Why SMEs Should Offer PMI to Employees in 2025
As an FCA-authorised broker that has helped arrange over 800,000 policies, WeCovr understands the challenges UK businesses face. This guide explores why private medical insurance is a crucial investment for SMEs in 2025, driving recruitment, retention, and wellbeing in a competitive landscape.
Benefits for recruitment, retention, and staff wellbeing
For any Small or Medium-sized Enterprise (SME) in the UK, your people are your most valuable asset. In an increasingly competitive market, attracting and retaining top talent while ensuring your team is healthy, happy, and productive is paramount. Private Medical Insurance (PMI) has evolved from a 'nice-to-have' perk into a strategic tool that directly addresses these core business needs.
Offering private health cover demonstrates a genuine commitment to your employees' welfare, creating a positive company culture that pays dividends in loyalty, motivation, and performance. Let's explore how.
Why 2025 is a Critical Year for Employee Health Benefits
The landscape of work and health in the UK has fundamentally shifted. Several factors make 2025 a pivotal year for SMEs to reconsider their approach to employee benefits, with private medical insurance UK taking centre stage.
The Unprecedented Strain on the NHS
The National Health Service is a national treasure, but it is facing immense pressure. As of early 2025, the challenges are clear:
- Record Waiting Lists: The elective care waiting list in England continues to hover in the millions. The latest NHS data shows that millions of patients are waiting for routine treatments, with a significant number waiting over a year. This means an employee with a treatable condition could be absent or working at reduced capacity for an extended period.
- GP Access: Securing a timely GP appointment remains a challenge in many parts of the country, delaying initial diagnosis and referral.
- Impact on the Workforce: These delays don't just affect individuals; they have a direct impact on the UK economy. According to the Office for National Statistics (ONS), long-term sickness is a major driver of economic inactivity, with record numbers of people out of the workforce due to health reasons.
For an SME, an employee's extended absence can be crippling. PMI provides a direct solution by offering prompt access to diagnosis and treatment, bypassing the long waits.
The Rise of Employee Expectations
The modern workforce, particularly younger generations, has different priorities. A 2024 survey by the Chartered Institute of Personnel and Development (CIPD) highlighted that health and wellbeing support are now among the top benefits sought by job candidates.
A competitive salary is no longer enough. Employees want to work for organisations that care about their whole self—physically and mentally. Offering a comprehensive benefits package that includes private health cover sends a powerful message that you are an employer of choice.
Supercharge Your Recruitment: Attracting Top Talent with PMI
In a tight labour market, every advantage counts. When a talented candidate is weighing up offers from two similar SMEs, the benefits package can be the deciding factor.
Stand Out from the Competition
Many large corporations offer PMI as standard, but it is still a significant differentiator in the SME sector. By offering it, you immediately elevate your proposition, competing on more than just salary.
Example Scenario: The Deciding Factor
Imagine two tech start-ups trying to hire a skilled software developer.
| Feature | Company A | Company B |
|---|---|---|
| Salary | £55,000 | £55,000 |
| Holiday | 25 days | 25 days |
| Pension | Standard contribution | Standard contribution |
| Health Benefits | Statutory Sick Pay | Full Private Medical Insurance |
For the candidate, Company B's offer is clearly superior. It provides peace of mind and access to fast, high-quality healthcare for them and potentially their family. This single benefit can be enough to sway their decision, securing you the talent you need to grow.
Signal a Positive Company Culture
Offering private health cover is a tangible demonstration of your company's values. It says:
- "We care about you and your family."
- "We invest in our people for the long term."
- "Your health and wellbeing are a priority for us."
This fosters a culture of mutual respect and support, which is highly attractive to high-calibre candidates looking for more than just a job.
Boost Employee Retention and Reduce Staff Turnover
The cost of replacing an employee is significant. Studies suggest it can be anywhere from 6 to 9 months of their salary when you factor in recruitment fees, training, and lost productivity. Investing in retention is one of the smartest financial decisions an SME can make.
The True Cost of Losing an Employee
Let's break down the potential costs of replacing a mid-level employee on a £40,000 salary.
| Cost Component | Estimated Cost |
|---|---|
| Recruitment Agency Fee (15%) | £6,000 |
| Advertising & Job Boards | £500 |
| Management Time (Interviewing) | £2,000 |
| Onboarding & Training | £3,000 |
| Lost Productivity (3-6 months) | £10,000 - £20,000 |
| Total Estimated Cost | £21,500 - £31,500 |
In contrast, a group PMI policy for a small team can cost as little as £30-£50 per employee per month. The return on investment becomes immediately clear. A benefit that costs a few hundred pounds a year can prevent a loss of over £20,000.
Fostering Loyalty Through Support
When an employee or their family member falls ill, it's a stressful time. If your company's PMI policy helps them get a quick diagnosis and effective treatment, you create a powerful, lasting sense of loyalty. They know the company had their back when it mattered most. This kind of goodwill is invaluable and cannot be bought with a simple pay rise.
A Direct Investment in Staff Wellbeing and Productivity
A healthy workforce is a productive workforce. PMI is not just about dealing with major illnesses; it's a comprehensive tool for maintaining day-to-day health and tackling issues before they escalate.
1. Minimise Absence Through Swift Treatment
Sickness absence costs the UK economy billions each year. The ONS reported that in 2023, the sickness absence rate reached its highest point in over a decade. Minor musculoskeletal issues and mental health were leading causes.
With PMI, an employee with back pain isn't waiting weeks for a physiotherapy referral; they can often be seen within days. This dramatically cuts down on time off work and gets your valuable team member back to full health and productivity faster.
2. Tackle 'Presenteeism'
Presenteeism—the act of working while sick—can be more damaging than absenteeism. An employee who is unwell is not productive, is more likely to make mistakes, and can negatively affect team morale. They may also spread illness to colleagues.
PMI helps by providing easy access to services like:
- Virtual GP Appointments: Employees can speak to a doctor 24/7 via their phone, often getting a diagnosis and prescription without leaving their home. This encourages them to seek help early rather than 'powering through'.
- Mental Health Support: Stress, anxiety, and depression are major causes of presenteeism. PMI policies often include access to confidential counselling and therapy.
3. Comprehensive Mental Health Support
In 2025, mental health support is non-negotiable. Work-related stress and burnout are at all-time highs. A robust PMI policy can provide a lifeline.
Typical Mental Health Cover Includes:
- 24/7 Support Helplines: Immediate, confidential access to trained counsellors.
- Therapy Sessions: A set number of sessions for talking therapies like Cognitive Behavioural Therapy (CBT).
- Psychiatric Care: Access to specialist consultations and even in-patient care if needed.
By providing this support, you not only help the individual but also protect your business from the impact of long-term mental health-related absence.
4. Promote a Proactive and Preventative Health Culture
Modern PMI is not just about treatment; it's about prevention. Many providers offer a suite of wellness benefits designed to keep your staff healthy.
| Wellness Benefit | How It Helps Your Business |
|---|---|
| Discounted Gym Memberships | Encourages physical activity, reducing stress and long-term health risks. |
| Health Screenings | Catches potential issues like high blood pressure or cholesterol early. |
| Wellness Apps | Provides tools for mindfulness, nutrition, and fitness tracking. |
| Smoking Cessation Programmes | Supports employees in making positive lifestyle changes. |
| Virtual GP Services | Offers quick, convenient medical advice, reducing time off for appointments. |
As a WeCovr client, your employees can also get complimentary access to CalorieHero, our AI-powered calorie and nutrition tracking app, further supporting their journey to a healthier lifestyle.
Understanding What Private Medical Insurance Actually Covers
It's vital for both employers and employees to understand what a PMI policy is for. Misconceptions can lead to disappointment, so clarity is key.
The Golden Rule: Acute vs. Chronic Conditions
UK private medical insurance is designed to treat 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 include joint pain requiring a hip replacement, cataracts, or hernias.
- A chronic condition is a disease, illness, or injury that has one or more of the following characteristics: it needs ongoing or long-term monitoring, it has no known cure, it is likely to recur, or it requires palliative care. Examples include diabetes, asthma, and high blood pressure.
PMI is there to get you back to the state of health you were in before you fell ill. It is not designed for the long-term management of incurable conditions, which remains the responsibility of the NHS.
Critical Clarification: Pre-Existing Conditions
This is the most important exclusion to understand. Standard UK PMI policies do not cover pre-existing conditions.
A pre-existing condition is any disease, illness, or injury for which an employee has experienced symptoms, received medication, advice, or treatment before their policy started.
However, many group schemes offer underwriting options that can be more favourable than personal policies, which a specialist broker like WeCovr can help you navigate.
What's Typically Included?
PMI policies are structured in tiers, but most good-quality schemes will include:
- In-patient and Day-patient Treatment: Covers surgery, hospital stays, and procedures where a hospital bed is required.
- Out-patient Diagnostics: Consultations with specialists and diagnostic tests (like MRI and CT scans) to find out what's wrong.
- Cancer Cover: This is a core component, often providing access to specialist drugs and treatments not yet available on the NHS.
- Mental Health Support: As discussed, this is an increasingly vital part of modern policies.
- Therapies: Physiotherapy, osteopathy, and chiropractic treatment.
How Group PMI Schemes for SMEs Work
Setting up a group scheme is more straightforward than you might think, especially with expert guidance. A group scheme is simply a single policy that covers a group of people—in this case, your employees.
The Power of Group Underwriting
One of the biggest advantages of a group scheme is the underwriting method. Instead of each employee filling out a detailed medical questionnaire, insurers offer simpler options for groups.
- Moratorium (MORI): This is the most common type. The policy automatically excludes any condition a member has had in the five years before joining. However, if they go two full years on the policy without any symptoms, treatment, or advice for that condition, it may become eligible for cover.
- Full Medical Underwriting (FMU): Each member completes a health questionnaire. The insurer then lists specific exclusions for each person based on their medical history. It's more admin upfront but provides absolute clarity on what is and isn't covered from day one.
- Medical History Disregarded (MHD): This is the gold standard and is typically available for slightly larger groups (often 15-20+ employees). As the name suggests, the insurer disregards all previous medical history and covers new, acute conditions, even if they are related to a pre-existing one. This is a hugely powerful benefit.
A knowledgeable PMI broker can advise on the best underwriting option for your specific business size and needs.
The Financial Case for SME Health Insurance
While PMI is an investment, it's an affordable and tax-efficient one.
A Tax-Deductible Business Expense
The cost of providing a PMI scheme for your employees is considered an allowable business expense. This means you can deduct the full cost of the premiums from your pre-tax profits, reducing your Corporation Tax bill.
Benefit-in-Kind (P11D) for Employees
Private medical insurance is considered a 'benefit-in-kind' for the employee. This means they will have to pay income tax on the value of the benefit (the premium). HMRC uses the P11D form to process this.
However, the amount of tax is usually very small compared to the value of the cover and the cost of buying a policy individually. For a basic-rate taxpayer, a policy costing £500 a year would result in just £100 of tax. It's a highly-valued benefit for a minimal personal cost.
Illustrative Costs for an SME
The cost of a group PMI policy varies based on factors like the average age of employees, the level of cover, and your location. However, here are some illustrative examples for a tech SME based in Manchester.
| Number of Employees | Average Age | Level of Cover | Estimated Monthly Cost Per Employee |
|---|---|---|---|
| 5 | 35 | Mid-Range (Out-patient included) | £40 - £60 |
| 15 | 38 | Comprehensive | £65 - £90 |
| 30 | 40 | Comprehensive with MHD | £75 - £100 |
Disclaimer: These are purely illustrative figures. Your actual quote will depend on your company's specific circumstances.
Working with an expert broker like WeCovr ensures you get the most competitive rates from the UK's leading insurers, with no cost to you for our advice and service. Furthermore, clients who purchase PMI or Life Insurance through us can often access discounts on other types of business or personal insurance.
Choosing the Best PMI Provider for Your Business
Navigating the market can be complex. There are numerous providers, each with different strengths, hospital lists, and policy options.
Key Factors to Compare:
- Hospital List: Does the insurer's list include convenient, high-quality hospitals for your employees?
- Out-patient Cover: Is there a limit on consultations or diagnostic tests?
- Excess Levels: A higher excess (the amount an employee pays towards a claim) can lower the premium. What options are available?
- Digital Tools: How good are the provider's app and virtual GP service?
- Customer Service: What is their reputation for handling claims smoothly?
The Value of a Specialist Broker
This is where a specialist PMI broker becomes invaluable. Instead of spending hours trying to compare complex policy documents, you can rely on an expert to do the hard work for you.
WeCovr acts as your independent partner. Our role is to:
- Understand Your Needs: We take the time to learn about your business, budget, and what you want to achieve.
- Scan the Market: We compare policies from all the top UK insurers to find the best fit.
- Explain Your Options: We present the options in plain English, highlighting the pros and cons of each.
- Handle the Admin: We manage the application process from start to finish.
- Provide Ongoing Support: We are here to help with renewals, claims queries, and adding new members to your scheme.
Our service is provided at no extra cost to you, and we have a strong track record of high customer satisfaction. We make securing the best private health cover simple and stress-free.
Frequently Asked Questions (FAQs)
Is private health insurance a taxable benefit for UK employees?
What is the difference between an acute and a chronic condition in PMI?
Does company health insurance cover pre-existing conditions?
Ready to Invest in Your Team's Health?
In 2025, offering private medical insurance is one of the most powerful investments an SME can make. It strengthens recruitment, boosts retention, and fosters a healthy, productive, and loyal workforce.
Let WeCovr help you find the perfect health insurance solution for your business. Our expert advisors will compare the UK's leading providers to find you the right cover at the right price, all with no obligation and no fee for our service.
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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!