Small Business Health Insurance Group PMI Options for 2-50 Employees
As an FCA-authorised expert broker that has helped arrange hundreds of thousands of policies, WeCovr understands that navigating the UK's private medical insurance market can be complex. This guide is designed to give small business owners the clear, authoritative information you need to make the best decision for your company and your team.
Cost-effective group coverage for small businesses, employee benefit strategies, tax advantages, and providers specializing in SME health insurance
For any small or medium-sized enterprise (SME) in the UK, 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. It's a powerful tool for businesses with 2 to 50 employees, offering a tangible benefit that can transform your ability to attract talent, reduce absenteeism, and foster a supportive workplace culture.
This comprehensive guide will walk you through everything you need to know about small business health insurance, from how it works and what it costs, to the tax benefits and strategies for keeping it affordable.
Why Should Small Businesses Invest in Group Private Medical Insurance?
In a competitive job market, salary is only part of the equation. A robust benefits package is often the deciding factor for top candidates. But beyond recruitment, the advantages of group PMI have a direct and positive impact on your day-to-day operations.
Key Benefits for Your Business:
- Attract & Retain Top Talent: Offering private health cover demonstrates that you are an employer who invests in your staff's wellbeing, making you a more attractive prospect. It's a premium benefit that helps you stand out from competitors.
- Reduce Sickness Absence: The UK lost an estimated 185.6 million working days to sickness or injury in 2023, according to the Office for National Statistics (ONS). With NHS waiting lists for routine treatment in England remaining over 7.5 million, PMI gives your employees a route to faster diagnosis and treatment, getting them back to work and good health sooner.
- Boost Productivity & Morale: When employees feel valued and cared for, their morale and engagement naturally increase. Knowing they have support if they fall ill reduces stress and allows them to focus on their work, boosting overall productivity.
- Duty of Care: Providing health insurance is a clear and meaningful way to fulfil your duty of care as an employer, building a positive and loyal company culture.
Key Benefits for Your Employees:
- Fast-Track Medical Treatment: This is the primary benefit. PMI allows employees to bypass long NHS queues for eligible, acute conditions.
- Choice and Control: Employees often get more choice over the specialist who treats them and the hospital where they receive care.
- Access to Specialist Care: Gain access to advanced diagnostic scans, specialist consultations, and treatments or drugs that may not be routinely available on the NHS due to funding constraints.
- Peace of Mind: Knowing that they and their families (if included) can access private care without facing huge medical bills provides invaluable reassurance.
Understanding How Group PMI Works for SMEs
At its core, a Group PMI scheme is a single policy that a business takes out to cover a defined group of its employees. It is generally cheaper and easier to arrange per person than individual policies because the risk is spread across the group.
However, there is a fundamental principle of UK private medical insurance that every business owner must understand.
Critical Point: Acute vs. Chronic & Pre-existing Conditions Standard UK private medical insurance 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.
It does not cover chronic conditions (long-term illnesses like diabetes, asthma, or high blood pressure that can be managed but not cured) or pre-existing conditions (any illness or injury you had before the policy started).
How Are Medical Histories Handled? (Underwriting)
For small groups, insurers need to assess the potential risk. They do this through a process called underwriting. There are two main types for SMEs:
- Moratorium (MORI) Underwriting: This is the most common and simplest option. Employees don't need to complete a medical questionnaire. Instead, the policy automatically excludes treatment for any medical condition that existed in the 5 years prior to the policy start date. These exclusions are usually lifted if the employee goes 2 continuous years on the policy without needing treatment, advice, or medication for that condition.
- Full Medical Underwriting (FMU): Each employee completes a detailed health questionnaire. The insurer assesses their medical history and may place specific exclusions on the policy from day one. This process takes more time but provides absolute clarity on what is and isn't covered. It is often the cheaper of the two options.
| Underwriting Type | How It Works | Pros | Cons |
|---|---|---|---|
| Moratorium (MORI) | No initial health questions. A 2-year waiting period applies to conditions from the last 5 years. | Quick and easy to set up. Less intrusive for employees. | Can be uncertainty at the point of claim. May not be suitable for those with recent health issues. |
| Full Medical Underwriting (FMU) | Each member declares their full medical history on a form. | Full clarity from day one on what is covered. Often cheaper than Moratorium. | More initial administration. Pre-existing conditions will be permanently excluded. |
For larger groups (typically 20+ employees), a third option, Medical History Disregarded (MHD), becomes available. This is the most comprehensive and expensive option, as it agrees to cover eligible pre-existing conditions, but it is less common for smaller SMEs.
What Does a Typical Small Business Health Insurance Policy Cover?
Policies are built in layers. You start with core cover and then add optional extras to match your budget and your team's needs.
Core Cover (Standard on most policies)
This is the foundation of any PMI plan and primarily covers treatment received when admitted to hospital as an in-patient (requiring an overnight stay) or day-patient (admitted for a procedure but not staying overnight).
- Hospital Charges: Including accommodation, nursing care, and operating theatre costs.
- Specialist Fees: Fees for surgeons, anaesthetists, and physicians.
- Diagnostic Tests: Such as CT, MRI, and PET scans, and X-rays when part of in-patient or day-patient treatment.
- Cancer Cover: Most policies offer comprehensive cancer cover as standard, including chemotherapy, radiotherapy, and surgical procedures.
Popular Optional Extras
This is where you can tailor the policy. Common add-ons include:
- Out-patient Cover: This is the most popular add-on. It covers diagnostic tests and consultations with a specialist before you are admitted to hospital. Without this, an employee would need to rely on the NHS for their initial diagnosis, which can involve a long wait.
- Therapies Cover: Includes treatments like physiotherapy, osteopathy, and chiropractic care. Highly valued by employees, especially those in physically demanding or desk-based roles.
- Mental Health Cover: A crucial and increasingly sought-after benefit. This can provide cover for psychiatric consultations, therapy sessions (like CBT), and in-patient treatment for mental health conditions.
- Dental & Optical Cover: Helps with routine costs like check-ups, fillings, new glasses, and contact lenses.
- Travel Cover: Extends medical cover for employees when travelling abroad.
| Cover Type | What It Typically Includes | Is It Core or Optional? |
|---|---|---|
| In-patient/Day-patient | Hospital stays, surgery, specialist fees while admitted. | Core Cover |
| Out-patient | Specialist consultations and diagnostic scans before hospital admission. | Optional Extra |
| Therapies | Physiotherapy, osteopathy, chiropractic sessions. | Optional Extra |
| Mental Health | Psychiatric care, counselling, and therapy sessions. | Optional Extra |
| Dental & Optical | Routine check-ups, treatments, and contributions to eyewear. | Optional Extra |
An expert broker like WeCovr can help you model different combinations of cover to find the sweet spot between comprehensive benefits and an affordable premium.
How Much Does Small Business Health Insurance Cost?
The cost of a group PMI policy is not one-size-fits-all. Premiums are calculated on a per-employee basis and depend on several key factors:
- Average Age: An older workforce will have higher premiums than a younger one.
- Number of Employees: While not always linear, larger groups can sometimes attract better per-head rates.
- Level of Cover: A basic core policy will be significantly cheaper than a comprehensive plan with full out-patient, mental health, and dental cover.
- Policy Excess: This is a fixed amount an employee pays towards their claim (e.g., the first £250). A higher excess will lower the overall premium.
- Hospital List: Insurers offer different lists of eligible private hospitals. Choosing a list that excludes the most expensive facilities (often in Central London) can reduce costs.
- Location: Premiums are typically higher for businesses based in London and the South East due to higher private treatment costs.
- Underwriting: Full Medical Underwriting is usually cheaper than Moratorium.
Indicative Monthly Costs
To give you a rough idea, here are some illustrative monthly costs per employee. These are for guidance only and will vary significantly based on the factors above.
| Average Employee Age | Indicative Core Cover (per employee/month) | Indicative Comprehensive Cover (per employee/month) |
|---|---|---|
| 30 | £35 - £55 | £65 - £95 |
| 40 | £50 - £70 | £85 - £125 |
| 50 | £70 - £100 | £115 - £170 |
Disclaimer: These figures are estimates for 2025 and are for illustrative purposes only. The actual premium will depend on your company's specific circumstances.
The Tax Implications of Small Business Health Insurance
Understanding the tax treatment is vital for budgeting. The good news is that providing health insurance is tax-efficient for the business.
- For the Business: The premiums you pay for a group PMI policy are 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: Private medical insurance is treated as a 'benefit-in-kind' (BIK). This means the value of the insurance premium is added to the employee's income for tax purposes, and they will pay income tax on it at their marginal rate (20%, 40%, or 45%). The business is responsible for reporting this on a P11D form for each employee.
- National Insurance: The business must also pay Class 1A National Insurance Contributions (NICs) on the value of the benefit provided to the employee. The rate for 2024/25 is 13.8%.
Example:
- Your company pays an annual premium of £800 for an employee.
- The employee is a basic rate (20%) taxpayer.
- Employee's Tax: They will pay 20% of £800 = £160 in extra income tax per year (or ~£13.33 per month).
- Company's NICs: The company will pay 13.8% of £800 = £110.40 in Class 1A NICs for that employee.
Even with the BIK tax, group schemes are almost always cheaper for the employee than buying an equivalent individual policy themselves.
Smart Strategies for Making Group PMI Cost-Effective
While group PMI is a valuable investment, you need to ensure it remains affordable. Here are some proven strategies to manage costs without sacrificing quality.
- Introduce an Excess: Opting for a policy excess of £100, £250, or even £500 can significantly reduce your premiums.
- Opt for the '6-Week Wait' Option: This is one of the most effective cost-saving measures. With this clause, the private cover only activates if the required treatment is not available on the NHS within six weeks. As many urgent procedures are done quickly on the NHS, this reduces the insurer's risk and your premium.
- Select a Guided Hospital List: Instead of giving employees free choice of any hospital, choose a policy with a curated list of high-quality facilities. This control helps the insurer manage costs, which is passed on to you as a lower premium.
- Tailor Cover Levels: You don't have to offer the same level of cover to all staff. Many businesses provide a comprehensive plan for senior management and a core plan for the rest of the team.
- Review Your Policy Annually: Never simply auto-renew. The health insurance market is competitive. An independent broker can re-broke your policy each year to compare deals from all major providers, ensuring you don't fall victim to "price walking" and always get the best value.
Top UK Private Health Insurance Providers for SMEs
The UK has a mature PMI market with several excellent providers who specialise in cover for small businesses. Each has its own strengths:
- AXA Health: A global insurance leader known for its strong digital tools, including a 24/7 digital GP service, and a focus on proactive health support.
- Aviva: One of the UK's largest insurers, offering highly flexible and customisable policies. Their "Guidance" hospital lists are a popular way to manage costs.
- Bupa: Arguably the most recognised brand in UK health insurance. Bupa offers extensive networks, comprehensive mental health support, and a trusted reputation.
- Vitality: Famous for its unique "Shared Value" model. Vitality rewards employees for healthy living (tracking activity, having health checks) with perks like cinema tickets, coffee, and discounts on their premium. This can be fantastic for engaging a younger, active workforce.
- WPA (Western Provident Association): A not-for-profit insurer with a strong focus on customer service and tailoring policies specifically for SMEs. They are highly regarded for their ethical approach and straightforward claims process.
Finding the right provider depends entirely on your team's demographics, your budget, and your company's priorities.
The Value of an Independent PMI Broker
Trying to compare these providers and their complex policy documents on your own is time-consuming and confusing. This is where an independent, FCA-authorised broker like WeCovr is invaluable.
A specialist broker works for you, not the insurer. Our role is to:
- Understand Your Needs: We take the time to learn about your business, budget, and employees.
- Scan the Entire Market: We have access to policies and rates from all the leading UK providers.
- Explain the Options in Plain English: We cut through the jargon to help you understand exactly what you are buying.
- Tailor the Perfect Policy: We help you find the right balance of cover, excess, and cost-saving options.
- Handle the Administration: We manage the application process, making it seamless for you.
- Provide Ongoing Support: We are here to help with renewals and any queries you have during the policy year.
Best of all, using a broker like WeCovr costs you nothing. We are paid a commission by the insurer you choose, so you get expert, impartial advice and market comparison for free.
Beyond PMI: Building a Holistic Employee Wellness Strategy
Private medical insurance is the cornerstone of a great health benefits package, but it works best as part of a wider wellness strategy. Many PMI policies now include valuable added benefits at no extra cost:
- Digital GP Services: 24/7 access to a GP via phone or video call, allowing employees to get medical advice, prescriptions, and referrals without leaving their home or office.
- Employee Assistance Programmes (EAPs): Confidential telephone support for a range of life's challenges, including mental health, financial worries, legal issues, and family stress.
- Wellness Apps & Tools: Many insurers provide apps that offer health tracking, fitness challenges, and mindfulness resources.
At WeCovr, we go a step further. All our clients who purchase a PMI or Life Insurance policy gain complimentary access to CalorieHero, our AI-powered calorie and nutrition tracking app. We also offer discounts on other types of business and personal insurance, helping you protect your business and your life in a more connected, cost-effective way.
Can I cover employees' families on a small business health insurance policy?
What happens to the health cover if an employee leaves the company?
Do we have to offer health insurance to all our employees?
Is mental health treatment covered by small business health insurance?
Ready to Protect Your Team and Grow Your Business?
Investing in your team's health is one of the smartest investments you can make. A Group Private Medical Insurance policy is a powerful, tax-efficient way to build a resilient, motivated, and loyal workforce.
The options can seem complex, but you don't have to navigate them alone. Contact WeCovr today for a free, no-obligation quote. Our friendly, expert advisors will compare the UK's leading insurers to find the perfect solution for your business and your budget.
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!