PMI Group Schemes The SME Advantage in Health Cover
As an FCA-authorised broker that has helped arrange over 800,000 policies, WeCovr sees first-hand how UK SMEs leverage private medical insurance. A group policy is a powerful tool for employee retention, wellbeing, and cost control, offering a significant competitive edge in today's demanding business landscape.
How SMEs use group policies for retention, staff wellbeing, and insurance cost control
In the competitive world of small and medium-sized enterprises (SMEs), every decision counts. Attracting and keeping the best people, ensuring they are healthy and productive, and managing business costs are constant priorities. A Group Private Medical Insurance (PMI) scheme is a strategic investment that addresses all three of these challenges head-on.
For a modern SME, a group health policy is far more than just a "perk". It is a cornerstone of a robust employee value proposition. It demonstrates a genuine commitment to staff wellbeing, which in turn fosters loyalty and reduces costly staff turnover. By providing fast access to high-quality healthcare, it minimises the impact of sickness absence on productivity. And, structured correctly, it delivers these benefits in a way that is surprisingly cost-effective and tax-efficient for the business.
This article explores the definitive advantages of group PMI for SMEs, breaking down how these schemes work, how to tailor them to your needs, and how to maximise their value for your team and your business.
What is a PMI Group Scheme for SMEs? A Clear Definition
In simple terms, a Group Private Medical Insurance scheme is a single health insurance policy that a business purchases to cover a group of its employees. Instead of each employee sourcing their own individual policy, the company acts as the single policyholder, simplifying administration and often securing much better terms.
These schemes are designed for businesses of all sizes, with some insurers offering group plans for as few as two or three employees. The core purpose of the policy is to give employees swift access to private diagnosis, treatment, and medical care for eligible conditions.
A Critical Point on Health Cover
It is vital to understand what private medical insurance is designed for. Standard UK PMI policies are intended to cover acute conditions—illnesses or injuries that are short-term and likely to respond quickly to treatment.
PMI does not typically cover:
- Pre-existing conditions: Any medical condition you had before the policy start date.
- Chronic conditions: Long-term illnesses that require ongoing management rather than a cure, such as diabetes, asthma, or high blood pressure.
While the NHS provides excellent care for emergencies and chronic conditions, PMI offers a parallel route to bypass potential waiting lists for eligible acute problems, from diagnostic scans to surgical procedures.
The Business Case for SME Group Health Insurance: Beyond the Hype
Investing in a group PMI scheme offers tangible, measurable returns for a small or medium-sized business. Let's examine the three core pillars of this advantage.
Boosting Staff Retention and Attracting Top Talent
In a tight labour market, salary alone is often not enough to attract or retain the best talent. A comprehensive benefits package is a key differentiator.
- High-Value Perception: Health insurance is consistently ranked as one of the most desired employee benefits. It sends a powerful message that you value your team's health and wellbeing beyond the workplace.
- Competitive Edge: Many larger corporations offer PMI as standard. By offering a similar benefit, SMEs can level the playing field and compete more effectively for skilled professionals who might otherwise only consider bigger companies.
- Increased Loyalty: When an employee or their family member uses the policy to get a quick diagnosis or vital treatment, it creates a profound sense of gratitude and loyalty towards the company that provided it.
Example in Practice: A small digital marketing agency in Manchester with 15 employees found it was losing out on top creative talent to larger firms in the city. By introducing a group PMI scheme, they instantly enhanced their benefits package. This single move helped them successfully recruit two senior designers who cited the health cover as a key factor in their decision, viewing it as a sign of a caring and modern company culture.
Enhancing Employee Wellbeing and Reducing Sickness Absence
Employee health is directly linked to business productivity. Sickness absence carries a significant cost, not just in lost work but also in the burden it places on the remaining team members.
- Minimising Downtime: NHS waiting lists for certain treatments can be extensive. According to NHS England data, the waiting list for consultant-led elective care stood at around 7.5 million treatments in mid-2024. PMI allows employees to bypass these queues for eligible conditions, getting them diagnosed and treated faster, and back to work sooner.
- Reducing "Presenteeism": This is the problem of employees coming to work while unwell, leading to lower productivity and potentially spreading illness. Quick access to a GP or specialist through PMI encourages staff to address health issues promptly.
- Proactive Health Support: Modern PMI schemes are not just about treatment. They include a wealth of proactive wellbeing resources:
- 24/7 Digital GP: Virtual appointments via phone or video, often available within hours.
- Mental Health Support: Access to confidential helplines and structured therapy sessions. The CIPD's 2023 'Health and Wellbeing at Work' report highlights that a majority of UK organisations are increasing their focus on employee wellbeing, and mental health support is a critical component.
- Wellness Tools: Many insurers provide apps and online resources for nutrition, fitness, and mindfulness.
ONS statistics released in 2024 revealed that the UK sickness absence rate hit a record high of 2.8% in 2023, with an estimated 185.6 million working days lost. By providing faster healthcare access, a group PMI scheme is a direct and effective tool for reducing this number within your own business.
Controlling Costs and Gaining a Financial Advantage
While it involves an upfront investment, a group PMI policy is often more cost-effective than you might think.
- Economies of Scale: Insurers offer lower per-person premiums for group schemes compared to individual policies because the risk is spread across multiple people.
- Tax Efficiency: For the business, the premiums paid on a group health insurance policy are typically considered an allowable business expense. This means they can be offset against your corporation tax bill.
- Simplified Administration: With certain underwriting types, such as 'Medical History Disregarded' (more on this below), there is no need for individual employees to fill out lengthy medical questionnaires, saving time and administrative hassle for everyone.
How Group Private Medical Insurance Works in Practice
Setting up and using a group PMI scheme is a straightforward process, especially when guided by an expert PMI broker.
Setting Up Your Group Scheme: Key Decisions
When you establish a policy, you'll need to make a few key choices that will define the cover and the cost.
- Who to Cover: You can decide to cover all employees, or just a specific group (e.g., senior management). Covering everyone is often the most equitable and impactful approach. You can also choose to extend the cover to include employees' families for an additional premium.
- Underwriting Option: This is the most technical decision and significantly impacts how pre-existing conditions are treated.
| Underwriting Type | How It Works | Best For... |
|---|---|---|
| Full Medical Underwriting (FMU) | Each employee completes a detailed health questionnaire. The insurer then lists specific exclusions for each person based on their medical history. | Very small groups (2-3 people) or where cost is the absolute primary concern and the team is young and healthy. |
| Moratorium (Mori) | No medical questionnaires are needed upfront. Any condition that existed in the 5 years before joining is automatically excluded for a set period (usually 2 years). The exclusion is lifted if the member remains symptom-free for that condition during the 2-year period. | Most SMEs. It's a great balance of simplicity, speed of set-up, and cost-effectiveness. |
| Medical History Disregarded (MHD) | The "gold standard". The insurer agrees to disregard all previous medical history, covering eligible new conditions regardless of past problems. | Larger SMEs (typically 20+ employees). It's the most inclusive and administratively simple option, but also the most expensive. |
- Level of Cover: You will work with your broker to choose the components of your plan, balancing your budget with the desired level of protection.
The Employee Journey: Making a Claim
For an employee, using the policy is designed to be simple and stress-free.
- GP Referral: The employee feels unwell and visits their NHS GP (or uses the Digital GP service included with the policy). The GP identifies the need for specialist consultation or tests and provides an open referral letter.
- Pre-authorisation: The employee calls the insurer's claims helpline with their membership details and the referral information.
- Authorisation & Booking: The insurer checks the policy coverage, authorises the claim, and provides a list of approved specialists or hospitals. The employee can then book their appointment.
- Treatment: The employee receives the consultation, scan, or treatment at the chosen private facility.
- Direct Settlement: The hospital or specialist sends the bill directly to the insurance company. Apart from any pre-agreed excess, the employee has nothing to pay.
Tailoring Your SME Health Cover: Core Components and Optional Extras
One of the great strengths of modern group PMI is its flexibility. You can build a plan that fits your company's budget and priorities perfectly. Policies are generally constructed from a core foundation with optional add-ons.
| Benefit Category | Core Cover (Typically Included) | Optional Extras (Common Add-ons) |
|---|---|---|
| Hospital Treatment | In-patient and day-patient fees, including surgery, accommodation, and specialist consultations while in hospital. | An extended hospital list, giving access to premium city-centre hospitals (e.g., in Central London). |
| Cancer Care | Comprehensive cover for diagnosis and treatment (chemotherapy, radiotherapy, surgery) is a standard and highly valued feature. | Access to the very latest experimental drugs and treatments not yet approved for NHS use. |
| Out-patient Cover | Often limited or excluded in basic plans to keep costs down. May cover diagnostics like scans if they lead to in-patient treatment. | Comprehensive out-patient cover for specialist consultations, diagnostic tests, and scans before hospital admission is decided. |
| Mental Health | Basic cover might include a helpline and a limited number of therapy sessions (e.g., 8 sessions of CBT). | More extensive cover for psychiatric consultations, in-patient mental health treatment, and a wider range of therapies. |
| Therapies | A set number of sessions for physiotherapy, osteopathy, and chiropractic treatment following a GP referral. | Higher limits on the number of therapy sessions, or inclusion of a wider range of therapies like acupuncture. |
| Additional Benefits | 24/7 Digital GP service, health information helplines. | Dental and optical cover, worldwide travel insurance, wellness rewards programmes. |
An expert broker like WeCovr can model different combinations of these benefits to find the sweet spot between comprehensive cover and an affordable premium for your business.
Managing Costs: Smart Strategies for SMEs
A common misconception is that group PMI is prohibitively expensive. In reality, there are several levers you can pull to manage the cost effectively.
- Introduce an Excess: This is a fixed amount an employee pays towards their claim each year (e.g., £100 or £250). A higher excess significantly lowers the overall premium for the business.
- Select a Guided Hospital List: Insurers have different tiers of hospital networks. Choosing a list that excludes the most expensive city-centre facilities can reduce premiums without compromising on quality of care for most conditions.
- Opt for the '6-Week Wait' Option: This is a very popular cost-saving feature. With this option, if the NHS can provide the required in-patient treatment within six weeks of the recommended date, the employee will use the NHS. If the wait is longer, the private medical insurance kicks in. This can reduce premiums by up to 25-30%.
- Choose the Right Underwriting: For most SMEs, Moratorium underwriting offers the best blend of cost and administrative simplicity.
- Review Your Policy Annually: Never simply auto-renew. Insurers often raise premiums at renewal. By using a broker to re-shop the market each year, you can ensure you are always getting the most competitive terms, either by switching providers or negotiating with your current one.
- Promote Wellbeing Programmes: Actively encouraging your team to use the included wellness tools, digital GP services, and gym discounts can lead to a healthier workforce and, over the long term, fewer claims and more stable premiums.
The Added Value: Wellness Programmes and Digital Health Tools
The best PMI providers have evolved beyond simply paying for treatment. They are now health partners, offering a suite of tools to help employees stay healthy.
- Digital GP Services: A cornerstone of modern policies, offering 24/7 access to a GP by video or phone. This is incredibly convenient for employees and helps address health concerns early.
- Mental Health Pathways: Recognising the importance of mental wellbeing, insurers provide confidential access to telephone counselling, self-help resources, and structured therapy sessions.
- Reward-Based Wellness: Providers like Vitality have pioneered a model that actively rewards healthy behaviours. Employees can earn points for activities like walking, going to the gym, or completing health checks, which translate into real-world rewards like cinema tickets, coffee, and discounts on smartwatches.
- Exclusive Client Benefits: At WeCovr, we enhance the value of your policy further. All our health and life insurance clients receive complimentary access to CalorieHero, our AI-powered calorie and nutrition tracking app, to support their health goals. Furthermore, clients who purchase PMI through us can benefit from discounts on other essential insurance products, such as life insurance or income protection.
These value-added services transform a PMI policy from a passive safety net into an active, engaging part of your company's culture and wellbeing strategy. This proactive approach to health is something that resonates strongly with employees and is often highlighted by our clients with high customer satisfaction ratings.
Choosing the Best PMI Provider for Your SME
The UK private health insurance market is served by several excellent, established providers. The "best" one for your SME depends entirely on your specific priorities: budget, desired level of cover, employee demographics, and company culture.
| Provider | Key Strengths & Specialisms | A Great Choice For SMEs Who... |
|---|---|---|
| Bupa | The UK's best-known health insurer with a vast network and a reputation for comprehensive cancer cover. | Value a trusted, established brand and want a wide choice of hospitals and specialists. |
| AXA Health | A strong focus on digital innovation, with an excellent app and clear pathways for mental and physical health support. | Prioritise easy digital access for their employees and robust mental health provisions. |
| Vitality | Unique wellness programme that actively rewards employees for living a healthy lifestyle with discounts and perks. | Want to build a high-engagement wellbeing culture and actively encourage employee health. |
| Aviva | A major UK insurer known for flexible, customisable policies and a market-leading Digital GP service. | Are looking for a flexible and cost-effective solution from a household name. |
| WPA | A not-for-profit provider often praised for outstanding customer service and innovative policy options. | Favour exceptional service and want flexible options that can help manage costs. |
The most effective way to navigate these options is to use an independent, whole-of-market PMI broker. Instead of going direct to one insurer and only hearing their sales pitch, a broker works for you. They will take the time to understand your business, compare policies and prices from all the leading providers, and present you with clear, impartial recommendations.
Navigating the Legal and Tax Implications
Understanding the tax treatment of group PMI is essential.
- For the Business: The premiums you pay for the group policy are generally considered an allowable business expense. This means you can deduct the cost from your revenue before calculating your Corporation Tax liability, making the net cost to the business lower than the headline premium. The business will also need to pay Class 1A National Insurance contributions (currently 13.8%) on the value of the benefit.
- For the Employee: Having company-paid private medical insurance is considered a 'benefit-in-kind' by HMRC. This means its value is treated as additional taxable income for the employee. The cost of the premium is added to their income for tax purposes, and they will pay income tax on it at their marginal rate (e.g., 20% or 40%).
- P11D Form: As the employer, you are responsible for reporting this benefit to HMRC for each employee on a P11D form at the end of the tax year.
While there is a tax implication for the employee, the cost is almost always significantly lower than if they were to buy an equivalent individual policy themselves.
Common Pitfalls to Avoid When Buying Group PMI
A group health scheme is a significant investment. Here are some common mistakes to avoid to ensure you get it right.
- Ignoring the Fine Print: Make sure you and your employees understand the key exclusions, especially concerning pre-existing and chronic conditions. Clear communication is essential.
- Automatically Renewing: The biggest mistake is letting your policy auto-renew without a market review. Premiums can rise sharply, and better deals are often available.
- Choosing the Wrong Cover Level: Don't pay for benefits your team won't use (like a Central London hospital list if you're based in Scotland). Conversely, don't cut costs so much that the policy fails to provide meaningful cover when needed.
- Failing to Communicate the Benefit: A policy is only valuable if your staff know it exists, understand how to use it, and appreciate its value. A launch briefing and regular reminders are crucial for engagement.
- Going Direct to an Insurer: By only speaking to one provider, you miss out on the impartial advice and comprehensive market comparison that a specialist broker offers. This can lead to paying more for a less suitable policy.
What is the minimum number of employees needed for a group PMI scheme?
Is mental health covered by group private medical insurance?
Do employees have to pay tax on company health insurance?
Can we cover pre-existing conditions with a group scheme?
Ready to explore the advantage of group PMI for your SME?
The right health insurance policy can transform your business, helping you build a healthier, more loyal, and more productive team. Navigating the market to find that perfect policy can be complex, but you don't have to do it alone.
Contact the experts at WeCovr today. Our FCA-authorised advisors will compare the market for you, providing impartial advice to find the ideal policy that protects your team and your bottom line—at no cost to you.
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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Who Are WeCovr?
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!