capacity.
3. Boosting Productivity and Morale
When employees feel valued and supported, their engagement and morale soar. Knowing they have access to first-class medical care should they need it provides invaluable peace of mind. This positive environment fosters loyalty, reduces staff turnover, and contributes to a more productive and motivated workforce.
4. Fulfilling Your Duty of Care
Employers have a fundamental duty of care for their employees' health, safety, and wellbeing. A corporate PMI scheme is a clear and powerful demonstration of this commitment, showing you are proactively investing in their physical and mental health.
Understanding the Fundamentals of Corporate PMI in the UK
Before diving into structuring a package, it's essential to grasp the core concepts of private health cover in the UK.
What is Corporate PMI?
Corporate Private Medical Insurance is a policy taken out by an employer to provide healthcare benefits for its employees. When an employee develops an eligible medical condition, the policy covers the cost of private diagnosis and treatment, from consultations and scans to surgery and aftercare.
The Critical Distinction: Acute vs. Chronic Conditions
This is the single most important concept to understand about UK PMI.
- Acute Conditions: These are diseases, illnesses, or injuries that are likely to respond quickly to treatment and lead to a full recovery. Examples include joint replacements, cataract surgery, or hernia repairs. PMI is designed to cover acute conditions that arise after you join the scheme.
- Chronic Conditions: These are long-term conditions that cannot be cured, only managed. Examples include diabetes, asthma, and high blood pressure. Standard UK private medical insurance does not cover the ongoing management of chronic conditions.
Similarly, pre-existing conditions (illnesses you had before the policy started) are typically excluded, although this can be different for large corporate schemes, as we'll explore below.
Key Terminology Explained
| Term | What it Means for Your Scheme |
|---|---|
| Underwriting | This is how an insurer assesses risk. For large groups (typically 20+ staff), the most common type is Medical History Disregarded (MHD). This is a major benefit, as it means the insurer agrees to cover eligible medical conditions, regardless of a member's previous medical history. Pre-existing conditions that would be excluded on an individual policy may be covered. |
| Excess | The amount an employee must pay towards their claim each policy year. For example, if the excess is £100 and the treatment costs £2,000, the employee pays the first £100 and the insurer pays the remaining £1,900. A higher excess lowers the overall premium. |
| Benefit Limits | Most policies have an annual limit on the total value of claims that can be made, either per person or per policy. While often high (e.g., £1 million), some elements like out-patient cover may have lower sub-limits. |
| Hospital List | Insurers have lists of approved hospitals. These are often tiered. A standard list might include hundreds of private hospitals nationwide, while a more expensive option might add premium private hospitals in Central London. Restricting this list can be a key way to manage costs. |
The Core Components of a Corporate Health Insurance Policy
Think of a PMI policy as a set of building blocks. You start with the foundation and then add optional extras to create the right package for your needs.
1. In-patient and Day-patient Cover (The Foundation)
This is the core of every PMI policy and typically covers costs when an employee is admitted to hospital for treatment.
- In-patient: Requires an overnight stay in a hospital bed.
- Day-patient: Admitted to hospital for a procedure but does not need to stay overnight.
This cover includes:
- Hospital accommodation and nursing care
- Surgeons' and anaesthetists' fees
- Specialist consultations
- Diagnostic tests like CT and MRI scans
- Operating theatre costs
2. Out-patient Cover (The Most Common Add-on)
This covers diagnosis and treatment where a hospital bed is not required. It's one of the most used parts of a policy. Cover typically includes:
- Specialist consultations
- Diagnostic tests and scans
- Physiotherapy and other therapies
Out-patient cover is usually offered in levels, for example:
- Basic: A financial limit of around £500 per person per year.
- Standard: A limit of £1,000 - £1,500.
- Comprehensive: Full cover with no yearly financial limit.
3. Cancer Cover (A Crucial Element)
Cancer care is a cornerstone of modern PMI. While the NHS provides excellent cancer care, private cover can offer access to treatments, drugs, and facilities that may not be available on the NHS due to funding decisions. Comprehensive cancer cover typically includes:
- Surgery, radiotherapy, and chemotherapy
- Consultations and monitoring
- Access to specialist cancer centres
- Experimental or newly licensed drugs
4. Mental Health Support (Increasingly Essential)
With mental ill-health being a leading cause of long-term absence, strong mental health support is vital. Policies can include:
- Access to counsellors, psychotherapists, and psychiatrists
- In-patient and day-patient psychiatric treatment
- Digital mental health support via apps and online platforms
Structuring Your PMI Package: A Step-by-Step Guide for HR Managers
Now, let's put it all together. Structuring the right scheme involves a series of strategic decisions.
Step 1: Define Your Objectives and Budget
First, clarify what you want to achieve.
- Are you aiming for market leadership? You'll need a comprehensive, top-tier plan.
- Is your goal to provide a solid, valued benefit while managing costs? A well-chosen mid-tier plan with cost-control options might be best.
- What is your per-head budget? This will be the primary constraint guiding your choices.
Step 2: Decide Who to Cover (Scheme Membership)
You have several options for eligibility:
- All employees: The most inclusive approach, fostering equality and broad-based goodwill.
- Based on seniority: Different levels of cover for different job grades (e.g., comprehensive for directors, core for managers, etc.).
- Based on length of service: As a reward for loyalty, e.g., employees become eligible after passing their probation or after one year of service.
While tiered systems can manage costs, a single, inclusive scheme for all staff is often simpler to administer and communicate.
Step 3: Choose the Right Underwriting: Medical History Disregarded (MHD)
For large companies, this decision is straightforward. Medical History Disregarded (MHD) is the industry standard for schemes with over 20 employees.
Why is MHD so important? Unlike individual policies, it ignores previous medical history. This means eligible acute conditions are covered, even if they are pre-existing. This is a hugely valuable benefit that removes a major barrier to cover and simplifies administration, as employees do not need to declare their medical history.
Step 4: Select the Level of Cover (Core vs. Comprehensive)
This is where you balance benefits with your budget. Here’s a typical comparison:
| Feature | Core "Essentials" Plan | Comprehensive "Prestige" Plan |
|---|---|---|
| In-patient / Day-patient | Full Cover | Full Cover |
| Out-patient Cover | £500 limit for diagnostics & consultations | Full Cover (unlimited) |
| Cancer Cover | Core cover (standard treatments) | Full advanced cover (incl. new drugs) |
| Mental Health | Out-patient consultations only | In-patient & out-patient treatment |
| Therapies (Physio etc.) | Included within out-patient limit | Separate, generous limit |
| Dental & Optical | Not included | Included as an optional add-on |
| Hospital List | Standard national list | Full list including Central London |
Step 5: Customise with Add-ons and Value-Added Services
Beyond the core components, you can enhance your package with a range of valuable extras:
- Dental & Optical Cover: Can be included for routine check-ups, treatments, and eyewear.
- Therapies Cover: Physiotherapy, osteopathy, and chiropractic treatment are highly valued benefits that help employees recover from musculoskeletal issues, a common cause of absence.
- Travel Insurance: Often available as a bolt-on, providing worldwide travel cover for business and leisure.
- Wellness Programmes: Many insurers offer rewards for healthy living, such as gym discounts or points for hitting activity targets.
- Digital GP: 24/7 access to a GP via phone or video call is now a standard and highly convenient feature.
At WeCovr, we enhance our health and life insurance offerings by providing clients with complimentary access to our AI-powered nutrition app, CalorieHero, and offer discounts on other insurance products, adding extra value to your benefits package.
Step 6: Managing Costs with Smart Policy Levers
A skilled broker can help you fine-tune your policy to meet your budget without sacrificing essential cover. The main cost-control levers are:
- The 6-Week Wait Option: This is one of the most effective ways to reduce premiums. With this option, if the NHS can provide the required in-patient treatment within six weeks, the employee will use the NHS. If the wait is longer than six weeks, the private medical insurance kicks in. This ensures employees get prompt care when the NHS is under pressure, but utilises the NHS for more routine procedures, saving money.
- Adjusting Excess Levels: Introducing or increasing the employee excess (e.g., from £0 to £150) will lower the premium. This encourages employees to consider the cost of care and can be set at different levels for different staff grades.
- Tailoring the Hospital List: Unless a large portion of your workforce is based in Central London, choosing a hospital list that excludes the most expensive city-centre hospitals can generate significant savings.
- Co-payment Options: Some policies allow for a co-payment, where the employee pays a percentage of their claim costs (e.g., 20%) up to a set cap.
How to Compare Corporate PMI Providers in the UK
The UK market is served by several excellent, well-established insurers. Each has its own strengths and focus areas.
| Provider | Key Strength / Unique Selling Point (USP) | Example Features |
|---|---|---|
| Bupa | Extensive experience and network, including their own hospitals and clinics. A very trusted brand. | Direct access to services, Be.Me app for wellbeing. |
| Aviva | Strong digital focus and integration with other insurance products. Excellent clinical expertise. | Aviva Digital GP, "BacktoBetter" muscle, bone, and joint support. |
| AXA Health | Focus on preventative healthcare and clinical support. Strong digital tools. | Access to their 24/7 health support line, Doctor@Hand digital GP service. |
| Vitality | Unique model focused on rewarding healthy behaviour with discounts and perks. | The Vitality Programme, which encourages activity for rewards like cinema tickets and coffee. |
The Role of an Expert PMI Broker
Choosing between these providers and their countless policy combinations can be overwhelming. This is where an independent PMI broker like WeCovr is indispensable.
An expert broker:
- Understands the whole market: We work with all the leading insurers.
- Saves you time: We do the research and price comparisons for you.
- Provides impartial advice: We are not tied to any one insurer and will recommend the policy that best fits your specific needs and budget.
- Negotiates on your behalf: We can often secure better terms than you could by going direct.
- Offers ongoing support: We help with implementation, communication, and the annual renewal process to ensure your scheme remains competitive and cost-effective.
Best of all, using a broker typically comes at no extra cost to you, as we are compensated by the insurer you choose.
Beyond PMI: Building a Holistic Corporate Wellness Strategy
Private medical insurance is a powerful tool, but it's most effective as part of a wider, proactive wellness strategy. Consider integrating your PMI with:
- Employee Assistance Programmes (EAP): Confidential, 24/7 support lines for issues like stress, debt, legal queries, and family problems.
- Proactive Health Screenings: Offering yearly health checks to catch potential issues like high cholesterol or blood pressure early.
- Financial Wellbeing Support: Financial stress is a major contributor to poor mental health. Offering workshops or access to financial advisors can be hugely beneficial.
- Promoting Healthy Habits: Encourage good sleep, a balanced diet, and regular activity. Simple initiatives like providing fresh fruit, encouraging walking meetings, and promoting tools like CalorieHero can make a real difference.
The Financials: Understanding Costs and Tax Implications
As an HR Manager, you'll need to understand the financial side of PMI for both the company and the employee.
How Premiums are Calculated
Insurers base your company's premium on several factors:
- Average age of employees: Younger workforces generally have lower premiums.
- Industry: Some professions are considered higher risk than others.
- Location: Postcodes influence the cost of local private healthcare.
- Level of cover: The more comprehensive the plan, the higher the cost.
- Claims history: At renewal, your company's claims history will influence the new premium.
Tax Implications
- For the Business: The cost of the PMI premiums is considered a legitimate business expense and is therefore eligible for Corporation Tax relief.
- For the Employee: Corporate health insurance is a 'benefit in kind' (BIK). This means the value of the premium paid by the employer is treated as taxable income for the employee. The company must report this to HMRC on a P11D form for each covered employee, and the employee will pay income tax on that amount. It's crucial to communicate this clearly to staff so they understand the small impact on their tax code.
Taking the Next Step
Structuring a corporate health insurance package is a significant strategic decision. It requires a clear understanding of your objectives, your budget, and the needs of your workforce. By focusing on the core components, using smart cost-control levers, and partnering with an expert, you can design a scheme that delivers outstanding value.
A well-designed PMI scheme is more than just a benefit; it's an investment in your most valuable asset—your people. It protects their health, provides peace of mind, and ultimately drives the success and resilience of your entire organisation.
Is corporate health insurance a taxable benefit in the UK?
Does corporate PMI cover pre-existing conditions?
What is the '6-week wait' option in a PMI policy?
How can we reduce the cost of our company's health insurance scheme?
Ready to explore the best private medical insurance UK options for your company? The expert team at WeCovr can help you compare the market and build the perfect package. Contact us today for a free, no-obligation quote and a confidential discussion about your needs.
