TL;DR
As an FCA-authorised broker that has arranged over 900,000 policies, WeCovr helps UK businesses find the right private medical insurance. This guide explains the costs and benefits of group cover for your small business, ensuring you make an informed choice for your team's wellbeing and your bottom line. Group PMI pricing explained for SME owners As a small business owner in the UK, you know that your team is your most valuable asset.
Key takeaways
- Business Profile: A digital marketing agency in Manchester.
- Number of Employees: 5
- Average Age: 32
- Level of Cover: Mid-range cover with outpatient diagnostics and a £250 excess.
- Business Profile: An independent retailer with a shop in Bristol.
As an FCA-authorised broker that has arranged over 900,000 policies, WeCovr helps UK businesses find the right private medical insurance. This guide explains the costs and benefits of group cover for your small business, ensuring you make an informed choice for your team's wellbeing and your bottom line.
Group PMI pricing explained for SME owners
As a small business owner in the UK, you know that your team is your most valuable asset. Keeping them healthy, happy, and motivated is not just good practice—it's a strategic business decision. This is where Group Private Medical Insurance (PMI) comes in.
Group PMI is a company-funded health insurance policy that provides your employees with access to private medical treatment. Unlike individual policies, a group scheme covers multiple people under a single contract, which often brings significant cost savings and more inclusive benefits.
For a Small to Medium-sized Enterprise (SME), offering private health cover can be a game-changer. It demonstrates a genuine commitment to employee welfare, helps you compete with larger corporations for top talent, and critically, reduces the impact of sickness absence on your operations. With NHS waiting lists remaining a significant concern, PMI ensures your staff can get diagnosed and treated quickly, allowing them to return to work sooner.
This comprehensive guide will demystify the cost of private health insurance for your small business, explore the factors that influence pricing, and show you how to find a policy that delivers maximum value.
How Much Does Business Health Insurance Cost in the UK?
This is the most common question we hear from SME owners, and the honest answer is: it depends. The price of a group PMI policy is highly tailored to the specific needs and demographics of your business.
However, to give you a clear idea, we've created some illustrative examples. These figures are estimates for 2025 and assume a standard level of cover for a business based outside of central London.
Example 1: A Small Tech Start-up (5 Employees)
- Business Profile: A digital marketing agency in Manchester.
- Number of Employees: 5
- Average Age: 32
- Level of Cover: Mid-range cover with outpatient diagnostics and a £250 excess.
| Provider | Estimated Monthly Cost Per Employee | Estimated Total Monthly Cost |
|---|---|---|
| Provider A | £45 - £55 | £225 - £275 |
| Provider B | £48 - £60 | £240 - £300 |
| Provider C | £50 - £65 | £250 - £325 |
Example 2: A Growing Retail Business (15 Employees)
- Business Profile: An independent retailer with a shop in Bristol.
- Number of Employees: 15
- Average Age: 40
- Level of Cover (illustrative): Comprehensive cover including therapy, with a £100 excess.
| Provider | Estimated Monthly Cost Per Employee | Estimated Total Monthly Cost |
|---|---|---|
| Provider A | £65 - £80 | £975 - £1,200 |
| Provider B | £70 - £85 | £1,050 - £1,275 |
| Provider C | £75 - £90 | £1,125 - £1,350 |
Important Note: These tables are for guidance only. The final premium will depend on the unique factors of your business. The best way to get an accurate figure is to speak with an expert PMI broker like WeCovr, who can compare the market for you at no extra cost.
What Factors Influence the Cost of a Group PMI Policy?
Insurers use a range of factors to calculate your premium. Understanding these levers will empower you to build a policy that fits your budget.
-
Number of Employees: Generally, the more employees you add to a scheme, the lower the average cost per person. Insurers see larger groups as lower risk and are able to offer more competitive pricing.
-
Average Age of the Group: Age is one of the most significant cost factors. Older employees are statistically more likely to claim, so a group with a higher average age will typically have a higher premium.
-
Location of the Business: The cost of private medical treatment varies across the UK. Policies for businesses based in and around Central London are the most expensive due to the higher costs of private hospitals in the capital. A business in Scotland or the North of England will usually pay less.
-
Level of Cover: You can tailor your policy by choosing different levels of cover:
- Basic: Typically covers inpatient treatment (when you need a hospital bed overnight) and day-patient treatment.
- Mid-Range: Includes everything in a basic plan, plus a set limit for outpatient consultations and diagnostic tests (like MRI and CT scans).
- Comprehensive: Offers the most extensive cover, including full outpatient benefits, and often includes therapies like physiotherapy.
-
Policy Excess (illustrative): The excess is the amount an employee pays towards their treatment costs before the insurance kicks in. A higher excess (£500 or £1,000) will significantly lower your premium, while a lower excess (£100 or £0) will increase it.
-
Hospital List: Insurers offer different tiers of hospital lists. A list that includes only local private hospitals will be cheaper than one that gives national access, especially if it includes the premium hospitals in Central London.
-
Optional Extras: You can enhance your policy with valuable add-ons, but each will increase the cost. Common extras include:
- Mental Health Cover: Provides access to psychiatrists and therapists. Given the rising focus on mental wellbeing, this is an increasingly popular and valuable benefit.
- Dental and Optical Cover: Helps with routine check-ups, glasses, and dental treatment.
- Travel Insurance: Can be added to cover employees for medical emergencies abroad.
-
Industry and Occupation: The nature of your business can play a role. A construction company with manual labourers may face slightly higher premiums than an office-based accountancy firm due to the perceived higher risk of injury.
-
Underwriting Type: This is a crucial choice that affects both cost and how pre-existing conditions are handled.
Understanding the Different Types of Underwriting
Underwriting is how an insurer assesses risk, particularly regarding pre-existing medical conditions. For group schemes, there are three main options.
1. Moratorium Underwriting (The most common for small groups)
- How it works: Employees do not need to declare their medical history when joining. Instead, the insurer applies a blanket exclusion for any condition that existed in the 5 years prior to the policy start date.
- The Catch: If an employee remains symptom-free and needs no treatment, advice, or medication for that condition for a continuous 2-year period after joining, the exclusion may be lifted for that condition.
- Best for: Small businesses who want a quick and easy setup without lengthy medical questionnaires. It's the standard for groups of 2-15 employees.
2. Full Medical Underwriting (FMU)
- How it works: Each employee completes a detailed medical questionnaire. The insurer then assesses their history and lists specific exclusions for any pre-existing conditions on their policy documents.
- The Advantage: Everyone knows exactly what is and isn't covered from day one. There are no grey areas.
- Best for: Businesses that want absolute clarity on cover, or if employees have historical medical issues they want assessed upfront. It can sometimes result in a slightly lower starting premium than a moratorium policy.
3. Medical History Disregarded (MHD)
- How it works: This is the most comprehensive—and most expensive—form of underwriting. The insurer agrees to cover eligible medical conditions, regardless of whether they are pre-existing.
- The Requirement: MHD is typically only available to larger groups, usually 20+ employees. Insurers offer this because the risk is spread across a larger pool of people.
- Best for: Larger SMEs or companies in highly competitive industries who want to offer the absolute best health benefits package to attract and retain staff.
Critical Clarification: What Private Medical Insurance Does and Doesn't Cover
It is vital to understand the fundamental purpose of private medical insurance in the UK.
PMI is designed to cover acute conditions that arise after you take out the policy.
- An acute condition is a disease, illness, or injury that is likely to respond quickly to treatment and lead to a full recovery. Examples include joint pain requiring a hip replacement, cataracts needing surgery, or diagnosing and treating most forms of cancer.
Standard UK PMI policies DO NOT cover:
- Pre-existing Conditions: Any medical condition for which you have experienced symptoms, or received medication, advice, or treatment for before the policy began (unless you have a Medical History Disregarded policy).
- Chronic Conditions: Illnesses that cannot be cured and require ongoing, long-term management. Examples include diabetes, asthma, high blood pressure, and arthritis. While the initial diagnosis of a chronic condition might be covered, the long-term management will be passed back to the NHS.
- Emergency Services: A&E visits and emergency ambulance transport remain the responsibility of the NHS.
- Normal Pregnancy & Childbirth: Routine maternity care is not covered, though complications may be.
- Cosmetic Surgery, unless medically necessary.
- Self-inflicted injuries or conditions related to substance abuse.
Understanding this distinction is key to managing expectations and ensuring your team knows what their policy is for: providing fast access to treatment for new, eligible conditions to get them back on their feet.
How Can Small Businesses Reduce Their Health Insurance Premiums?
Worried about the cost? There are several effective strategies to make private medical insurance more affordable without sacrificing the core benefits.
-
Increase the Policy Excess (illustrative): This is the quickest way to reduce your premium. Choosing a £250 or £500 excess can lead to savings of 15-30%.
-
Opt for a Limited Hospital List: If your team is based in one region, a hospital list that focuses on quality local facilities rather than expensive London hospitals is a smart way to save.
-
Choose the '6-Week Wait' Option: This is a clever compromise. With this option, if the NHS can provide the required inpatient treatment within six weeks, the employee will use the NHS. If the wait is longer, the private medical insurance policy kicks in. This can reduce premiums by up to 30% as it removes the cost of more routine procedures that the NHS handles efficiently.
-
Review Cover Levels: Do you need full outpatient cover, or would a policy covering only diagnostics and consultations be sufficient? Tailoring the cover to your team's likely needs is crucial.
-
Promote a Healthy Workplace: Many modern PMI providers, like Vitality, actively reward healthy behaviour. By encouraging your team to be active, you can earn discounts on your renewal premium. This creates a win-win: a healthier workforce and lower insurance costs.
-
Work with an Independent Broker: An expert broker, like WeCovr, does the shopping for you. We have access to the whole market and can negotiate with insurers on your behalf to find the best possible terms. We review your policy annually to ensure you're never paying more than you need to.
The Benefits of Offering Private Health Insurance to Your Team
While the cost is a key consideration, it's essential to weigh it against the immense value a PMI policy brings to your business.
-
Reduced Sickness Absence: This is the most direct financial benefit. According to the Office for National Statistics (ONS), an estimated 185.6 million working days were lost in the UK in 2022 due to sickness or injury. PMI helps your employees bypass long waiting lists for diagnosis and treatment, drastically cutting the time they are off work. A key employee returning to work months earlier can save your business thousands.
-
Attracting and Retaining Top Talent: In a competitive job market, a strong benefits package sets you apart. Private health cover is consistently ranked as one of the most desired employee benefits, showing prospective and current staff that you are an employer who cares.
-
Improved Morale and Loyalty: When an employee or their family member faces a health scare, having the support of a PMI policy is a huge relief. This builds immense goodwill and loyalty, fostering a positive and supportive company culture.
-
Access to Digital GP and Mental Health Support: Most modern PMI policies now include 24/7 digital GP appointments and access to mental health support lines. These preventative tools help staff address health concerns early, before they become serious problems, further reducing absence and boosting productivity.
-
A Duty of Care: Providing health insurance demonstrates a proactive approach to your duty of care as an employer, protecting both your employees' health and your business's operational stability.
Comparing Top UK Private Health Insurance Providers for SMEs
The UK market is served by several excellent, well-established insurers. Each has its strengths, and the "best" one depends entirely on your business's priorities.
| Provider | Key Strengths for SMEs | Wellness Programme |
|---|---|---|
| AXA Health | Known for its flexible 'Business Health Select' framework, excellent customer service, and strong mental health pathways. | Offers the 'ActivePlus' scheme with gym discounts and health support, but less integrated than Vitality. |
| Aviva | Offers a 'Solutions' policy with a modular approach. Strong digital offering and a large, trusted brand name. | 'Aviva Wellbeing' app provides health tracking and support. Focus on holistic wellbeing. |
| Bupa | A very well-known brand with a vast network of hospitals and facilities. Offers direct access to services like cancer and cardiac care without needing a GP referral. | 'Bupa Touch' app provides access to digital GP services and health information. Focus on clinical excellence. |
| Vitality | Unique shared-value model that rewards employees for healthy living with discounts and perks (e.g., Apple Watch, coffee). Can lead to lower renewal premiums. | The 'Vitality Programme' is central to its offering, actively encouraging and rewarding physical activity and healthy habits. |
Navigating these options and their complex policy documents can be daunting. This is why partnering with an independent, FCA-authorised broker is so valuable. We provide impartial advice to help you find the perfect fit.
Why Use an Independent Broker like WeCovr?
Choosing a health insurance policy is a significant decision. An independent broker acts as your expert guide, providing a level of service and market access you can't get by going direct to an insurer.
- Whole-of-Market Comparison: We are not tied to any single insurer. We compare policies and prices from across the market to find the optimal solution for your specific needs and budget.
- Expert, Unbiased Advice: We translate the jargon and explain the pros and cons of each option, ensuring you understand exactly what you are buying. Our advice is tailored to your business.
- It Costs You Nothing: Our service is free for you. We are paid a commission by the insurer you choose, which is already built into the premium, so you don't pay a penny more for our expertise.
- Annual Reviews & Claims Support: Our job doesn't end when the policy is set up. We will be there to assist with any complex claims and, crucially, will review your policy at renewal each year to ensure it still offers the best value.
- Exclusive Benefits: As a WeCovr client, you and your employees gain complimentary access to our AI-powered calorie and nutrition tracking app, CalorieHero, to support your wellness goals. Furthermore, customers who purchase PMI or Life Insurance through us are eligible for discounts on other types of cover we offer.
With high customer satisfaction ratings and a commitment to clear, honest advice, WeCovr is the ideal partner for any small business looking to invest in its team's health.
Health and Wellness: A Proactive Approach to Business Health
Investing in private medical insurance is a fantastic step, but it's even more powerful when combined with a proactive workplace wellness culture. Encouraging healthy habits can reduce the long-term risk of illness, boost energy levels, and improve mental resilience across your team.
- Encourage Movement: Simple initiatives like promoting walking meetings, offering subsidised gym memberships, or organising team fitness challenges can make a big difference. Many PMI providers support this directly.
- Prioritise Mental Health: Create an open culture where it's okay to talk about mental health. Provide access to resources and ensure managers are trained to spot signs of burnout or stress. PMI policies with mental health cover are invaluable here.
- Healthy Nutrition: A well-nourished employee is a productive one. Consider providing healthy snacks like fruit in the office, and share resources on balanced eating. Apps like CalorieHero can empower employees to take control of their nutrition.
- Champion Good Sleep: The link between poor sleep and a host of health problems is well-documented. Promote a healthy work-life balance that allows employees to switch off and get the 7-9 hours of sleep recommended for adults.
A focus on wellness not only helps your staff feel better but can also lead to fewer claims and, in turn, more stable insurance premiums over the long term.
Is business health insurance a tax-deductible expense in the UK?
Can I add family members or dependants to a small business health insurance policy?
What happens to the health cover if an employee leaves my company?
Ready to protect your team and your business?
Understanding private medical insurance costs is the first step towards making a smart investment in your company's future. The right policy will not only provide peace of mind but also deliver a tangible return through reduced absenteeism and a more loyal, productive workforce.
Contact WeCovr today for a free, no-obligation quote. Our friendly, expert team will help you compare the UK's leading private health insurance providers and design a plan that's perfectly tailored to your business and your budget.
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.
