How to Provide Private Health Insurance to Employees
As an FCA-authorised expert broker that has helped arrange over 900,000 policies, WeCovr understands the UK market for private medical insurance inside and out. This guide explains exactly how to provide private health insurance to your employees, turning a complex decision into a strategic business advantage.
An HR and SME guide to offering PMI as a benefit
In today's competitive job market, attracting and retaining top talent requires more than just a competitive salary. A comprehensive benefits package that genuinely supports employee wellbeing has become a cornerstone of a forward-thinking business strategy. At the forefront of these benefits is Private Medical Insurance (PMI).
For Human Resources (HR) professionals and Small to Medium-sized Enterprise (SME) owners, navigating the world of company health insurance can seem daunting. This guide is designed to demystify the process, providing a clear, step-by-step framework for choosing, implementing, and managing a PMI scheme that benefits both your employees and your bottom line.
What is Business Private Medical Insurance?
Business Private Medical Insurance, often called group health insurance, is a policy taken out by an employer to provide healthcare cover for its employees. It is designed to work alongside the NHS, giving staff quicker access to diagnosis and treatment for eligible medical conditions.
The core purpose of PMI is to cover the costs of treating acute conditions – diseases, illnesses, or injuries that are likely to respond quickly to treatment and lead to a full recovery.
Critical Point: Standard private medical insurance in the UK is not designed to cover chronic conditions (long-term illnesses like diabetes or asthma) or pre-existing conditions that an employee had before joining the scheme. It is for new, eligible conditions that arise after the policy begins.
Why Should Your Business Offer Private Health Insurance?
Offering PMI is a significant investment, but the returns can be transformative for your organisation's culture, productivity, and reputation.
Benefits for the Employer:
- Attract and Retain Top Talent: In a competitive market, a quality health insurance plan can be the deciding factor for a sought-after candidate. It shows you are an employer who invests in their people.
- Reduce Sickness Absence: Long waits for NHS treatment can keep valuable employees off work for extended periods. PMI provides faster access to specialists and treatment, reducing downtime. 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 has been in a decade. Reducing this figure, even marginally, has a direct impact on productivity.
- Boost Morale and Loyalty: Employees who feel cared for are more likely to be engaged, motivated, and loyal. A health plan is a tangible demonstration of your commitment to their wellbeing.
- Enhance Your Duty of Care: Providing swift access to medical care, especially for mental health, shows you take your responsibilities as an employer seriously.
Benefits for the Employee:
- Faster Access to Treatment: This is the primary benefit. Employees can bypass long NHS waiting lists for consultations, diagnostic tests (like MRI and CT scans), and surgery.
- Choice and Control: PMI often gives employees a choice of leading specialists and a nationwide network of high-quality private hospitals.
- Comfort and Privacy: Treatment is often in a private room with an en-suite bathroom, offering a more comfortable and dignified experience.
- Access to Specialist Drugs and Treatments: Some policies provide access to drugs or treatments not yet available on the NHS due to cost or approval delays.
- Peace of Mind: Knowing that they and their families can access care when they need it most reduces stress and anxiety.
How to Set Up a Company Health Insurance Scheme: A Step-by-Step Guide
Implementing a group PMI scheme involves several key decisions. Following this structured process will ensure you create a plan that meets your company's specific needs and budget.
Step 1: Define Your Objectives and Budget
Before you look at any policies, ask yourself some fundamental questions:
- What is our primary goal? Is it to reduce absenteeism, boost recruitment, improve morale, or a combination of these?
- Who do we want to cover? Will the scheme be for all employees, just senior management, or those with a certain length of service? Can employees add their families?
- What is our budget? How much can we afford to spend per employee, per month? Having a clear budget is crucial for getting realistic quotes.
Step 2: Understand Your Underwriting Options
Underwriting is how an insurer assesses risk and decides on the terms of your policy. It's a critical choice that affects what is covered and how claims are handled.
| Underwriting Type | How It Works | Best For |
|---|---|---|
| Moratorium (Mori) | Pre-existing conditions from the last 5 years are automatically excluded for a set period (usually 2 years). If the employee remains symptom-free for that period, the condition may become eligible for cover. No medical forms are needed upfront. | Simplicity and speed. Most popular for small groups. |
| Full Medical Underwriting (FMU) | Each employee completes a detailed medical questionnaire. The insurer then lists specific exclusions on their policy certificate from the outset. | Clarity. Employees know exactly what is and isn't covered from day one. Can sometimes lead to lower premiums if the group is healthy. |
| Medical History Disregarded (MHD) | The insurer agrees to cover eligible medical conditions, regardless of an employee's previous medical history. Pre-existing conditions are covered. | Larger groups (typically 20+ employees). It's the most comprehensive but also the most expensive option. |
An expert PMI broker, like WeCovr, can provide invaluable guidance on which underwriting method is most suitable for your business size and objectives.
Step 3: Decide on the Level of Cover
PMI policies are built in layers. You start with a core foundation and can add optional extras to create a more comprehensive package.
Core Cover (Usually included as standard):
- In-patient and Day-patient Treatment: This covers tests and treatment where a hospital bed is required, either overnight (in-patient) or for the day (day-patient). This includes surgery, hospital accommodation, nursing care, and specialist fees.
Optional Extras (Choose based on budget and needs):
| Optional Benefit | What It Covers | Why Consider It? |
|---|---|---|
| Out-patient Cover | Consultations with specialists, diagnostic tests, and scans that do not require a hospital bed. | This is a highly valued benefit as it speeds up the diagnosis of a problem. You can often choose a limit (e.g., £500, £1,000, or unlimited). |
| Mental Health Cover | Access to psychiatrists, psychologists, and therapists for conditions like anxiety, stress, and depression. | With mental health being a leading cause of workplace absence, this is becoming an essential part of a modern benefits package. |
| Therapies Cover | Physiotherapy, osteopathy, and chiropractic treatment. | Helps employees recover from musculoskeletal injuries, a common cause of time off work. |
| Dental and Optical Cover | Routine check-ups, hygienist visits, and contributions towards glasses or contact lenses. | A popular "everyday" benefit that staff can use regularly, increasing the perceived value of the scheme. |
| Travel Cover | Medical cover for employees when they travel abroad. | A useful addition for companies whose staff travel frequently for business or pleasure. |
Step 4: Compare Quotes and Select a Provider
Once you have a clear idea of your requirements, it's time to approach the market. This is where using an independent PMI broker is essential.
A specialist broker like WeCovr does the hard work for you. We don't charge you for our service; we receive a commission from the insurer you choose. Our role is to:
- Understand your business needs and budget.
- Approach the UK's leading private health insurance providers on your behalf (e.g., Aviva, AXA Health, Bupa, Vitality).
- Analyse and compare the quotes in an easy-to-understand format.
- Provide impartial advice to help you select the best PMI provider and policy for your team.
Step 5: Implement and Communicate the Scheme
Once you've chosen a policy, the final step is to roll it out. Effective communication is key to ensuring your employees understand and value their new benefit.
- Provide Clear Documentation: Give every employee a policy handbook and a clear summary of what is and isn't covered.
- Hold Information Sessions: Run a presentation (perhaps with your broker) to explain how the scheme works and answer questions.
- Explain How to Make a Claim: Ensure staff know the process, which usually starts with getting a GP referral.
- Highlight the Value-Added Benefits: Make sure to promote extras like virtual GP apps, wellbeing helplines, and gym discounts.
Understanding the Costs and Tax Implications of Company PMI
For any SME, managing costs is paramount. Here's a breakdown of how PMI is priced and treated for tax purposes.
How Are Premiums Calculated?
Insurers use several factors to calculate the premium for a group scheme:
- Average Age of Employees: Older workforces generally have higher premiums.
- Company Location: Premiums are often higher in Central London due to the higher cost of private hospitals.
- Industry/Occupation: A construction firm may have higher premiums than an office-based accountancy firm due to higher risk.
- Level of Cover: The more optional extras you add, the higher the cost.
- Policy Excess: You can choose to add an excess (e.g., £100 or £250) that the employee pays towards their first claim each year. This is a simple way to reduce the overall premium.
- The 6-Week Wait Option: This is another cost-saving measure. If the NHS can provide the required treatment within six weeks, the employee will be treated by the NHS. If the wait is longer, the private medical insurance kicks in.
Tax Implications for the Employer and Employee
Understanding the tax treatment is essential for budgeting and payroll.
| Party | Tax Treatment | How It Works |
|---|---|---|
| The Employer (Your Company) | Business Expense | The premiums you pay for your employees' health insurance are considered an allowable business expense. You can deduct the cost from your company's profits, reducing your Corporation Tax bill. |
| The Employee | Benefit in Kind (BIK) | HMRC considers private medical insurance a 'Benefit in Kind'. This means the value of the premium is treated as additional taxable income for the employee. You, as the employer, must report this on a P11D form each year. The employee then pays income tax on the value of the benefit at their marginal rate (20%, 40%, or 45%). |
Example: An employee is a basic rate (20%) taxpayer. Their company pays a PMI premium of £600 per year for them.
- The company reports a £600 benefit on the employee's P11D form.
- The employee will pay 20% of £600 in tax, which is £120 for the year (or £10 per month).
- The company may also have to pay Class 1A National Insurance contributions on the value of the benefit.
It's crucial to communicate this clearly to employees so they understand the small tax liability they will incur for this valuable benefit.
Beyond Treatment: The Rise of Wellness and Value-Added Benefits
Modern private health cover is evolving. The best PMI providers now offer a suite of services designed to keep your staff healthy, not just treat them when they're ill. These are often included at no extra cost and significantly enhance the value of your scheme.
Look for policies that include:
- 24/7 Virtual GP Service: Allows employees to have a video consultation with a GP at their convenience, often within hours.
- Mental Health Support Lines: Confidential helplines offering support for stress, anxiety, and other mental health concerns.
- Wellness Programmes: Many insurers, like Vitality, incentivise healthy living with rewards like free coffee, cinema tickets, and discounts on smartwatches.
- Health and Fitness Discounts: Significant savings on gym memberships.
- Expert Second Opinions: Access to a world-leading expert to review a diagnosis and treatment plan.
At WeCovr, we enhance this further. All our clients who purchase PMI or Life Insurance receive complimentary access to CalorieHero, our proprietary AI-powered calorie and nutrition tracking app, helping your team build healthy eating habits. Furthermore, purchasing one policy with us can unlock discounts on other types of business or personal insurance you may need.
Why WeCovr is the Smart Choice for Your Business
Choosing a health insurance plan is a major decision. Partnering with an expert, FCA-authorised broker like WeCovr ensures you make the right one.
- Independent and Impartial: We are not tied to any single insurer. Our advice is based entirely on your needs.
- Market-Wide Comparison: We have access to policies from all the leading UK insurers, ensuring you get the best possible terms and price.
- Expertise at No Cost: Our service is free for you to use. We handle the complex comparisons and negotiations, saving you time and money.
- Dedicated Support: From the initial quote to setting up the scheme and supporting you at renewal, we are with you every step of the way. Our high customer satisfaction ratings reflect our commitment to excellent service.
- Tailored for SMEs: We understand the unique challenges and budget constraints of small and medium-sized businesses and can craft a plan that delivers maximum value.
Offering private medical insurance is more than just an employee perk; it's a strategic investment in the health, happiness, and productivity of your workforce. It sends a powerful message that you are an employer who truly cares.
Are pre-existing and chronic conditions covered by company PMI?
What is the difference between business health insurance and a health cash plan?
How many employees do I need for a group health insurance scheme?
Can we switch our company health insurance provider at renewal?
Ready to explore the best private medical insurance UK options for your team?
Contact WeCovr today for a free, no-obligation quote and discover how affordable a premium employee benefits package can be.
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!