TL;DR
As an FCA-authorised broker that has helped arrange over 900,000 policies of various kinds, WeCovr specialises in finding the perfect private medical insurance (PMI) solution for UK businesses. This guide explains how even the smallest companies can offer this highly-valued perk affordably. Affordable health insurance options for small businesses In today's competitive landscape, attracting and retaining top talent is a major challenge for Small and Medium-sized Enterprises (SMEs).
Key takeaways
- The Data: According to the Office for National Statistics (ONS), a staggering 185.6 million working days were lost to sickness or injury in the UK in 2023. Minor illnesses were the most common reason, but long-term conditions and delays in treatment play a huge role.
- The PMI Solution: PMI gives your employees fast-track access to private GPs, specialists, and treatments. A team member with a painful joint problem might wait months for an NHS consultation and scan; with PMI, they could be seen and diagnosed within days or weeks. This drastically reduces the time they spend off work or working at a reduced capacity.
- Without PMI: They face a long wait for a GP appointment, then a multi-month wait for a referral to a physiotherapist through the NHS. During this time, their productivity drops, and they take several sick days.
- With PMI: They use a digital GP service included in their policy, get an immediate referral to a private specialist, have an MRI scan the following week, and start a course of physiotherapy shortly after. They are back to full health and productivity in a fraction of the time.
- 24/7 digital GP access
As an FCA-authorised broker that has helped arrange over 900,000 policies of various kinds, WeCovr specialises in finding the perfect private medical insurance (PMI) solution for UK businesses. This guide explains how even the smallest companies can offer this highly-valued perk affordably.
Affordable health insurance options for small businesses
In today's competitive landscape, attracting and retaining top talent is a major challenge for Small and Medium-sized Enterprises (SMEs). While larger corporations can offer extensive benefits packages, smaller businesses often believe that perks like private health insurance are beyond their reach.
However, the UK's private medical insurance market has evolved. It now offers a range of flexible and surprisingly affordable options tailored specifically for SMEs. Providing health cover is no longer a luxury reserved for the few; it's a strategic investment in your most valuable asset: your people.
This comprehensive guide will walk you through everything you need to know about PMI for SMEs, from the core benefits and cost-saving measures to how to choose the right policy for your team.
Why Should Your Small Business Invest in Health Insurance?
Offering private medical insurance goes far beyond simply being a "nice-to-have" perk. It delivers tangible returns for your business by tackling some of the most pressing challenges SMEs face.
1. Reduce Sickness Absence and Boost Productivity
NHS waiting lists remain a significant concern. While the NHS provides excellent emergency care, waiting times for consultations, diagnostic scans, and elective treatments can be lengthy.
- The Data: According to the Office for National Statistics (ONS), a staggering 185.6 million working days were lost to sickness or injury in the UK in 2023. Minor illnesses were the most common reason, but long-term conditions and delays in treatment play a huge role.
- The PMI Solution: PMI gives your employees fast-track access to private GPs, specialists, and treatments. A team member with a painful joint problem might wait months for an NHS consultation and scan; with PMI, they could be seen and diagnosed within days or weeks. This drastically reduces the time they spend off work or working at a reduced capacity.
Example in Action: An employee at a small marketing agency develops persistent back pain.
- Without PMI: They face a long wait for a GP appointment, then a multi-month wait for a referral to a physiotherapist through the NHS. During this time, their productivity drops, and they take several sick days.
- With PMI: They use a digital GP service included in their policy, get an immediate referral to a private specialist, have an MRI scan the following week, and start a course of physiotherapy shortly after. They are back to full health and productivity in a fraction of the time.
2. Attract and Retain Top Talent
In a competitive job market, a strong benefits package can be the deciding factor for a potential employee. For existing staff, it’s a powerful statement that you value their health and wellbeing, fostering loyalty and reducing staff turnover. A Glassdoor survey found that health insurance is consistently one of the most sought-after employee benefits.
3. Enhance Employee Morale and Wellbeing
Knowing they have access to prompt medical care reduces stress and anxiety for your team. Modern PMI policies often include valuable wellness benefits that support overall health, not just treat illness. These can include:
- 24/7 digital GP access
- Mental health support lines and therapy sessions
- Gym discounts and rewards for healthy living
- Access to nutritional advice and wellness apps
By investing in your team's health, you are building a positive, supportive company culture where employees feel valued and cared for.
How Does Business Health Insurance Actually Work?
Understanding the process is simple. Private medical insurance is designed to work alongside the NHS, not replace it. It primarily covers acute conditions that arise after you take out the policy.
What's an Acute Condition? An acute condition is a disease, illness, or injury that is likely to respond quickly to treatment and lead to a full recovery.
- Examples: Cataracts, hernias, joint replacements, broken bones, appendicitis.
What's a Chronic Condition? A chronic condition is an illness that is long-lasting and often cannot be fully cured, but can be managed.
- Examples: Diabetes, asthma, high blood pressure, arthritis, Crohn's disease.
CRITICAL POINT: Standard UK private medical insurance does not cover chronic or pre-existing conditions. It is designed for new, treatable conditions that occur after your policy begins.
The Patient Journey with PMI:
- Symptom: An employee feels unwell or suffers an injury.
- GP Visit: They visit their NHS GP (or a private GP if their policy includes it). The GP assesses them and, if necessary, provides a referral to a specialist.
- Claim: The employee contacts their PMI provider with the referral details.
- Authorisation: The insurer confirms the condition and treatment are covered by the policy and authorises the next steps.
- Treatment: The employee uses the approved list of private specialists and hospitals to book their consultation, scans, or surgery at a time and place that suits them.
- Payment: The insurer settles the bills directly with the hospital and specialists, minus any excess the employee needs to pay.
Understanding Underwriting: The Key to Your Policy's Rules
"Underwriting" is the process an insurer uses to assess risk and decide what your policy will and will not cover. For SMEs, there are two main types:
| Underwriting Type | How It Works | Pros | Cons |
|---|---|---|---|
| Moratorium (Most Popular for SMEs) | No medical questionnaire is needed upfront. The policy automatically excludes treatment for any medical conditions an employee (or their family) has had symptoms, treatment, or advice for in the 5 years before joining. | Quick and easy to set up. Less intrusive for employees. | Lack of certainty upfront. A condition might be excluded if it's linked to a past issue. |
| Full Medical Underwriting (FMU) | Each employee completes a detailed health questionnaire. The insurer assesses their medical history and lists specific exclusions from the start. | Provides complete clarity on what is and isn't covered from day one. | Slower to set up. Requires employees to disclose personal medical history. |
With moratorium underwriting, the 5-year exclusion can be lifted for a condition if the employee goes a continuous 2-year period after joining the policy without seeking any treatment, advice, or medication for it.
Making PMI Affordable: 7 Proven Strategies for SMEs
The biggest myth about business health insurance is that it's prohibitively expensive. By customising your policy, you can control the cost and create a plan that fits your budget.
Here are the most effective ways to lower your premiums:
1. The 6-Week Option This is one of the most popular cost-saving options in the UK. If the NHS can provide the required inpatient treatment within six weeks of when it's needed, the employee will use the NHS. If the waiting list is longer than six weeks, the private medical insurance kicks in. As this reduces the number of claims, it significantly lowers your premium.
2. Increase the Policy Excess An excess is a fixed amount the employee pays towards the cost of their claim each policy year. For example, if the excess is £250 and a course of treatment costs £3,000, the employee pays the first £250 and the insurer pays the remaining £2,750.
- Illustrative estimate: Choosing a higher excess (e.g., £250 or £500 instead of £0 or £100) will directly reduce your monthly premium.
3. Limit the Hospital List Insurers group hospitals into tiers based on cost (with central London hospitals being the most expensive). You can save money by choosing a policy that uses a more limited, regional list of hospitals rather than a comprehensive national one.
4. Tailor Your Outpatient Cover Outpatient services (consultations, diagnostic tests, and scans that don't require a hospital bed) can be a major driver of cost. You can control this by:
- Capping the benefit (illustrative): Limiting outpatient cover to a set amount per year (e.g., £1,000).
- Removing it entirely: Opting for a core policy that only covers inpatient and day-patient treatment. This is the most basic and cheapest form of cover.
5. Consider Employee Contributions (Co-payment) You can set up a scheme where the business pays for a core level of cover, and employees can choose to pay extra themselves to add benefits like dental, optical, or family cover.
6. Introduce a Digital GP Service Many modern policies include a 24/7 digital GP service. This can help triage issues early and efficiently, potentially avoiding the need for a more expensive specialist referral.
7. Use an Expert Broker An independent broker's service is invaluable and comes at no extra cost to you. A specialist broker like WeCovr has access to the whole market and can negotiate preferential rates. We understand the nuances of each provider's offerings and can build a bespoke plan that balances cost and benefits perfectly for your business.
What Does a Typical SME Health Insurance Policy Cover?
Policies are built from a core foundation with optional extras. This "menu-based" approach is what makes them so flexible for small businesses.
| Cover Type | What It Includes | Is It Standard or Optional? |
|---|---|---|
| Core Cover | Inpatient & Day-Patient Treatment: Costs for surgery, hospital beds, nursing care, and specialist fees when you're admitted to hospital. | Standard |
| Comprehensive Cancer Cover: Access to advanced treatments, drugs, and therapies not always available on the NHS. Often includes palliative care. | Standard in most quality policies | |
| Optional Add-ons | Outpatient Cover: Consultations with specialists and diagnostic tests (MRI, CT scans, blood tests) that don't require hospital admission. | Optional (highly recommended) |
| Mental Health Cover: Access to psychiatrists, psychologists, and therapists. Crucial for supporting employee wellbeing. | Optional | |
| Therapies Cover: Physiotherapy, osteopathy, chiropractic treatment, and sometimes acupuncture. | Optional | |
| Dental & Optical Cover: Contributions towards routine check-ups, treatments, glasses, and contact lenses. | Optional | |
| Travel Cover: Extends medical cover for employees when they travel abroad. | Optional |
The Added Value: Wellness Programmes & Digital Health
Modern private health cover is proactive, not just reactive. Leading providers now compete on the quality of their wellness offerings, designed to keep your staff healthy and engaged.
- Reward-Based Programmes: Vitality is the best-known example, rewarding employees with cinema tickets, free coffee, and discounted Apple Watches for tracking their physical activity. This gamified approach encourages healthier habits.
- Digital GP Services: Almost all major providers (including AXA Health, Bupa, and Aviva) offer a 24/7 app or phone-based GP service. This gives your staff incredible convenience, allowing them to get medical advice without taking time off work.
- Employee Assistance Programmes (EAPs): Many policies include an EAP, which provides confidential support for a range of life issues, including financial worries, legal advice, and stress management, not just medical problems.
- Exclusive Perks from WeCovr: When you arrange your PMI with us, your team also gets complimentary access to our AI-powered nutrition app, CalorieHero, to support their healthy eating goals. Furthermore, as a WeCovr client, you can benefit from discounts on other essential business and personal insurance, such as life insurance or public liability cover.
Our dedication to client support has earned us consistently high satisfaction ratings on major customer review platforms.
Tax Implications of Business Health Insurance in the UK
It's important to understand the tax rules, which are quite straightforward.
- 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: Health insurance is treated as a 'benefit in kind'. This means the value of the premium is added to their income, and they will pay income tax on it. The employer reports this on a P11D form at the end of the tax year. The cost to the employee is usually small compared to the benefit they receive.
How to Set Up Your SME Health Insurance Policy: A 5-Step Guide
- Define Your Goals & Budget: Are you aiming to reduce sickness absence, attract new hires, or both? How much can you realistically afford per employee per month? (Costs can start from as little as £30-£40 per employee per month for a basic policy).
- Decide Who to Cover: Will you cover all employees, or only managers/directors? Will you give them the option to add family members at their own cost? A group scheme typically requires a minimum of two employees.
- Choose Your Core & Optional Benefits: Start with a core inpatient plan and decide which add-ons are most important for your team. Outpatient and mental health cover are often the most valued additions.
- Speak to an Independent Broker: This is the most crucial step. An expert broker like WeCovr will take the time to understand your business, explain your options in plain English, and gather quotes from the market's leading insurers. This saves you time and ensures you get the best possible value.
- Launch and Communicate: Once you've chosen a policy, it's vital to communicate the benefits clearly to your staff. Explain how the plan works, what's included, and how to make a claim. A successful launch ensures high take-up and appreciation.
Does business health insurance cover pre-existing medical conditions?
How many employees do I need to set up a group PMI scheme?
Is private medical insurance a taxable benefit for UK employees?
Take the Next Step Towards a Healthier Business
Investing in your team's health is one of the smartest decisions a small business can make. It protects your operations from disruption, boosts morale, and gives you a competitive edge in the talent market. With the flexible and affordable options available today, it's more accessible than ever.
Ready to explore your options? The expert team at WeCovr is here to provide a free, no-obligation quote. We'll compare the UK's leading insurers and help you design a health insurance plan that supports your employees and your budget.
Get your free, personalised business health insurance quote today.
Sources
- Office for National Statistics (ONS): Mortality, earnings, and household statistics.
- Financial Conduct Authority (FCA): Insurance and consumer protection guidance.
- Association of British Insurers (ABI): Life insurance and protection market publications.
- HMRC: Tax treatment guidance for relevant protection and benefits products.
