TL;DR
As an FCA-authorised expert with over 900,000 policies arranged, WeCovr understands the UK private medical insurance market inside out. This definitive guide for company directors explores corporate PMI, from comparing top providers and navigating the setup process to ensuring full tax and legal compliance for your business.
Key takeaways
- An acute condition is a disease, illness, or injury that is likely to respond quickly to treatment and lead to a full recovery (e.g., joint replacement, cataract surgery, hernia repair).
- A chronic condition is a long-term illness that may have no known cure and requires ongoing management (e.g., diabetes, asthma, high blood pressure). PMI will not cover the routine management of these conditions.
- Define Your Objectives and Budget
- Why are we doing this? Is it to combat absenteeism, attract talent, or reward senior staff?
- How much can we realistically allocate per employee, per month? Costs can range from £30 for a basic policy for a young employee to over £100 for comprehensive cover for an older one. Your budget will be the single biggest factor in shaping your policy.
As an FCA-authorised expert with over 900,000 policies arranged, WeCovr understands the UK private medical insurance market inside out. This definitive guide for company directors explores corporate PMI, from comparing top providers and navigating the setup process to ensuring full tax and legal compliance for your business.
Provider comparisons, set-up process, and compliance tips for company-paid private health insurance
For any forward-thinking UK company director, the health of your team is intrinsically linked to the health of your business. In an increasingly competitive landscape, offering company-paid private medical insurance (PMI) is no longer a luxury reserved for FTSE 100 giants; it's a strategic tool for businesses of all sizes to attract top talent, minimise downtime, and demonstrate a genuine commitment to employee welfare.
This comprehensive guide will walk you through everything you, as a director, need to know to make an informed decision about implementing a corporate health insurance scheme.
Understanding the Value of Corporate PMI in Today's UK Business Landscape
The conversation around corporate PMI often starts with one question: "Is it worth the investment?" To answer that, we must look at the current UK health and business environment.
The NHS, while a national treasure, is under unprecedented strain. As of mid-2025, NHS England figures show millions of people are on waiting lists for consultant-led elective care. For a business, this translates directly into lost productivity. An employee waiting months for a diagnosis or non-urgent surgery is an employee who may be in pain, stressed, and unable to perform at their best.
This is where corporate PMI provides its most immediate return on investment.
Key Business Benefits of Company Health Insurance:
- Reduced Sickness Absence: According to the Office for National Statistics (ONS), an estimated 185.6 million working days were lost because of sickness or injury in 2022, the highest it's been in a decade. PMI gives employees fast-track access to specialists, diagnostics, and treatment, significantly cutting down the time they're away from work.
- A Powerful Recruitment and Retention Tool: In a tight labour market, a strong benefits package can be the deciding factor for a candidate. Private health cover is consistently ranked as one of the most desired employee benefits, signalling that you are an employer who invests in your people.
- Enhanced Productivity and Morale: A healthy workforce is a productive one. Knowing that they have support when they need it reduces anxiety for employees and fosters a positive, caring company culture. This boosts morale and, consequently, productivity.
- Fulfilling a Duty of Care: Providing access to healthcare demonstrates a robust commitment to your team's wellbeing, strengthening the employer-employee relationship and building loyalty.
Real-World Example: A small marketing agency with 15 employees introduced a PMI scheme. Six months later, a key graphic designer needed a knee operation. Instead of an 8-month NHS wait, he was seen by a specialist within a week and had the surgery three weeks later. He was back to work (initially from home) within a month, preventing a major project delay.
Decoding Corporate PMI: What's Covered and Key Exclusions
Understanding the scope of a private medical insurance policy is crucial. Misconceptions can lead to disappointment later. The most important rule to remember is this:
Critical Point: Standard UK private medical insurance is designed to cover acute conditions that arise after you take out the policy. It is not designed for managing long-term chronic conditions or treating pre-existing conditions.
- An acute condition is a disease, illness, or injury that is likely to respond quickly to treatment and lead to a full recovery (e.g., joint replacement, cataract surgery, hernia repair).
- A chronic condition is a long-term illness that may have no known cure and requires ongoing management (e.g., diabetes, asthma, high blood pressure). PMI will not cover the routine management of these conditions.
Here’s a clear breakdown of what you can typically expect to be included and excluded.
| Typical Inclusions (What's Usually Covered) | Typical Exclusions (What's Usually Not Covered) |
|---|---|
| In-patient and day-patient treatment (tests and surgery requiring a hospital bed) | Pre-existing conditions (illnesses you had before the policy started) |
| Specialist consultations (appointments with consultants following a GP referral) | Chronic conditions (like diabetes, asthma, hypertension) |
| Advanced diagnostics (MRI, CT, and PET scans) | A&E / Emergency services (PMI is for planned, non-emergency treatment) |
| Comprehensive cancer cover (including chemotherapy, radiotherapy, and surgery) | Normal pregnancy and childbirth (though complications may be covered) |
| Mental health support (often as an add-on or with specific limits) | Cosmetic surgery (unless for reconstructive purposes after an accident/illness) |
| Virtual GP services (24/7 access to a GP via phone or video call) | Routine dental and optical care (unless purchased as an add-on) |
| Physiotherapy and complementary therapies (often with limits) | Self-inflicted injuries or issues related to substance abuse |
Understanding Key PMI Terminology
- Underwriting: This is how an insurer assesses risk. For corporate schemes, the main types are:
- Moratorium (Mori): The most common type for small groups. The insurer doesn't ask for medical history upfront. Instead, they apply a waiting period (usually two years). If an employee has no symptoms, treatment, or advice for a pre-existing condition during that period, it may become eligible for cover thereafter.
- Full Medical Underwriting (FMU): Employees complete a full health questionnaire. The insurer then explicitly lists any conditions that will be excluded from the policy from day one.
- Medical History Disregarded (MHD): This is the gold standard, usually available for groups of 15-20+ employees. The insurer agrees to cover eligible pre-existing conditions. It's a major selling point for corporate schemes and significantly simplifies administration.
- Excess (illustrative): A fixed amount an employee pays towards their claim, similar to car insurance. A higher excess (£250, £500) will lower the overall premium.
- Hospital List: Insurers have different tiers of hospitals. A more restricted list (e.g., local private hospitals only) will be cheaper than a comprehensive list that includes prime central London facilities.
A Director's Guide to Comparing Top UK Private Health Insurance Providers
The UK private health insurance market is dominated by a few key players, each with its own strengths and focus. As a director, you don't need to become an expert in all of them—that's what a specialist broker is for. However, having a foundational knowledge is invaluable.
An expert broker like WeCovr can provide a detailed, side-by-side comparison of the policies and pricing tailored to your company's specific needs, ensuring you get the best value without the hassle of researching each provider individually.
Here is a high-level overview of the leading providers in 2025:
| Provider | Key Strengths & Market Focus | Unique Features & Digital Tools |
|---|---|---|
| Bupa | A household name with a huge network. Strong reputation for comprehensive cancer care and mental health pathways. Runs its own clinics and hospitals. | Bupa Touch app for policy management, Anytime HealthLine (24/7 nurse advice), access to Bupa-owned facilities. |
| AXA Health | Excellent digital tools and a focus on preventative healthcare. Strong on musculoskeletal support (physio, etc.) and mental health services. | Doctor at Hand (virtual GP service), dedicated support for muscle, bone, and joint issues, Proactive Health Gateway for businesses. |
| Aviva | A major UK insurer with a reputation for flexible, modular policies. Strong value proposition and a wide range of add-ons (dental, optical, travel). | Aviva DigiCare+ app (includes annual health check, mental health support, and nutritional advice), extensive hospital list options. |
| Vitality | Unique "Shared Value" model that rewards healthy behaviour. Very popular with active, younger workforces who engage with the wellness programme. | The Vitality Programme (rewards for activity via partners like Apple Watch, Caffè Nero), Vitality GP app, comprehensive health screening. |
Choosing the "best PMI provider" is subjective. The best provider for a tech start-up with a young, active team (who would benefit from Vitality's rewards) might be different from the best provider for an established law firm with senior partners who prioritise access to top London hospitals (where Bupa or AXA might excel).
Setting Up Your Company Health Insurance: A Step-by-Step Guide
Implementing a corporate PMI scheme is a structured process. Following these steps will ensure you create a policy that meets your goals and budget.
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Define Your Objectives and Budget Before you even look at quotes, ask yourself:
- Why are we doing this? Is it to combat absenteeism, attract talent, or reward senior staff?
- How much can we realistically allocate per employee, per month? Costs can range from £30 for a basic policy for a young employee to over £100 for comprehensive cover for an older one. Your budget will be the single biggest factor in shaping your policy.
-
Decide Who to Cover You have several options:
- All Employees: A fully inclusive approach that fosters a great culture.
- Management/Directors Only: A common starting point for smaller businesses, used as a senior-level perk.
- Service-Related: Employees become eligible after a certain length of service (e.g., after passing their probation or after one year).
- Include Families: You can choose to extend the cover to include employees' partners and/or children. The company can pay for this, or offer it as a benefit employees can pay for themselves at a favourable corporate rate.
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Choose Your Level of Cover This is where you balance benefits with budget. Core cover always includes in-patient and day-patient care. You can then add layers:
- Out-patient Cover: This is a crucial add-on. It covers diagnostic tests and specialist consultations that don't require a hospital bed. Without it, an employee would need to use the NHS to get a diagnosis before the private treatment could begin, defeating the "speed of access" benefit. You can choose a full cover or cap it (e.g., up to £1,000 per year) to manage costs.
- Therapies: Adds cover for physiotherapy, osteopathy, etc.
- Mental Health: Expands support for psychiatric care, counselling, and therapy. This is an increasingly popular and valuable add-on.
- Dental & Optical: Covers routine check-ups, treatments, and eyewear.
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Select an Underwriting Method As discussed earlier, for small groups (2-15 employees), you'll likely choose between Moratorium and Full Medical Underwriting. For larger groups (15/20+), you should strongly push for Medical History Disregarded (MHD) underwriting, as it's a huge benefit that removes any ambiguity about pre-existing conditions.
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Work with an Expert Broker (like WeCovr) This step is arguably the most important. A specialist independent broker doesn't cost you anything—they are paid a commission by the insurer you choose. Their value is immense:
- Market Knowledge: They know the nuances of each provider's policies.
- Negotiating Power: They can often secure better terms or pricing than a company could directly.
- Time Saving: They handle the entire process of gathering quotes and comparing them in an easy-to-understand format.
- Impartial Advice: As an FCA-authorised intermediary, their duty is to find the best solution for you, not a particular insurer.
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Review Quotes and Finalise the Policy Your broker will present you with 2-3 of the most suitable options. They will walk you through the differences in cover, hospital lists, and price. Once you've made your decision, they will handle all the paperwork to get the policy set up.
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Implement and Communicate to Staff Once the policy is live, you must communicate it clearly to your employees. Provide them with documentation that explains:
- What is covered.
- How to make a claim.
- Who to contact with questions. A good broker can often help provide materials or even run a launch session for your team.
Navigating the Tax and Compliance Maze of Corporate PMI
As a director, you are responsible for ensuring the company is compliant with HMRC rules. Getting this wrong can lead to penalties.
Tax Implications for the Company
The good news is that the premiums your company pays for a corporate health insurance scheme are generally considered an allowable business expense. This means you can deduct the cost from your pre-tax profits, reducing your Corporation Tax bill.
Tax Implications for the Employee (Benefit in Kind)
This is the most critical part to understand. Because the company is paying for a personal benefit for the employee, HMRC classes it as a Benefit in Kind (BIK).
- P11D Form: As the employer, you must report the value of the benefit to HMRC for each employee who receives it. This is done on a P11D form at the end of each tax year.
- Employee Pays Income Tax: The value of the premium is added to the employee's income for the year, and they will pay income tax on it at their marginal rate (20%, 40%, or 45%).
- Employer Pays National Insurance: The company is required to pay Class 1A National Insurance Contributions (NICs) on the total value of the premiums paid for all employees. The current Class 1A NICs rate can be found on the gov.uk website.
P11D Example: Your company pays a £800 annual premium for an employee. That employee is a higher-rate taxpayer (40%).
- The company reports £800 on the employee's P11D. (illustrative estimate)
- The employee will pay an extra £320 in income tax for the year (£800 x 40%). (illustrative estimate)
- The company will pay Class 1A NICs on the £800 premium. (illustrative estimate)
Insurance Premium Tax (IPT)
All UK insurance policies are subject to Insurance Premium Tax (IPT). For health insurance, this is charged at the standard rate (currently 12%). This tax is included in the premium quoted by the insurer, so you don't need to calculate it separately, but it's important to know it's part of the overall cost.
Enhancing Your Employee Value Proposition: Beyond Insurance to Total Wellness
The best modern PMI schemes are not just about fixing problems; they are about preventing them. Insurers are now competing to offer the most engaging wellness programmes and digital health tools.
Leveraging these can transform your PMI scheme from a simple insurance policy into a cornerstone of your corporate wellness strategy.
- Promote Digital GP Services: Encourage staff to use the virtual GP service included in most policies. It's convenient for them and can reduce time off for minor appointments.
- Engage with Wellness Rewards: If you choose a provider like Vitality, actively promote the rewards programme. Create internal leaderboards or challenges to drive engagement with the activity tracking benefits.
- Utilise Mental Health Resources: Make sure every employee knows how to access the mental health support lines, counselling sessions, or mindfulness apps included in your policy. Normalise the conversation around mental wellbeing.
At WeCovr, we enhance this further. All our clients who take out a PMI or Life Insurance policy gain complimentary access to CalorieHero, our AI-powered calorie and nutrition tracking app. It's a tangible, daily-use tool that helps your employees manage their health proactively.
Furthermore, by working with us for your health insurance needs, you can unlock discounts on other essential business and personal cover, such as key person insurance or relevant life policies, creating even greater value for your company and its people.
Is corporate health insurance a taxable benefit in the UK?
Does company PMI cover pre-existing medical conditions?
How much does corporate health insurance cost per employee?
Can a small business with only two directors get a corporate PMI policy?
Take the Next Step with Expert, No-Cost Advice
Choosing and implementing the right private medical insurance for your UK business is a significant decision. It impacts your finances, your legal obligations, and most importantly, your team's wellbeing. You don't have to navigate this complex market alone.
The expert team at WeCovr is here to help. As an independent, FCA-authorised broker, we provide impartial advice tailored to your company's unique needs and budget. We'll handle the market comparison, explain your options in plain English, and manage the entire set-up process—all at no cost to you.
Contact WeCovr today for a free, no-obligation quote and discover the ideal health insurance solution for your business.
Sources
- NHS England: Waiting times and referral-to-treatment statistics.
- Office for National Statistics (ONS): Health, mortality, and workforce data.
- NICE: Clinical guidance and technology appraisals.
- Care Quality Commission (CQC): Provider quality and inspection reports.
- UK Health Security Agency (UKHSA): Public health surveillance reports.
- Association of British Insurers (ABI): Health and protection market publications.
