TL;DR
As an employer, attracting and retaining top talent in a competitive market is a constant challenge. At WeCovr, where we've helped arrange hundreds of thousands of policies, we know that a compelling benefits package is crucial. This expert guide to UK corporate private medical insurance (PMI) explains everything you need to know about offering private healthcare as a powerful employee benefit.
Key takeaways
- Reduced Sickness Absence: Quick access to diagnosis and treatment means employees can get the care they need faster and return to work sooner. ONS data consistently shows millions of working days are lost to sickness each year; PMI can directly mitigate this.
- Enhanced Recruitment & Retention: A quality health insurance plan is a major differentiator in the job market. It signals that you are an employer who cares, making it easier to attract and keep the best people.
- Increased Productivity & Morale: A healthy workforce is a productive one. Knowing they have support when they need it gives employees peace of mind, reduces stress, and fosters a positive, loyal company culture.
- Duty of Care: Providing health insurance is a clear and effective way to fulfil your duty of care towards your employees' health and wellbeing.
- Control Over Business Disruption: For key personnel, a long, unexpected absence can severely disrupt operations. PMI ensures they can bypass lengthy waiting lists for consultations, scans, and surgery, getting them back to health and work promptly.
As an employer, attracting and retaining top talent in a competitive market is a constant challenge. At WeCovr, where we've helped arrange hundreds of thousands of policies, we know that a compelling benefits package is crucial. This expert guide to UK corporate private medical insurance (PMI) explains everything you need to know about offering private healthcare as a powerful employee benefit.
Everything employers need to know about corporate private healthcare and group medical insurance
Corporate Private Health Insurance, also known as Group Private Medical Insurance or a Company Health Scheme, is a policy taken out by an employer to provide private healthcare access for its employees. It works alongside the NHS, offering staff quicker access to diagnosis and treatment for eligible acute medical conditions.
For businesses of any size, from small start-ups to large corporations, it is one of the most highly-valued employee benefits. It demonstrates a genuine commitment to staff wellbeing, helping to reduce sickness absence and boost productivity and morale.
This comprehensive guide will walk you through how it works, the benefits, the costs, the tax implications, and how to choose the right scheme for your organisation.
Why Should Employers Offer Corporate Health Insurance?
Offering corporate PMI is a strategic business decision with tangible benefits for both the company and its employees. In a post-pandemic world, with NHS waiting lists remaining a significant concern, the value of private healthcare has never been more apparent.
Benefits for the Employer:
- Reduced Sickness Absence: Quick access to diagnosis and treatment means employees can get the care they need faster and return to work sooner. ONS data consistently shows millions of working days are lost to sickness each year; PMI can directly mitigate this.
- Enhanced Recruitment & Retention: A quality health insurance plan is a major differentiator in the job market. It signals that you are an employer who cares, making it easier to attract and keep the best people.
- Increased Productivity & Morale: A healthy workforce is a productive one. Knowing they have support when they need it gives employees peace of mind, reduces stress, and fosters a positive, loyal company culture.
- Duty of Care: Providing health insurance is a clear and effective way to fulfil your duty of care towards your employees' health and wellbeing.
- Control Over Business Disruption: For key personnel, a long, unexpected absence can severely disrupt operations. PMI ensures they can bypass lengthy waiting lists for consultations, scans, and surgery, getting them back to health and work promptly.
Benefits for the Employee:
- Faster Access to Treatment: This is the core benefit. Employees can bypass NHS waiting lists for specialist consultations, diagnostic tests (like MRI and CT scans), and eligible treatments.
- Choice and Convenience: Employees often have a choice of specialist and hospital. Appointments and treatments can be scheduled at times that suit them, minimising disruption to their work and family life.
- Access to Specialist Drugs & Treatments: Some policies provide cover for drugs and treatments that may not be available on the NHS due to cost or other restrictions.
- Private and Comfortable Facilities: Treatment is typically provided in a private hospital room with en-suite facilities, offering a more comfortable and restful environment for recovery.
- Peace of Mind: Knowing they and their families can access private care without facing huge personal expense is a significant and reassuring benefit.
How Does Corporate Private Medical Insurance Work?
The process from setting up a policy to an employee making a claim is straightforward, especially when guided by an expert broker.
- Policy Setup: The employer works with a broker or insurer to design a policy. This involves deciding who is covered (e.g., all employees, management only), the level of cover, the underwriting method, and the budget.
- Employee Enrolment: Once the policy is live, employees are enrolled in the scheme. They receive policy documents explaining their cover and how to make a claim.
- Symptom & GP Visit: When an employee develops a new, non-urgent medical symptom, their first port of call is usually their NHS GP.
- Open Referral: If the GP feels a specialist consultation is needed, they will provide an 'open referral' letter. This recommends the type of specialist required (e.g., a cardiologist) but doesn't name a specific individual.
- Claim Authorisation: The employee contacts their PMI provider's claims line with their policy details and the referral letter.
- Treatment Pathway: The insurer authorises the claim and provides a choice of recognised specialists and hospitals. They will issue an authorisation number for the consultation and any subsequent diagnostic tests.
- Treatment & Billing: The employee receives treatment. The hospital and specialist bill the insurance company directly. The employee is only responsible for paying any 'excess' they may have on their policy.
Insider Tip: The single most important step for an employee is to get pre-authorisation from their insurer before undergoing any consultation or treatment. Failure to do so can result in the claim being rejected.
Key Components of a Corporate PMI Policy Explained
Corporate health insurance is not a one-size-fits-all product. Policies are built from a core foundation with optional extras, allowing you to tailor the plan to your budget and your employees' needs.
Core Cover (Usually included as standard):
- In-patient & Day-patient Treatment: This covers costs when an employee is admitted to hospital for treatment and requires a bed, either overnight (in-patient) or just for the day (day-patient). This includes hospital fees, specialist fees, and anaesthetist fees.
- Cancer Cover: This is a fundamental part of modern PMI. Cover is often extensive, including surgery, chemotherapy, and radiotherapy. The level of cover can vary, so it's a key area to compare.
Common Optional Extras:
- Out-patient Cover: This is arguably the most important add-on. It covers diagnostic tests and consultations that do not require a hospital bed. Without this, an employee would rely on the NHS for the initial diagnostic phase, which can involve long waits.
- Mental Health Cover: Provides access to psychiatric treatment, therapists, and counsellors. Given the increasing focus on mental wellbeing, this is a highly sought-after benefit.
- Therapies Cover: Covers treatments like physiotherapy, osteopathy, and chiropractic care, which are vital for musculoskeletal issues—a leading cause of sickness absence.
- Dental & Optical Cover: A routine 'cashback' benefit that helps with the costs of check-ups, glasses, and dental treatment.
- Travel Cover: Extends medical cover for employees when they are travelling abroad.
The table below summarises how these components build a policy.
| Component | Description | Why it's Important |
|---|---|---|
| Core Cover | Hospital charges, specialist fees for in-patient/day-patient treatment. | The fundamental safety net for surgery and major procedures. |
| Cancer Cover | Access to specialist cancer drugs, treatments, and care pathways. | Provides comprehensive support during a critical illness. |
| Out-patient Cover | Consultations and diagnostic scans (MRI, CT) not requiring admission. | Crucial for speeding up the initial diagnosis and avoiding NHS waits. |
| Mental Health | Access to psychiatrists, psychologists, and therapy sessions. | Addresses a key area of employee wellbeing and reduces absence. |
| Therapies | Physiotherapy, osteopathy, etc. for muscle, bone, and joint issues. | Gets employees back on their feet quickly after injury. |
Understanding Underwriting: The Heart of Your Policy
Underwriting is the process an insurer uses to assess risk and decide what they will and will not cover. For corporate schemes, there are several options, each with different implications for your employees.
Crucial Rule of UK PMI: Standard private medical insurance is designed to cover acute conditions that arise after you take out the policy. It does not cover pre-existing conditions (illnesses you had before joining) or chronic conditions (long-term, incurable illnesses like diabetes, asthma, or high blood pressure).
Here are the main types of underwriting for group schemes:
| Underwriting Type | How it Works | Pros | Cons |
|---|---|---|---|
| Moratorium (Mori) | No medical questionnaire is needed upfront. The insurer applies a blanket exclusion for any condition the member has had symptoms of or treatment for in the last 5 years. This exclusion can be lifted if the member goes a continuous 2-year period after joining without any symptoms, treatment, or advice for that condition. | Simple and quick to set up. Less intrusive for employees. | Creates uncertainty. Cover for a condition is only determined when a claim is made, which can lead to disappointment. |
| Full Medical Underwriting (FMU) | Each employee completes a detailed medical history questionnaire. The insurer reviews this and states from the outset exactly what is and isn't covered for that individual. | Provides complete clarity and certainty for the employee from day one. No ambiguity at the point of a claim. | More admin-heavy to set up. Requires employees to disclose personal medical information. |
| Medical History Disregarded (MHD) | Available for larger groups (typically 15-20+ employees). The insurer agrees to cover eligible pre-existing conditions, subject to the policy's general terms. It's the most comprehensive form of cover. | The "gold standard" of corporate cover. Covers pre-existing conditions. A huge employee benefit. | Only available for larger schemes. The most expensive option. |
| Continued Personal Medical Exclusions (CPME) | Used when switching an existing group scheme to a new insurer. The new provider agrees to match the underwriting terms of the previous policy, ensuring continuous cover for employees. | Seamless transfer with no loss of cover for employees. | Only applicable when switching an existing, underwritten scheme. |
An expert broker, like WeCovr, can provide invaluable advice on which underwriting method is most suitable for your company's size, goals, and budget.
The Cost of Corporate Health Insurance: What Influences Premiums?
There is no single "price" for corporate health insurance. The premium is calculated based on a wide range of risk factors. Understanding these will help you manage your budget.
Key Factors Influencing Your Premium:
- Average Age of Employees: Older employees represent a higher risk, so a workforce with a higher average age will have a higher premium.
- Company Location: Medical treatment costs vary across the UK, with central London being the most expensive. Insurers use postcodes to price this risk.
- Industry / Occupation: Some industries (e.g., construction) have a higher risk of injury, which can be reflected in the price.
- Level of Cover: The more comprehensive the policy (e.g., with full out-patient, mental health, and therapies cover), the higher the cost.
- Policy Excess: This is the amount an employee pays towards their claim. A higher excess (e.g., £250) will lower the overall premium. Offering an excess is a very effective way to make a scheme more affordable.
- Hospital List: Insurers offer different tiers of hospitals. A policy that includes expensive central London hospitals will cost more than one with a more restricted regional network.
- Underwriting Type: Medical History Disregarded is the most expensive, while Moratorium is often the cheapest.
- Claims History (for renewals): For existing schemes, the number and value of claims made in the previous year will be the single biggest factor in determining the renewal premium.
Tax Implications for Employers and Employees
The tax treatment of corporate PMI is a critical area for employers to understand.
For the Employer:
- The cost of the premiums paid by the business is generally considered an allowable business expense.
- This means you can deduct the full cost of the scheme from your pre-tax profits, reducing your overall Corporation Tax liability.
For the Employee:
- Private medical insurance is treated as a Benefit-in-Kind (BIK). This means it has a taxable value.
- The value of the benefit is the premium that the employer pays for that specific employee.
- The employer must report this on a P11D form to HMRC each year.
- The employee will then pay income tax on the value of the premium at their marginal rate (e.g., 20%, 40%, or 45%). This is usually handled by an adjustment to their tax code.
Example: An employer pays a £600 annual premium for an employee who is a basic rate (20%) taxpayer.
- The BIK value is £600.
- The employee will pay 20% of £600 in tax, which is £120 for the year, or £10 per month.
- The employee gets access to a comprehensive health insurance policy for just £10 a month in tax.
Choosing the Right Insurer and Policy for Your Business
The UK private medical insurance market is dominated by a few major providers, each with its own strengths and focus.
- Bupa: One of the most recognised brands, known for its extensive network and strong cancer cover.
- AXA Health: A global giant with a strong focus on technology, digital GP services, and mental health support.
- Aviva: A major UK insurer offering a wide range of flexible and well-regarded PMI products.
- Vitality: Unique in its focus on wellness and prevention. It incentivises healthy living by offering rewards (like cinema tickets and coffee) and premium discounts for members who stay active.
Why Use a Broker?
Navigating the differences between these providers and their complex policy options can be daunting. This is where an independent, unbiased broker is essential.
- Whole-of-Market Access: A broker can compare policies and prices from all leading insurers, not just one.
- Expert Advice: They understand the nuances of policy wording, underwriting, and claims processes.
- Needs Analysis: A broker will take the time to understand your business, your employees, and your budget to recommend the most suitable solution.
- No Extra Cost: Brokers are paid a commission by the insurer you choose, so their expert advice and support come at no direct cost to your business.
At WeCovr, we specialise in helping UK businesses find the perfect corporate health insurance plan. We do the hard work of comparing the market so you can make a confident and informed decision.
How to Set Up or Switch Your Group Health Insurance Scheme
- Define Your Objectives: What are you trying to achieve? Reduce sickness absence? Attract top graduates? Reward senior management?
- Set Your Budget: Decide how much you can afford to invest per employee, per year.
- Gather Your Data: You'll need an anonymised list of employees, including their dates of birth and postcodes. For a switch, you'll also need details of your current scheme and claims history.
- Speak to a Broker: Engage an independent broker. They will take your information and objectives to the market to gather quotes and options.
- Review the Proposals: Your broker will present you with a comparison of the best options, explaining the pros and cons of each. This is the time to fine-tune the cover—adjusting the excess, hospital list, or optional extras to meet your budget.
- Implement the Scheme: Once you've made your choice, your broker will handle the application and setup process with the insurer.
- Communicate to Staff: It's vital to launch the new benefit effectively. Communicate clearly what the scheme is, what it covers, and how to use it to ensure maximum engagement and appreciation.
Beyond the Basics: Added Value Services & Wellness Programmes
Modern corporate PMI is about more than just paying for surgery. Insurers now include a wide range of added-value services designed to support everyday health and wellbeing. These are often available to all members, regardless of whether they make a claim.
- Digital GP / Remote GP: 24/7 access to a GP via phone or video call. This is incredibly popular, offering quick advice and prescriptions without leaving the home or office.
- Employee Assistance Programmes (EAP): Confidential telephone support lines for a range of issues, including stress, debt, legal advice, and bereavement.
- Mental Health Support: Many policies now offer direct access to telephone counselling or digital CBT (Cognitive Behavioural Therapy) without needing a GP referral.
- Wellness Apps & Discounts: Insurers provide access to a host of apps and services for fitness, nutrition, and mindfulness. For instance, at WeCovr, we provide complimentary access to our AI calorie tracking app, CalorieHero, to help your team stay on top of their nutritional goals.
These services transform a health insurance policy from a reactive safety net into a proactive, everyday wellness tool that helps keep your workforce healthy and engaged. As a WeCovr client, you can also benefit from discounts on other essential business and personal insurance policies.
Does corporate health insurance cover pre-existing conditions?
Is corporate health insurance a taxable benefit in the UK?
What is the minimum number of employees for a group health insurance scheme?
Ready to Explore the Best Options for Your Business?
Investing in your team's health is one of the smartest investments you can make. A well-chosen corporate private medical insurance scheme can be a cornerstone of your employee value proposition, delivering a powerful return through improved health, loyalty, and productivity.
The market is complex, but the process doesn't have to be. Contact the friendly, expert team at WeCovr today for a free, no-obligation review of your needs. We'll compare the UK's leading insurers to find a solution that protects your people and your budget.
