PMI for Small Business Owners Protecting Teams and Yourself
As an FCA-authorised broker that has helped arrange over 900,000 policies, WeCovr understands the unique pressures facing UK small business owners. This guide explores how private medical insurance (PMI) can be a powerful tool for protecting your team, your business, and your own health and wellbeing.
Cover types and cost allocation for SME founders and their employees
For any small or medium-sized enterprise (SME) in the UK, your people are your most critical asset. Their health directly impacts your productivity, morale, and bottom line. With NHS waiting lists reaching record highs, providing private medical insurance is no longer a 'big company' perk—it's a strategic investment in business resilience.
This guide will walk you through everything you need to know: from the different types of cover available to the smartest ways to allocate costs, ensuring you get the best value while safeguarding your team.
Why Should a Small Business Consider Private Medical Insurance?
As an SME founder, you juggle countless responsibilities. The last thing you need is a key team member—or yourself—facing a long, uncertain wait for medical treatment. The benefits of a group PMI scheme extend far beyond simply 'skipping the queue'.
Benefits for Your Business:
- Reduced Sickness Absence: According to the Office for National Statistics (ONS), a record 185.6 million working days were lost to sickness or injury in 2022. PMI provides swift access to diagnosis and treatment, helping employees return to work faster and healthier.
- Attraction and Retention of Talent: In a competitive job market, a strong benefits package sets you apart. PMI is a highly valued perk that shows you care about your team's wellbeing, helping you attract top candidates and retain your best people.
- Increased Productivity and Morale: Knowing they have fast access to healthcare reduces stress and financial worry for your employees. A healthy, supported team is a happy and productive team.
- Protecting Key Individuals: A business health insurance policy ensures that you and other crucial members of your team can get treated quickly, minimising disruption and protecting business continuity.
Benefits for Your Employees:
- Faster Access to Treatment: This is the core benefit. With NHS referral-to-treatment waiting lists exceeding 7.5 million in 2024, PMI can reduce the wait for consultations, scans, and surgery from many months to just a few weeks.
- Choice and Control: Employees can often choose their specialist and the hospital where they receive treatment, offering greater convenience and peace of mind.
- Access to Advanced Treatments: Some policies provide access to new drugs or treatments not yet available on the NHS due to funding constraints.
- Enhanced Mental Health Support: Most modern PMI policies include excellent mental health cover, from counselling sessions to psychiatric care, which is vital in today's high-pressure world.
- Digital GP Services: 24/7 access to a virtual GP can resolve minor issues quickly without an employee needing to take time off work to visit a surgery.
A Critical Note: What PMI Does and Doesn't Cover
It is essential to understand the fundamental purpose of private medical insurance in the UK.
PMI is designed to cover acute conditions. An acute condition is a disease, illness, or injury that is likely to respond quickly to treatment and lead to a full recovery. Think of conditions like hernias, joint replacements, or cataracts.
Standard UK PMI policies DO NOT cover:
- Pre-existing conditions: Any medical condition you had before the policy start date is typically excluded.
- Chronic conditions: Long-term illnesses that cannot be cured, only managed (e.g., diabetes, asthma, high blood pressure). Whilst the initial diagnosis might be covered, the long-term management will revert to the NHS.
An expert PMI broker can help you navigate these exclusions and find a policy that best fits your team's potential needs.
Understanding the Different Levels of PMI Cover
Private health cover isn't a one-size-fits-all product. Policies are structured in tiers, allowing you to balance the level of protection with your budget.
| Level of Cover | What It Typically Includes | Best For |
|---|---|---|
| Basic (or 'Core') | In-patient and day-patient treatment: Covers costs if you are admitted to hospital overnight or for a day for surgery or procedures. Includes hospital fees, specialist fees, and diagnostics during your stay. | Businesses on a tight budget looking to provide a safety net against major medical events and long surgical waits. |
| Mid-Range | Everything in Basic, plus: Out-patient consultations and diagnostics: Covers specialist appointments and tests (like MRI/CT scans) before you are admitted to hospital. Often has an annual financial limit (e.g., £1,000). | A good balance of cost and cover. It speeds up the entire diagnostic process, not just the treatment itself. |
| Comprehensive | Everything in Mid-Range, plus: Full out-patient cover: Removes or significantly increases the limit for out-patient care. Often includes additional therapies like physiotherapy, osteopathy, and mental health support. | Businesses wanting to offer a premium, top-tier benefit. It provides the most complete peace of mind and fastest access from symptom to recovery. |
Optional Add-ons to Enhance Your Policy
Beyond these core levels, you can customise your plan with valuable extras:
- Mental Health Cover: Provides access to counsellors, therapists, and psychiatrists. This is one of the most valuable and frequently used add-ons.
- Therapies Cover: Covers treatments like physiotherapy, chiropractic, and osteopathy, which are crucial for musculoskeletal issues—a leading cause of workplace absence.
- Dental and Optical Cover: Helps with routine check-ups, treatments, and the cost of glasses or contact lenses. This is often a separate cash-plan style benefit.
- Travel Cover: Extends your medical cover for emergency treatment when travelling abroad.
An independent broker, like WeCovr, can help you analyse which add-ons provide the most value for your specific team and industry.
How Business PMI Costs are Calculated and Allocated
Understanding the financial side of a group health insurance scheme is crucial for any business owner. Let's break down how premiums are calculated and the tax implications involved.
Factors That Influence Your Premium
Insurers assess several factors to determine the annual cost of your group policy:
- Average Age of Employees: Younger teams generally have lower premiums.
- Number of Employees: The more members on the scheme, the lower the 'per-head' cost can be, as the risk is spread. Schemes typically start with as few as two employees.
- Location: Premiums are often higher in central London and other major cities where hospital costs are more expensive.
- Industry: A construction company may face higher premiums than an office-based accountancy firm due to the perceived higher risk of injury.
- Level of Cover: A comprehensive policy will cost more than a basic one.
- Policy Options: Your choices regarding excess, hospital list, and underwriting will significantly impact the price. We'll explore these below.
Tax Implications: Who Pays What?
When a company pays for private medical insurance for its employees, it's considered a 'Benefit-in-Kind'. This has tax consequences for both the business and the employee.
- For the Business: The cost of the PMI premiums is generally considered an allowable business expense. This means you can deduct the cost from your pre-tax profits, reducing your Corporation Tax bill.
- For the Employee: The value of the PMI premium is treated as additional income for the employee. They will have to pay income tax on this benefit. The company is responsible for reporting this to HMRC on a P11D form at the end of the tax year. The company will also need to pay Class 1A National Insurance contributions (currently 13.8%) on the value of the benefit.
Example:
- A company pays a £800 annual PMI premium for an employee.
- The business can claim this £800 as a business expense.
- The company also pays Class 1A National Insurance of £110.40 (£800 x 13.8%).
- The employee, if a basic rate taxpayer (20%), will pay an extra £160 in income tax for the year (£800 x 20%).
Cost Allocation Models for Your SME
You have flexibility in how you structure the payment of your scheme.
- Company-Paid Scheme: The business pays 100% of the premium for all included employees. This is the simplest and most common approach, offering the full benefit of attracting and retaining staff.
- Employee Contribution Scheme: The company pays a portion of the premium, and the employee pays the rest (often to upgrade their cover level or add family members). This can make a more comprehensive plan affordable.
- Voluntary Scheme: The company facilitates the group scheme, but employees pay the full premium themselves. The benefit here is that the group rate secured by the company is often significantly cheaper than an individual policy the employee could buy on their own.
Smart Strategies to Manage and Reduce Your PMI Costs
Providing private health cover doesn't have to break the bank. There are several levers you can pull to make your policy more affordable without sacrificing essential protection.
Key Cost-Saving Options Explained
| Option | How It Works | Impact on Premium |
|---|---|---|
| Excess | The amount an employee pays towards their claim each year (e.g., the first £250). Once paid, the insurer covers the rest. | Higher excess = lower premium. A simple and effective way to reduce cost. |
| 6-Week Wait | If the NHS can provide the required in-patient treatment within 6 weeks, the employee uses the NHS. If the wait is longer, the PMI policy kicks in. | Significant premium reduction. A popular option for balancing cost and faster care for long waits. |
| Hospital List | Insurers have tiered hospital lists. Choosing a more restricted list (e.g., excluding expensive central London hospitals) lowers the premium. | Moderate to significant premium reduction, depending on the list chosen. |
| Co-payment | The employee agrees to pay a percentage of each claim (e.g., 25%), usually up to a specified cap. | Can offer substantial savings but shifts more financial risk to the employee. Less common than excess. |
Choosing the Right Underwriting Method
Underwriting is how an insurer assesses the risk of new members and decides which conditions to exclude. For a small business, you'll typically encounter two main types:
-
Moratorium Underwriting (Most Common for SMEs): This is the "don't ask, just exclude" option. The policy automatically excludes treatment for any medical condition a member has had symptoms of, or received advice or treatment for, in the five years before joining. However, if the member then goes two full years on the policy without any symptoms, advice, or treatment for that condition, it may become eligible for cover. It's simple and quick to set up.
-
Full Medical Underwriting (FMU): Each member completes a detailed health questionnaire. The insurer then reviews their medical history and makes a specific decision on what will be excluded from day one. This provides absolute clarity on what is and isn't covered but takes longer to set up.
For businesses switching from another provider, a third option called Continued Personal Medical Exclusions (CPME) is often the best choice. It allows your team to carry over their existing underwriting terms, ensuring no one loses cover for a condition that was previously covered.
Beyond Treatment: The Rise of Wellness and Prevention
The best private medical insurance UK providers have evolved. They no longer just pay claims; they actively partner with you to keep your team healthy in the first place. This focus on preventative health is a huge source of added value.
Common Wellness Benefits Include:
- Discounted Gym Memberships: Encouraging an active lifestyle.
- Health Screenings: Proactive checks to catch potential issues early.
- Mental Health Apps: Access to services like Headspace or Calm.
- Wearable Tech Integration: Some providers, like Vitality, reward employees with points (leading to cinema tickets, coffee, or lower premiums) for hitting activity goals tracked on their smartwatches.
- Nutritional Advice and Support: Helping your team make healthier food choices.
WeCovr's Commitment to Your Team's Wellbeing
At WeCovr, we believe in a holistic approach to health. That's why, when you arrange a PMI policy through us, your team also gets complimentary access to CalorieHero, our AI-powered calorie and nutrition tracking app. It's a simple, effective tool to help your employees build healthier habits day by day.
Furthermore, clients who purchase PMI or Life Insurance through us can benefit from discounts on other insurance products, helping you protect your business and family more affordably.
Simple Health Tips for a More Productive Workplace
Encouraging a culture of wellness doesn't have to be complicated. Here are some simple, evidence-based tips you can promote within your team:
- Prioritise Sleep: Aim for 7-9 hours of quality sleep per night. Poor sleep is linked to reduced concentration, lower immunity, and poor mental health. Encourage staff to switch off from work and establish a relaxing bedtime routine.
- Stay Hydrated: Dehydration can cause headaches and fatigue. Encourage regular water breaks and have fresh water easily available.
- Move More: Even short 'micro-breaks' to walk around the office or stretch can boost circulation and energy levels. For remote workers, encourage short walks during the day. 有名
- Mindful Eating: Encourage staff to take a proper lunch break away from their desks. A balanced diet rich in fruits, vegetables, and whole grains fuels both body and mind.
- Talk Openly: Create a culture where it's okay to talk about mental health. Signpost resources and lead by example in prioritising work-life balance.
How to Choose the Best PMI Provider for Your Small Business
The UK market is home to several excellent insurers, each with its own strengths. Working with an independent PMI broker is the most effective way to compare them impartially.
Here’s a brief overview of the leading providers:
| Provider | Known For | Key Strengths |
|---|---|---|
| Bupa | The UK's largest health insurer with a huge brand presence. | Extensive hospital network, strong digital tools, wide range of policy options. |
| Aviva | One of the UK's biggest insurance companies, offering a trusted and reliable service. | Excellent core product, good value, strong mental health pathway, and a user-friendly digital GP service. |
| AXA Health | A global insurance giant with a strong focus on clinical excellence and pathways. | Guided specialist selection process ('Guided Option'), comprehensive cancer cover, and strong digital support. |
| Vitality | Unique wellness-focused model that rewards healthy behaviour. | Active Rewards programme, incentives for staying healthy, can be very cost-effective for active teams. |
The Role of an Expert PMI Broker
Trying to compare these providers and their countless policy variations on your own can be overwhelming. This is where a broker comes in.
An independent, FCA-authorised broker like WeCovr works for you, not the insurance companies. Our service includes:
- Understanding Your Needs: We take the time to learn about your business, your team, and your budget.
- Market Comparison: We search the market on your behalf, comparing policies from all the leading insurers.
- Clear, Impartial Advice: We explain the pros and cons of each option in plain English, helping you make an informed decision.
- Application Support: We handle the paperwork and liaise with the insurer to get your policy set up smoothly.
- Ongoing Service: We're here to help at renewal time or if you need to make a claim.
Crucially, our service is provided at no cost to you. We are paid a commission by the insurer you choose, which is already built into the premium, so you pay the same price (or often less) than going direct.
Frequently Asked Questions (FAQs)
Is private medical insurance a taxable benefit for my employees?
Does business health insurance cover pre-existing conditions?
What is the minimum number of employees for a group PMI scheme?
Can I add family members to a business health insurance policy?
Take the Next Step to Protect Your Team
Investing in the health of your team is one of the smartest investments you can make in the future of your business. It fosters loyalty, reduces downtime, and provides invaluable peace of mind for you and your employees.
Navigating the world of private medical insurance can be complex, but you don't have to do it alone.
Ready to explore the best private health cover options for your small business? Contact WeCovr today for a free, no-obligation quote. Our expert advisers will help you compare the market and build a plan that protects your people and your budget.
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.
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