TL;DR
In a competitive UK market, attracting and retaining top talent is paramount.
Key takeaways
- Statutory Sick Pay (SSP): The legal minimum you must pay to eligible employees.
- Contractual Sick Pay: More generous sick pay schemes offered by many companies, which can mean paying a full salary for a set period.
- Lost Productivity: The absent employee isn't contributing, and team output can suffer.
- Replacement Staff: Costs of hiring temporary staff or paying overtime to existing employees to cover the workload.
- Management Time: Managers spend valuable time rearranging work, managing cover, and conducting return-to-work interviews.
In a competitive UK market, attracting and retaining top talent is paramount. At WeCovr, an FCA-authorised broker that has helped arrange over 900,000 policies, we see firsthand how forward-thinking companies use benefits like private medical insurance not just as a perk, but as a powerful strategic tool to support their workforce and bottom line.
The business case for offering private health insurance to employees
Employee absence is more than just an inconvenience; it's a significant drain on a company's resources, productivity, and morale. Offering company Private Medical Insurance (PMI) is a direct and effective strategy to mitigate these costs. It's an investment in your most valuable asset—your people.
By providing staff with fast access to diagnosis, treatment, and specialist care, PMI helps them get back on their feet and back to work sooner. This isn't just about reducing the number of sick days. It's about building a resilient, healthy, and engaged workforce, creating a positive culture where employees feel valued and supported. In essence, the business case for PMI is built on three pillars: cost reduction, talent management, and enhanced productivity.
The Staggering Cost of Employee Sickness Absence in the UK
To fully appreciate the value of PMI, we must first understand the scale of the problem it addresses. Sickness absence in the UK has reached record levels, placing an immense burden on businesses of all sizes.
According to the Office for National Statistics (ONS), an estimated 185.6 million working days were lost due to sickness or injury in 2022, the highest since records began in 1995. This equates to an average of 5.7 days per worker.
The financial impact of this is twofold, comprising both direct and indirect costs.
Direct Costs:
- Statutory Sick Pay (SSP): The legal minimum you must pay to eligible employees.
- Contractual Sick Pay: More generous sick pay schemes offered by many companies, which can mean paying a full salary for a set period.
Indirect Costs: These are often hidden but can be far more substantial.
- Lost Productivity: The absent employee isn't contributing, and team output can suffer.
- Replacement Staff: Costs of hiring temporary staff or paying overtime to existing employees to cover the workload.
- Management Time: Managers spend valuable time rearranging work, managing cover, and conducting return-to-work interviews.
- Reduced Morale: Remaining staff can feel overworked and stressed, leading to a dip in morale and potentially more absences.
- Lower Service Quality: Customer service and client relationships can be impacted by staff shortages.
A Breakdown of Absence Costs
| Cost Type | Description | Example Impact |
|---|---|---|
| Direct Costs | Sick pay (statutory and contractual). | A company paying full contractual sick pay for an employee on a £40,000 salary loses over £150 per day in direct wage costs. |
| Indirect Costs | Lost output, hiring temps, management time. | A project deadline is missed because a key team member is on a long-term waiting list for a minor surgical procedure. |
| Cultural Costs | Lower team morale, increased stress on colleagues. | Remaining employees feel burnt out from carrying extra work, leading to a negative atmosphere and 'presenteeism'. |
How Private Medical Insurance Directly Tackles Sickness Absence
Private health cover is a powerful intervention that directly addresses the root causes of long-term absence. It empowers employees to take control of their health by removing the single biggest barrier to a speedy recovery: waiting times.
Bypassing NHS Waiting Lists for Faster Diagnosis and Treatment
The NHS is a national treasure, but it is under unprecedented strain. As of early 2024, the referral-to-treatment (RTT) waiting list in England stood at over 7.5 million treatment pathways. For many non-urgent but debilitating conditions, patients can wait months for an initial consultation, further weeks for diagnostic scans, and even longer for treatment.
This is where PMI makes a tangible difference.
- Prompt Specialist Access: An employee can typically see a specialist consultant within days or weeks, rather than months.
- Rapid Diagnostics: Crucial scans like MRI, CT, and PET scans can be arranged quickly, leading to a faster diagnosis.
- Timely Treatment: Once a diagnosis is made, any required surgery or treatment can be scheduled at a time and private hospital convenient for the employee.
Real-World Example: The NHS vs. PMI Timeline
Consider an employee, a graphic designer, who develops severe knee pain that impacts their ability to sit at a desk and commute.
| Stage | Typical NHS Timeline | Typical PMI Timeline | Impact on Business |
|---|---|---|---|
| GP Visit | 1-2 weeks for an appointment | 1-2 weeks (or same day via Digital GP) | Minimal |
| Specialist Referral | 18-24 weeks | 1-2 weeks | NHS: Months of reduced productivity or absence. PMI: Employee gets a clear diagnosis quickly. |
| MRI Scan | 6-8 weeks | 3-5 days | NHS: Further waiting and uncertainty. PMI: Treatment plan is confirmed almost immediately. |
| Surgery (e.g., Arthroscopy) | 20-30 weeks | 2-4 weeks | NHS: Employee could be off work for over a year in total. PMI: Employee is treated and starts recovery within a month or two. |
| Return to Work | 9-12+ months after first symptom | 2-3 months after first symptom | A vastly quicker return to full productivity, saving the business thousands in lost output and cover costs. |
Focus on Mental Health Support
According to the ONS, "stress, depression or anxiety" is one of the leading causes of long-term sickness absence. Most modern company PMI policies offer robust mental health pathways, often without needing a GP referral. This proactive approach is vital.
Benefits typically include:
- Access to a 24/7 mental health support line.
- Fast-track referrals for talking therapies like Cognitive Behavioural Therapy (CBT).
- Cover for sessions with counsellors, psychotherapists, and consultant psychiatrists.
- In-patient and day-patient care for more severe conditions.
By providing confidential and rapid access to support, companies can help employees manage stress and anxiety before they escalate into long-term absence.
Proactive Health and Wellbeing Services
The best private medical insurance UK providers have evolved beyond being just a "sick-care" service. They are now comprehensive "health and wellness" partners. These proactive benefits help prevent illness in the first place.
| Proactive PMI Benefit | How It Reduces Absence |
|---|---|
| Digital GP Services (24/7) | Employees can speak to a GP via video call anytime, getting quick advice and prescriptions without taking a day off work to wait for an appointment. |
| Health Screenings | Annual check-ups can catch potential issues like high blood pressure or cholesterol early, allowing for preventative action. |
| Wellness Programmes & Apps | Many policies offer discounts on gym memberships, fitness trackers, and wellness apps, encouraging a healthier lifestyle. |
| Nutritional & Diet Support | Access to nutritionists can help employees manage weight and diet, reducing the risk of conditions like Type 2 diabetes. |
As part of our commitment to holistic wellbeing, WeCovr provides clients who purchase PMI or Life Insurance with complimentary access to our AI-powered calorie and nutrition tracking app, CalorieHero, helping your team build healthy eating habits.
The Broader Business Benefits Beyond Reducing Sick Days
While the impact on absenteeism is clear, the benefits of a company health insurance scheme ripple throughout the organisation.
Boosting Recruitment and Retention
In a tight labour market, a strong benefits package is a key differentiator. Private health cover is consistently ranked as one of the most desired employee benefits. Offering PMI sends a powerful message to potential hires: this is a company that invests in its people. It can be the deciding factor that persuades a top candidate to join your team over a competitor's.
For retention, the effect is just as strong. When an employee or their family member uses the policy and experiences the speed and quality of private care, it builds immense loyalty and goodwill.
Enhancing Employee Morale and Loyalty
A PMI scheme is a visible, tangible sign that you care about your team's health and wellbeing beyond the workplace. This fosters a positive, supportive culture. Employees who feel cared for are more likely to be engaged, motivated, and committed to the company's success. This is not a "soft" benefit; it has a direct correlation with performance and discretionary effort.
Improving Productivity (Tackling 'Presenteeism')
'Presenteeism' is the hidden productivity killer. It's when employees show up for work but are not fully functional due to illness, pain, or stress. They might be struggling with a bad back, suffering from anxiety, or waiting for a diagnosis. Their output is low, their error rate is high, and they can negatively impact team morale.
Because PMI provides swift solutions for both physical and mental health issues, it directly tackles presenteeism. An employee who gets rapid physiotherapy for a bad back or quick access to therapy for stress is not just less likely to be absent; they are more likely to be fully present, focused, and productive when they are at work.
Key Considerations When Choosing a Company PMI Policy
Implementing a PMI scheme requires careful thought. It’s not a one-size-fits-all product. Working with an expert PMI broker like WeCovr is essential to navigate the options and tailor a plan that fits your company's unique needs and budget.
Understanding Underwriting Options
'Underwriting' is how an insurer assesses risk and decides on the terms of the policy. For businesses, there are three main types:
- Moratorium (Mori) Underwriting: The most common type for small groups. There's no lengthy medical questionnaire at the start. Instead, the policy automatically excludes treatment for any medical conditions the employee has had symptoms, treatment, or advice for in the 5 years before joining. However, if they go 2 full years on the policy without any issues relating to that condition, it may become eligible for cover.
- Full Medical Underwriting (FMU): Each employee completes a detailed medical questionnaire. The insurer then reviews their medical history and lists specific exclusions from the outset. This provides clarity but is more admin-intensive.
- Medical History Disregarded (MHD): This is the gold standard, typically available to larger groups (often 15-20+ employees). As the name suggests, it ignores everyone's prior medical history and covers eligible conditions regardless of whether they are pre-existing. It's the most comprehensive but also the most expensive option.
Tailoring Your Policy: What to Include
A company PMI policy is built from a core foundation with optional extras, allowing you to control the cost and level of cover.
| Policy Component | What It Covers | Is It Essential? |
|---|---|---|
| Core Cover (In-patient & Day-patient) | Covers tests and treatment when admitted to hospital, including surgery, accommodation, and nursing care. | Essential. This is the foundation of every PMI policy. |
| Out-patient Cover | Covers specialist consultations, diagnostic tests, and therapies that don't require a hospital bed. | Highly Recommended. Without this, employees would rely on the NHS for diagnosis, defeating the key 'speed of access' benefit. Often offered in tiers (e.g., up to £1,000 or unlimited). |
| Therapies Cover | Covers treatments like physiotherapy, osteopathy, and chiropractic care. | Highly Recommended. Crucial for musculoskeletal issues, a major cause of absence. |
| Mental Health Cover | Covers talking therapies and psychiatric treatment. | Highly Recommended. Given the prevalence of mental health issues, this is a vital component for a modern workforce. |
| Dental & Optical Cover | An optional add-on for routine check-ups, treatments, and eyewear. | Optional. A 'nice-to-have' benefit that can enhance the package but adds to the cost. |
The Crucial Point: Pre-existing and Chronic Conditions
This is the most important concept to understand about standard UK private medical insurance.
PMI is designed to cover new, acute conditions that arise after you join the policy.
- Acute Condition: A disease, illness, or injury that is likely to respond quickly to treatment and lead to a full recovery (e.g., a cataract, joint injury, hernia, appendicitis).
- Chronic Condition: A disease, illness, or injury that has one or more of the following characteristics: it needs ongoing or long-term monitoring, it has no known cure, it is likely to recur, or it requires palliative care (e.g., diabetes, asthma, high blood pressure, Crohn's disease).
Standard PMI policies do not cover the routine management of chronic conditions. For example, they won't pay for the ongoing insulin and check-ups for a diabetic. They are designed to get you diagnosed and treated for acute episodes to return you to your previous state of health.
Similarly, under Moratorium and Full Medical Underwriting, conditions you had before taking out the policy (pre-existing conditions) will be excluded for a set period or permanently. Only Medical History Disregarded (MHD) underwriting typically covers pre-existing conditions.
How an Expert Broker Like WeCovr Adds Value
The UK private health insurance market is complex, with numerous providers like Bupa, Aviva, AXA Health, and Vitality, each offering dozens of policy variations. Trying to compare these yourself is time-consuming and confusing.
This is where an independent, FCA-authorised broker like WeCovr becomes an invaluable partner.
- Market Expertise: We have an in-depth understanding of the market and the strengths and weaknesses of each insurer. We do the hard work of comparing policies and prices for you.
- Needs Analysis: We take the time to understand your business, your employees, and your budget to recommend a solution that truly fits.
- No Cost to You: Our service is free. We are paid a commission by the insurer you choose, which is already built into the premium. You get expert, impartial advice without paying a penny extra.
- Ongoing Support: We don't just set up the policy and disappear. We are here to help with claims queries, administration, and an annual review to ensure your scheme remains competitive and right for your business.
- Exclusive Benefits: When you arrange PMI or Life Insurance through us, we can also offer discounts on other essential business covers, helping you protect your company and save money.
Our high customer satisfaction ratings reflect our commitment to providing clear, helpful, and effective advice to businesses across the UK.
Implementing a PMI Scheme Successfully in Your Organisation
- Define Your Objectives: Are you primarily aiming to reduce sick days, boost recruitment, or improve morale? Your goals will shape the policy design.
- Set Your Budget: Decide how much you can invest per employee per month. This will determine the level of cover you can offer.
- Partner with a Broker: Engage an expert like WeCovr to guide you through the process, gather quotes, and explain the options in plain English.
- Choose the Right Policy: Select the underwriting method and level of cover (core, out-patient, mental health) that aligns with your objectives and budget.
- Communicate the Benefits: Launching the scheme is just the beginning. You need to clearly and regularly communicate what the benefit is, how to use it, and the value it provides. This ensures high uptake and appreciation.
- Review Annually: At renewal, work with your broker to review the policy's performance, claims data, and market pricing to ensure it continues to offer great value.
Is company private medical insurance a taxable benefit in the UK?
Does company PMI cover pre-existing conditions?
What's the difference between private health insurance and a health cash plan?
How many employees do I need for a group PMI scheme?
Ready to see how private medical insurance can transform your business, reduce sick days, and energise your team?
Contact WeCovr today for a free, no-obligation quote. Our expert advisors will compare the UK's leading insurers to find the perfect cover for your company's needs and budget.
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.
