Small Business PMI Offering Health Insurance to Staff
As an FCA-authorised broker that has helped arrange over 900,000 policies, WeCovr provides expert guidance on private medical insurance for UK small businesses. This article explores how you can offer this valuable benefit to your staff, helping you navigate group policies, manage costs, and stay compliant in 2025.
Group policies, cost management, and compliance for SMEs in 2025
For small and medium-sized enterprises (SMEs) in the UK, attracting and retaining top talent is more competitive than ever. While salary is a key factor, a comprehensive benefits package can be the deciding factor. At the forefront of desirable benefits is private medical insurance (PMI).
Offering private health cover is no longer the sole preserve of large corporations. It's an increasingly accessible and vital tool for SMEs to protect their most valuable asset: their people. This guide will walk you through everything you need to know to make an informed decision for your business.
Why Should Small Businesses Offer Private Medical Insurance?
In 2025, the pressure on the NHS remains significant. While it provides outstanding care, waiting times for elective treatments can be lengthy. Data from NHS England regularly shows millions of people on waiting lists. For a small business, a key employee facing a long wait for treatment can cause major disruption.
Offering PMI is a strategic business decision with compelling benefits for both the employer and the employee.
Benefits for Your Business (The Employer)
- Reduced Sickness Absence: According to the Office for National Statistics (ONS), an estimated 185.6 million working days were lost because of sickness or injury in 2022, the highest it's been in a decade. PMI gives employees faster access to diagnosis and treatment, significantly reducing the time they're away from work.
- Enhanced Recruitment and Retention: In a tight labour market, a strong benefits package sets you apart. PMI is consistently ranked as one of the most desired employee benefits, making your business more attractive to high-calibre candidates.
- Improved Productivity and Morale: Knowing they have access to private healthcare can reduce employee anxiety about their health. A healthy, happy workforce is a productive one. It sends a powerful message that you value your team's wellbeing.
- A Duty of Care: It demonstrates a proactive approach to employee welfare, strengthening the employer-employee relationship and fostering a positive company culture.
Benefits for Your Staff (The Employee)
- Faster Access to Treatment: This is the core benefit. Employees can bypass long NHS queues for eligible acute conditions, getting seen by a specialist and receiving treatment much sooner.
- Choice and Comfort: PMI often provides a choice of specialist and hospital. Treatment is typically in a private room with amenities like an en-suite bathroom and flexible visiting hours, making a stressful time more comfortable.
- Access to Specialist Drugs and Treatments: Some treatments and drugs may not be available on the NHS due to cost or other restrictions. PMI can provide access to these, subject to policy limits.
- Peace of Mind: Health worries can be a major source of stress. Having a private health cover plan in place provides reassurance that they and their families can get help quickly when needed.
Understanding Group Private Health Insurance: The Nuts and Bolts
A group PMI scheme is a single policy that covers a group of people, usually the employees of a company. It's generally more cost-effective and easier to set up than multiple individual policies.
What's Covered? (And What Isn't)
PMI is designed to cover the diagnosis and treatment of 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.
Examples of what's typically covered:
- Consultations with specialists
- Diagnostic tests (like MRI and CT scans)
- Hospital stays and nursing care
- Surgical procedures
- Cancer treatment (this is often a core component, but cover levels vary)
- Mental health support (cover varies significantly between policies)
The Critical Exclusion: Pre-existing and Chronic Conditions Explained
This is the single most important concept to understand about private medical insurance in the UK.
Crucially, standard UK private medical insurance is designed to cover acute conditions that arise after you take out a policy. It does not cover pre-existing conditions or long-term, chronic illnesses.
- Pre-existing Condition: Any illness, disease, or injury for which you have had symptoms, medication, advice, or treatment before your policy started.
- Chronic Condition: A condition that is long-lasting, has no known cure, and needs ongoing management. Examples include diabetes, asthma, arthritis, and high blood pressure.
While PMI won't cover the management of chronic conditions, it may cover acute flare-ups if your policy terms allow. The NHS will continue to provide care for any pre-existing and chronic conditions you have.
Key Terminology Demystified
The world of insurance can be full of jargon. Here are the key terms you'll encounter when setting up a small business PMI scheme.
| Term | Plain English Explanation |
|---|---|
| Underwriting | The process the insurer uses to assess risk and decide what they will and won't cover. |
| Moratorium Underwriting | The most common type for small groups. The insurer doesn't ask for your medical history upfront. Instead, for the first two years, they won't cover conditions you've had symptoms or treatment for in the five years before joining. If you go two full years on the policy without needing treatment, advice, or medication for that condition, it may become eligible for cover. |
| Full Medical Underwriting (FMU) | You and your employees complete a full health questionnaire. The insurer then reviews your medical history and explicitly lists any conditions that will be excluded from cover from day one. It's more admin upfront but provides absolute clarity on what's covered. |
| Medical History Disregarded (MHD) | Usually only available for larger groups (e.g., 20+ employees). The insurer agrees to cover eligible pre-existing conditions. It's the most comprehensive but also the most expensive option. |
| Excess | A fixed amount the employee pays towards their claim each policy year. A higher excess typically means a lower premium. For example, if you have a £250 excess and a claim costs £2,000, you pay the first £250 and the insurer pays the remaining £1,750. |
| 6-Week Option | A popular cost-saving feature. If the NHS can provide the required treatment within six weeks of it being recommended, the employee will use the NHS. If the wait is longer than six weeks, the PMI policy kicks in. |
Navigating the Costs: How Much Does Small Business PMI Cost in 2025?
There is no one-size-fits-all answer, as the premium is calculated based on a range of risk factors. However, as a small business owner, you can expect the cost to be a key consideration.
Factors Influencing Your Premium
The final price of your group policy will be a blend of these elements:
| Factor | How It Affects the Price |
|---|---|
| Average Age of Employees | Younger employees are generally lower risk, leading to lower premiums. |
| Location | Healthcare costs vary across the UK. Policies covering central London hospitals are typically the most expensive. |
| Industry/Occupation | Manual or higher-risk jobs may attract higher premiums than office-based roles. |
| Level of Cover | A basic policy covering diagnostics and in-patient care will be cheaper than a comprehensive one that includes out-patient cover, mental health, and dental. |
| Underwriting Type | Moratorium is standard. Medical History Disregarded is the most expensive. |
| Policy Excess | A higher excess (£250, £500) will lower the premium. A £0 excess will increase it. |
| Hospital List | Insurers have tiered hospital lists. A policy with access to a limited local list is cheaper than one with nationwide access, including premium London hospitals. |
| Optional Extras | Adding dental, optical, or travel cover will increase the cost. |
Example Cost Scenarios for a Small Business
To give you a clearer idea, here are some illustrative examples for a 10-employee tech company based in Manchester in 2025. These are purely estimates and your actual quote will vary.
| Level of Cover | Average Employee Age | Key Features | Estimated Monthly Premium (per employee) |
|---|---|---|---|
| Entry-Level | 35 | In-patient & day-patient cover, basic cancer care, 6-week option, £250 excess. | £35 - £50 |
| Mid-Range | 35 | As above, plus limited out-patient cover (e.g., £1,000), full cancer care, £100 excess. | £60 - £85 |
| Comprehensive | 35 | As above, plus full out-patient cover, mental health support, dental & optical, £0 excess, full hospital list. | £90 - £130+ |
Cost Management Strategies for SMEs
- Introduce an Excess: Even a small excess of £100 or £250 can make a noticeable difference to the premium.
- Opt for the '6-Week Wait' Option: This is one of the most effective ways to reduce costs, as it means you only use the private cover when the NHS cannot provide prompt treatment.
- Tailor Your Hospital List: Do your employees really need access to expensive central London hospitals? Choosing a more restricted or regional list can lead to significant savings.
- Consider a Health Cash Plan: If a full PMI policy is out of reach, a Health Cash Plan is a cheaper alternative. It doesn't cover major surgery but provides cashback on routine healthcare costs like dental check-ups, eye tests, and physiotherapy.
- Work with a Broker: An expert broker like WeCovr can compare the whole market for you, finding the policy that offers the best value for your specific needs and budget. Our service is free for you to use.
Choosing the Best PMI Provider for Your Business
The UK market is dominated by a few major players, each with its own strengths and focus areas.
Top UK Insurers for SMEs
- Bupa: One of the most recognised names in UK health insurance, known for its extensive network and comprehensive cancer care.
- AXA Health: A global insurance giant offering a wide range of flexible plans for businesses, with strong digital tools and a focus on preventative health.
- Aviva: A major UK insurer offering solid, reliable PMI policies with various options to help manage costs. Often praised for their clear policy documents.
- Vitality: Unique in its focus on wellness and prevention. Vitality rewards employees with discounts and perks (like cinema tickets and coffee) for staying active and healthy, which can also help keep future premiums down.
Provider Comparison for Small Business PMI
| Feature | Bupa | AXA Health | Aviva | Vitality |
|---|---|---|---|---|
| Main Selling Point | Strong brand, extensive direct-settlement network. | Flexible, modular plans with good digital support. | Straightforward, trusted policies from a major UK name. | Focus on wellness rewards to encourage healthy living. |
| Underwriting Options | Moratorium, FMU, MHD. | Moratorium, FMU, MHD. | Moratorium, FMU, MHD. | Moratorium, FMU, MHD. |
| SME Focus | Strong B2B offerings with dedicated support. | Excellent SME portal and tools. | 'Solutions' and 'Healthier Solutions' policies for businesses. | 'Vitality at Work' programme is very popular with SMEs. |
| Digital Health | 'Bupa Blua Health' app for digital GP access. | 'Doctor at Hand' app. | 'Aviva Digital GP'. | 'Vitality GP' app, plus the full rewards platform. |
| Wellness Programme | Health assessments, EAP options. | Proactive Health Gateway, EAP. | EAP, stress counselling helpline. | The core of their offering, tracking activity for rewards. |
The Role of an Expert PMI Broker like WeCovr
Choosing between these providers and their countless policy variations can be overwhelming. This is where an independent, FCA-authorised broker is invaluable.
Instead of approaching each insurer individually, you can work with a specialist like WeCovr. We will:
- Understand Your Needs: We take the time to learn about your business, your team, and your budget.
- Compare the Market: We have access to policies and rates from all the leading UK insurers, ensuring you see the full picture.
- Explain the Jargon: We translate the complex policy details into plain English so you can make a confident choice.
- Save You Money: We negotiate on your behalf to find the most competitive terms.
- Provide Ongoing Support: We're here to help with renewals, claims queries, and policy administration.
- Cost You Nothing: Brokers are paid a commission by the insurer you choose, so our expert advice and support are free of charge to your business.
Setting Up Your Group Health Insurance Policy: A Step-by-Step Guide
Here is a simple roadmap to getting your small business PMI scheme up and running.
- Define Your Budget and Goals: Decide how much you can afford per employee per month. Are you trying to solve an absence problem, or is this primarily for recruitment? Your goals will shape the policy.
- Choose Who to Cover: Will the policy cover all employees? Only senior management? Can employees add their families at their own cost?
- Decide on a Core Level of Cover: Start with the essentials: in-patient and day-patient treatment. Then consider adding out-patient cover, which is vital for diagnostics.
- Select Your Underwriting Method: For most small businesses (2-19 employees), the choice will be between Moratorium and Full Medical Underwriting. Moratorium is simpler to set up.
- Gather Employee Data: You'll need a list of employees to be covered, along with their dates of birth. No individual medical details are needed for a Moratorium policy.
- Contact an Expert Broker: This is the most efficient step. A broker will take all your requirements from the steps above and come back to you with tailored, easy-to-understand quotes from the market.
Compliance and Tax Implications for SMEs
Offering health insurance is a formal benefit and comes with some administrative and tax responsibilities.
Is PMI a Benefit in Kind?
Yes. When a company pays for an employee's private medical insurance, HMRC considers it a 'benefit in kind' (BIK). This means it's treated as part of the employee's income for tax purposes.
- Your Responsibility (The Employer): You must report the value of the benefit to HMRC for each employee on a P11D form at the end of the tax year. The value is the cost of the premium for that employee.
- The Employee's Responsibility: The employee will pay income tax on the value of the premium. This is usually handled by an adjustment to their tax code, so they'll see a small reduction in their monthly take-home pay.
Corporation Tax Implications
The good news for your business is that the cost of the premiums for your group PMI scheme is generally considered an allowable business expense. This means you can deduct the full cost from your profits before calculating your Corporation Tax bill, helping to offset the expense.
Beyond Insurance: Integrating Wellness into Your Workplace
Modern health benefits go beyond just insurance. A holistic approach to employee wellbeing can have a profound impact on your business culture and performance.
The Rise of Employee Assistance Programmes (EAPs)
Many PMI policies now include an EAP as standard or as a low-cost add-on. An EAP is a confidential support service that can help employees with a wide range of personal and work-related problems, including:
- Stress, anxiety, and depression
- Financial worries and debt advice
- Legal queries
- Relationship and family issues
- Bereavement counselling
They provide a vital, preventative layer of support, often helping to resolve issues before they escalate into serious health problems or long-term absence.
Leveraging Digital Health Tools
Insurers are investing heavily in digital health. Most now offer a virtual GP service via an app, allowing employees to have a video consultation with a doctor, often within hours. This is incredibly convenient and reduces the need to take time off work for a GP appointment.
At WeCovr, we enhance this by providing our clients with complimentary access to our AI-powered calorie and nutrition tracking app, CalorieHero. This helps your team take proactive control of their diet and health, aligning perfectly with a modern wellness strategy.
Simple Wellness Tips for Your Team
Promoting a healthy culture doesn't have to be expensive. Encourage:
- Active Breaks: Suggest walking meetings or simply getting up from the desk every hour.
- Healthy Hydration: Ensure easy access to fresh water.
- Mindful Eating: Discourage eating at desks. Creating a pleasant break area can foster better eating habits and social connection.
- Prioritising Sleep: Share resources on good sleep hygiene. A well-rested team is more focused, creative, and resilient.
When you purchase PMI or life insurance through us, we can also offer discounts on other types of cover, helping you build a comprehensive and affordable protection package for your business and your people. Our high customer satisfaction ratings reflect our commitment to finding the right solution for every client.
Do I have to offer health insurance to all my employees?
Does private medical insurance cover pre-existing conditions?
What is the difference between an in-patient and an out-patient?
Ready to explore how private medical insurance can benefit your small business?
The WeCovr team is here to help. We'll provide you with free, no-obligation quotes from the UK's leading insurers, tailored to your budget and your team.
[Get Your Free Small Business PMI Quote Today]
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:
Our Group Is Proud To Have Issued 900,000+ Policies!
We've established collaboration agreements with leading insurance groups to create tailored coverage
How It Works
1. Complete a brief form
2. Our experts analyse your information and find you best quotes
3. Enjoy your protection!
Any questions?
Learn more
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!