Group PMI Policies How Businesses Maximise Staff Benefits
As an FCA-authorised broker that has helped arrange over 900,000 policies, WeCovr understands the power of a great benefits package. This guide explores how UK businesses can leverage group private medical insurance to attract talent, reduce absenteeism, and build a healthier, more productive workforce.
Step-by-step guide for employers, including group scheme setup and tax tips
Offering Private Medical Insurance (PMI) is no longer a perk reserved for large corporations. Today, businesses of all sizes are discovering that a group health scheme is a powerful, affordable tool. This comprehensive guide will walk you through every step, from understanding the basics to navigating the tax implications and choosing the perfect plan for your team.
What Exactly is Group Private Medical Insurance?
Group Private Medical Insurance is a single policy taken out by an employer to provide private healthcare cover for its employees. Instead of individuals buying their own insurance, the business purchases a policy that covers a defined group of staff, often at a lower per-person cost than individual plans.
The core purpose of PMI is to cover the costs of diagnosis and treatment for acute conditions that arise after the policy begins. An acute condition is a disease, illness, or injury that is likely to respond quickly to treatment and lead to a full recovery.
This gives employees faster access to specialist consultations, diagnostic tests (like MRI and CT scans), and private hospital treatment, helping them bypass potentially long NHS waiting lists and return to health—and work—sooner.
The Business Case: Why Offer Group PMI to Your Staff?
Investing in your team's health is one of the smartest investments a business can make. The returns are seen in recruitment, retention, and overall productivity.
1. Attract and Retain Top Talent
In a competitive job market, a strong benefits package can be the deciding factor for a candidate. Offering private health cover shows you are a caring employer who invests in your team's wellbeing. It sends a clear message that you value your employees beyond their professional output.
2. Reduce Sickness Absence and Boost Productivity
Sickness absence costs UK businesses billions each year. According to the Office for National Statistics (ONS), an estimated 185.6 million working days were lost due to sickness or injury in 2022.
Group PMI can significantly reduce this impact by:
- Speeding up diagnosis: Employees can see a specialist in days, not months.
- Accelerating treatment: Prompt access to surgery or other treatments gets them back on their feet faster.
- Providing preventative tools: Many modern policies include wellness services that help staff stay healthy in the first place.
A healthy, present workforce is a productive workforce. When employees feel well and supported, their focus, morale, and output naturally increase.
3. A Tangible Return on Investment (ROI)
While there is an upfront cost, the ROI of a group PMI scheme is substantial.
| Benefit | How PMI Delivers | Potential Financial Impact |
|---|---|---|
| Lower Recruitment Costs | Makes your benefits package more attractive than competitors'. | Reduced need for expensive recruitment agency fees and advertising. |
| Improved Staff Retention | Employees feel valued and are less likely to leave for a role with better perks. | Lower costs associated with hiring and training new staff. |
| Reduced Absenteeism | Faster medical treatment means less time off work. | Increased output and reduced cost of temporary cover or lost productivity. |
| Corporate Tax Relief | PMI premiums are typically an allowable business expense. | Reduces your final corporation tax bill. |
How to Set Up a Group PMI Scheme: A 7-Step Guide
Setting up a group health insurance plan is more straightforward than you might think, especially with an expert guide.
Step 1: Define Your Objectives and Budget
First, ask yourself what you want to achieve.
- Are you trying to solve a problem with absenteeism?
- Do you want to compete with other local employers for talent?
- Is your main goal to provide a high-value benefit for senior leadership?
Your answers will shape the type of policy you need. At the same time, establish a realistic budget. How much can you afford to spend per employee, per month? This will determine the level of cover you can offer.
Step 2: Decide Who You Want to Cover
You have several options for eligibility:
- All Employees: The most inclusive option, covering everyone from day one or after a probation period.
- Management Tiers: You might offer a basic level of cover to all staff and a more comprehensive plan for senior managers or directors.
- Service-Based: Reward loyalty by offering cover to employees who have been with the company for a certain number of years.
Remember, you generally need at least two employees to start a group scheme.
Step 3: Choose the Right Level of Cover
PMI policies are not one-size-fits-all. They are built from a core foundation with optional extras.
| Level of Cover | What It Typically Includes | Best For |
|---|---|---|
| Basic | Core in-patient and day-patient treatment. Usually includes surgery, hospital accommodation, and specialist fees. | Businesses on a tight budget wanting to provide a safety net for major medical events. |
| Mid-Range | Everything in Basic, plus a set limit for out-patient diagnostics and consultations. May include some therapies. | A good balance of cost and comprehensive cover, suitable for most businesses. |
| Comprehensive | Full in-patient and out-patient cover, often with generous limits for therapies, mental health, and dental/optical care. | Companies wanting to offer a premium, top-tier benefit to attract and retain senior talent. |
Key Terms Explained:
- In-patient: Treatment that requires a stay in a hospital bed overnight.
- Day-patient: Treatment in a hospital bed for a day, but you don't stay overnight.
- Out-patient: Consultations or tests at a hospital or clinic where you don't need a bed.
Step 4: Understand Your Underwriting Options
Underwriting is how an insurer assesses risk and decides what it will and won't cover. This is a critical choice for a group scheme.
| Underwriting Type | How It Works | Pros | Cons |
|---|---|---|---|
| Full Medical Underwriting (FMU) | Each employee completes a detailed health questionnaire. The insurer excludes conditions based on their answers. | Premiums may be lower initially as the risk is clearly defined. | Can be intrusive for employees and administratively heavy. |
| Moratorium (MORI) | No medical questions upfront. Instead, conditions an employee had in the 5 years before joining are automatically excluded for the first 2 years of cover. If they remain symptom-free for those 2 years, the condition may become eligible for cover. | Simple and quick to set up. Less intrusive for staff. | The "2-year" rule can be confusing. Claims can be delayed while the insurer checks medical history. |
| Medical History Disregarded (MHD) | The insurer agrees to cover eligible medical conditions, regardless of an employee's previous medical history. This is the most inclusive option and can even cover pre-existing conditions. | The gold standard. No medical questions and covers most pre-existing conditions, removing a major barrier to using the policy. | Only available for larger groups (typically 15-20+ employees). It is the most expensive option. |
An experienced broker can advise on the best underwriting method for your group's size and needs.
Step 5: Compare Insurers and Policies
The UK private medical insurance market is vast, with providers like Bupa, Aviva, AXA Health, and Vitality all offering excellent group products. Each has different strengths, hospital lists, and added-value benefits.
Comparing them yourself can be time-consuming and confusing. This is where an independent broker like WeCovr provides immense value. As an FCA-authorised intermediary, we compare the entire market on your behalf, explaining the subtle but important differences between policies. Our service comes at no cost to you, but our expertise can save you thousands and ensure you get the right cover.
Step 6: Finalise Your Policy Details
Once you've chosen a provider, you'll need to confirm the finer details:
- Excess: This is the amount an employee pays towards a claim. A higher excess (£250, £500) will lower the overall premium. Offering an excess is a great way to manage costs.
- Hospital List: Insurers have different lists of approved hospitals. Ensure your chosen list provides good geographical coverage for your team.
- 6-Week Option: This is a cost-saving measure where, if the NHS can provide the required treatment within six weeks, the employee will use the NHS. If the waiting list is longer, the private cover kicks in.
Step 7: Launch and Communicate the Scheme
Once the policy is live, effective communication is key. Your employees need to understand what they are covered for and how to make a claim.
Provide them with:
- A clear summary of benefits.
- Membership numbers and contact details for the insurer.
- Guidance on the claims process (e.g., "See your GP first for a referral").
A successful launch ensures your team appreciates the new benefit and knows how to use it when they need it most.
The Financials: Costs, Taxes, and Savings
Understanding the financial side of Group PMI is essential for effective budgeting and compliance.
How Much Does Group PMI Cost?
There's no single price for group health insurance. The premium is calculated based on several factors:
- Group Size: The more employees you have, the lower the average cost per person.
- Average Age: An older workforce will generally have higher premiums than a younger one.
- Location: Premiums are often higher in London and the South East due to the higher cost of private treatment there.
- Industry: Some manual labour or high-stress industries may attract higher premiums.
- Level of Cover: A comprehensive plan will cost more than a basic one.
- Underwriting & Excess: An MHD plan with a £0 excess will be the most expensive, while a Moratorium plan with a £500 excess will be much cheaper.
Example Annual Premiums (Illustrative)
| Company Profile | Basic Cover (with excess) | Comprehensive Cover (no excess) |
|---|---|---|
| 5-person startup in Bristol (Avg. age 30) | £1,800 (£30/employee/month) | £4,200 (£70/employee/month) |
| 25-person law firm in London (Avg. age 42) | £15,000 (£50/employee/month) | £33,000 (£110/employee/month) |
| 50-person manufacturer in Glasgow (Avg. age 45) | £27,000 (£45/employee/month) | £57,000 (£95/employee/month) |
These figures are for illustration only. For an accurate quote, it's vital to speak to a specialist.
Tax Implications Explained
The tax rules around Group PMI are favourable for businesses but create a small liability for employees.
For the Business:
- The premiums your company pays for a Group PMI scheme are generally considered an allowable business expense.
- This means you can deduct the full cost of the policy from your profits before calculating your Corporation Tax bill. This effectively reduces the net cost of the scheme.
For the Employee:
- Because the employer is paying for a personal benefit, HMRC classes Group PMI as a 'benefit in-kind'.
- This means the value of the premium is treated as additional income for the employee, and they must pay income tax on it.
- The employer is responsible for calculating the value of the benefit per employee and reporting it to HMRC on a P11D form each year.
- HMRC will then adjust the employee's tax code to collect the tax due.
Example: An employee is a basic rate (20%) taxpayer. Their share of the Group PMI premium costs the business £600 for the year.
- Benefit-in-kind value = £600
- Tax due = 20% of £600 = £120 for the year, or £10 per month.
For a small monthly cost, the employee gains access to a private medical insurance UK policy that could be worth thousands.
The Small Print: What UK PMI Does and Doesn't Cover
It is vital that both you and your employees understand the limitations of private health cover to manage expectations.
The Golden Rule: Acute vs. Chronic Conditions
Private medical insurance is designed to cover acute conditions. These are illnesses or injuries that are short-term and can be cured or resolved with treatment (e.g., joint replacements, cataract surgery, hernia repair, cancer treatment).
PMI does not cover chronic conditions. These are long-term, incurable conditions that require ongoing management rather than a cure (e.g., diabetes, asthma, high blood pressure, arthritis). The day-to-day management of chronic conditions remains with the NHS.
Pre-existing Conditions
This is another critical point. Under most standard underwriting (Moratorium and Full Medical Underwriting), any medical condition an employee had before joining the scheme will be excluded from cover.
The main exception is a policy with Medical History Disregarded (MHD) underwriting. As mentioned, this is the most comprehensive option, typically available to larger groups, and it removes exclusions for most pre-existing conditions.
Standard Exclusions
All PMI policies have a list of standard exclusions. These nearly always include:
- Normal pregnancy and childbirth
- Cosmetic surgery (unless for reconstructive purposes after an accident)
- Treatment for addiction (alcohol or substance abuse)
- Emergency services (A&E visits are handled by the NHS)
- Self-inflicted injuries
Beyond Treatment: Maximising Value with Wellness Benefits
Modern Group PMI is about more than just hospital stays. Leading insurers now include a huge range of proactive and preventative health benefits designed to keep your staff well. When choosing a policy, look for these valuable extras:
- 24/7 Virtual GP: The ability to book a video consultation with a GP at any time, day or night, is incredibly valuable. It reduces time spent away from work for appointments and provides peace of mind.
- Mental Health Support: This is a huge area of growth. Many policies now offer access to counselling hotlines, a set number of therapy sessions (face-to-face or virtual), and access to mindfulness apps like Headspace.
- Health and Wellness Incentives: Some providers, like Vitality, actively reward healthy behaviour. Employees can earn discounts and rewards for tracking their activity, getting health checks, and eating well.
- Gym Discounts and Fitness Programmes: Discounts on memberships at major gym chains are a popular and tangible perk.
- Second Medical Opinions: The ability to get a world-leading expert to review a diagnosis and treatment plan can be invaluable for serious conditions.
At WeCovr, we enhance this value even further. Clients who arrange their private health cover through us also receive:
- Complimentary access to CalorieHero, our AI-powered calorie and nutrition tracking app to support healthy lifestyle goals.
- Exclusive discounts on other types of business and personal insurance, helping you and your employees save money across the board.
Nurturing a Healthy Workplace Culture
A PMI policy is the foundation, but building a true culture of wellness involves more. Encourage healthy habits across your team with simple, low-cost initiatives:
- Promote Movement: Encourage walking meetings or lunchtime walks. If you have cyclists, ensure there is safe bike storage.
- Healthy Snacks: Swap the biscuit tin for a fruit bowl.
- Hydration: Ensure fresh, filtered water is always available.
- Mental Wellbeing: Signpost mental health resources and encourage open conversations about stress and workload. Create a culture where taking a 'mental health day' is seen as responsible, not a weakness.
- Good Sleep Hygiene: Share tips on the importance of sleep for productivity and health, such as avoiding screens before bed and maintaining a regular sleep schedule.
By combining a robust PMI policy with a supportive environment, you create a workplace where employees feel cared for and can perform at their best.
Final Thoughts: Your Partner in Employee Health
Choosing to implement a Group Private Medical Insurance scheme is a significant, positive step for any business. It's a direct investment in your most valuable asset: your people.
The process can seem complex, but it doesn't have to be. Working with a specialist, independent PMI broker like WeCovr removes the guesswork. We provide the clarity and expert guidance needed to navigate the market with confidence. With high customer satisfaction ratings and a commitment to finding the best value, we act as your trusted partner.
We'll help you balance your budget with your objectives, compare the best PMI providers, and design a scheme that delivers real, tangible benefits for your business and your team.
How many employees do I need for a group health insurance scheme?
Is Group PMI a taxable benefit for my employees?
Will a group policy cover pre-existing medical conditions?
What is the difference between an 'acute' and a 'chronic' condition?
Ready to explore how a group private health cover plan could benefit your business? Contact the friendly experts at WeCovr today for a free, no-obligation chat and a tailored market comparison.
Related guides
Why private medical insurance and how does it work?
What is Private Medical Insurance?
Private medical insurance (PMI) is a type of health insurance that provides access to private healthcare services in the UK. It covers the cost of private medical treatment, allowing you to bypass NHS waiting lists and receive faster, more convenient care.How does it work?
Private medical insurance works by paying for your private healthcare costs. When you need treatment, you can choose to go private and your insurance will cover the costs, subject to your policy terms and conditions. This can include:• Private consultations with specialists
• Private hospital treatment and surgery
• Diagnostic tests and scans
• Physiotherapy and rehabilitation
• Mental health treatment
Your premium depends on factors like your age, health, occupation, and the level of cover you choose. Most policies offer different levels of cover, from basic to comprehensive, allowing you to tailor the policy to your needs and budget.
Questions to ask yourself regarding private medical insurance
Just ask yourself:👉 Are you concerned about NHS waiting times for treatment?
👉 Would you prefer to choose your own consultant and hospital?
👉 Do you want faster access to diagnostic tests and scans?
👉 Would you like private hospital accommodation and better food?
👉 Do you want to avoid the stress of NHS waiting lists?
Many people don't realise that private medical insurance is more affordable than they think, especially when you consider the value of faster treatment and better facilities. A great insurance policy can provide peace of mind and ensure you receive the care you need when you need it.
Benefits offered by private medical insurance
Private medical insurance provides numerous benefits that can significantly improve your healthcare experience and outcomes:Faster Access to Treatment
One of the biggest advantages is avoiding NHS waiting lists. While the NHS provides excellent care, waiting times can be lengthy. With private medical insurance, you can often receive treatment within days or weeks rather than months.
Choice of Consultant and Hospital
You can choose your preferred consultant and hospital, giving you more control over your healthcare journey. This is particularly important for complex treatments where you want a specific specialist.
Better Facilities and Accommodation
Private hospitals typically offer superior facilities, including private rooms, better food, and more comfortable surroundings. This can make your recovery more pleasant and potentially faster.
Advanced Treatments
Private medical insurance often covers treatments and medications not available on the NHS, giving you access to the latest medical advances and technologies.
Mental Health Support
Many policies include comprehensive mental health coverage, providing faster access to therapy and psychiatric care when needed.
Tax Benefits for Business Owners
If you're self-employed or a business owner, private medical insurance premiums can be tax-deductible, making it a cost-effective way to protect your health and your business.
Peace of Mind
Knowing you have access to private healthcare when you need it provides invaluable peace of mind, especially for those with ongoing health conditions or concerns about NHS capacity.
Private medical insurance is particularly valuable for those who want to take control of their healthcare journey and ensure they receive the best possible treatment when they need it most.
Important Fact!
We can look at a more suitable option mid-term!
Why is it important to get private medical insurance early?
👉 Many people are very thankful that they had their private medical insurance cover in place before running into some serious health issues. Private medical insurance is as important as life insurance for protecting your family's finances.👉 We insure our cars, houses, and even our phones! Yet our health is the most precious thing we have.
Easily one of the most important insurance purchases an individual or family can make in their lifetime, the decision to buy private medical insurance can be made much simpler with the help of FCA-authorised advisers. They are the specialists who do the searching and analysis helping people choose between various types of private medical insurance policies available in the market, including different levels of cover and policy types most suitable to the client's individual circumstances.
It certainly won't do any harm if you speak with one of our experienced insurance experts who are passionate about advising people on financial matters related to private medical insurance and are keen to provide you with a free consultation.
You can discuss with them in detail what affordable private medical insurance plan for the necessary peace of mind they would recommend! WeCovr works with some of the best advisers in the market.
By tapping the button below, you can book a free call with them in less than 30 seconds right now:
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WeCovr is an insurance specialist for people valuing their peace of mind and a great service.👍 WeCovr will help you get your private medical insurance, life insurance, critical illness insurance and others in no time thanks to our wonderful super-friendly experts ready to assist you every step of the way.
Just a quick and simple form and an easy conversation with one of our experts and your valuable insurance policy is in place for that needed peace of mind!