Employee health insurance plans are available from providers across the UK, offering a range of benefits. It’s important to assess what type of cover is right for your business and your team.

How does health insurance for employees work?

Employee healthcare insurance works on the basis that when an insurer offers cover to a group of people it's able to spread the risk so it also lowers the cost per head. As an employer, you take out one policy that covers all your employees. You could also decide to base access on a set of criteria, although it’s important that these are non-discriminatory. You can offer health insurance as a standard employee benefit (where you pay the premium) or on a voluntary basis, where employees decide whether to sign up and pay the premiums themselves. The voluntary option gives employees private health insurance at a lower cost than an individual policy.

Business benefits of a group health insurance scheme 

From a business perspective, one of the biggest advantages of providing health insurance for employees is the fact that they can avoid NHS waiting lists and access treatment quickly. This reduces the amount of time lost to the business and is also a plus for your employee as they will potentially avoid any loss of income. Waiting list statistics from February 2022 showed that 65.5% of patients waited more than 18 weeks for treatment. That could have a significant impact on both your business and your employees’ well-being. Even if a member of staff remains at work, many employee healthcare insurance policies offer 24/7 GP access which allows them to access medical advice without needing to take time off for appointments.

One of the biggest advantages is that it demonstrates your commitment to employee wellbeing, which brings greater engagement, job satisfaction and higher productivity.

Employees with health insurance
Businesses and their employees benefit from health insurance

Top benefits of health insurance for employees 

Shorter waiting times and access to medical advice at hours to suit them don’t just benefit your business. They’re both highly valuable to your employees as well. Most business health insurance plans offer high-quality healthcare for a wide variety of illnesses and other conditions. While these will vary according to the policy you choose most will include musculoskeletal conditions, cancer and mental health support. Some policies also allow employees to add family members to offer the same health insurance benefits to them. 

One of the most significant benefits of private healthcare is that it is more flexible and can be tailored to an employees’ individual needs. They are likely to be able to choose which hospital they attend and the consultant or specialist practitioner who provides the treatment.

Mental health and wellbeing

Mental health and workplace wellbeing have taken on a greater significance since 2022. Employees are increasingly looking to their employers to provide support in a variety of ways, whether by allowing them to work more flexibly or offering resources to help them look after their mental health. A group medical insurance policy enables you to outsource this to an independent provider. This gives the added benefit that your employees are able to speak in confidence without any concern that it will affect their employment.

Many private healthcare providers offer helplines or other support for wellbeing initiatives. Research by Gallup showed that such initiatives improve health outcomes and productivity in an already engaged workforce.

Are there any disadvantages to providing health insurance for employees?

Whilst the benefits of providing employee healthcare insurance are clear, you may wonder whether there are any downsides. One of the only real disadvantages of a group policy is its lack of flexibility. An individual private healthcare plan can be designed around a patient’s needs and medical history. Some policies allow your employees to provide details of their medical history, however, this is generally done as a way of excluding pre-existing conditions from cover. A group policy will usually cover a specified range of conditions and treatment which may not reflect employees’ individual needs.

The potential lack of flexibility in a group policy comes with one key trade-off; the cost is likely to be significantly lower.

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What does employee health insurance cover?

The health cover you get depends on the policy you choose. Most policies cover outpatient treatment, surgery and treatment for musculoskeletal conditions, for example, physiotherapy and chiropractic treatment. The main providers also cover cancer care and mental health treatment. It’s important to remember that insurers will typically only provide cover for acute conditions which can be cured with treatment, as opposed to chronic conditions which need ongoing management. Additional health and wellbeing support is also a feature of many policies, with access to healthcare apps, helplines and discounted gym memberships.

As an employer, you may decide to include optional extras, for example, dental treatment. If your employees regularly work overseas you can also opt to provide cover in another country. It’s worth investigating your employees’ needs and considering what cover to provide. This guide to health insurance cover from the British Medical Association is designed for individuals seeking private medical insurance but offers some useful guidance and questions to consider for employers too.

What isn’t covered?

Many employee health insurance policies will exclude cover for some conditions as standard. There are exceptions but these will depend on your provider and the type of underwriting you have on your policy. Typical exclusions include:

  • Treatment for addiction
  • Cosmetic surgery or other purely cosmetic procedures
  • Pregnancy and maternity cover
  • Chronic conditions
  • Pre-existing conditions

Chronic conditions

A chronic condition is one that can’t be cured by a course of treatment. Instead it’s an ongoing condition that requires management over a longer period of time. Typical examples are diabetes or asthma where treatment is available via the NHS.

Pre-existing conditions

You can choose policy underwriting that covers pre-existing conditions but this is often the most expensive option. Most healthcare policies exclude any pre-existing conditions although some will limit this to a specific period of time. For example, if you haven’t been treated for a particular condition in the five years before the start of the policy, you can still access treatment if it recurs later.

Workers with health insurance smiling
Various factors will affect the cost of your employee health insurance

How much will employee healthcare insurance cost?

In health insurance policies as in life, you get what you pay for. A group policy allows you to spread the employee health insurance cost over your entire workforce. If you’re looking for small business health insurance you may not think that this applies to you, but even if you only have two employees a group policy can still cost less than two individual policies. 

The costs associated with your healthcare insurance will depend on several factors. The level of cover, type of underwriting and the inevitable tax all need to be taken into account. 

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Moratorium underwriting

Moratorium underwriting excludes any pre-existing conditions which have needed treatment, typically within the last five years. Any relevant conditions are excluded for the first two years of the group policy and are then reviewed. If your employee hasn’t needed treatment for the same condition within the first two years of the policy it can be covered in the policy. You and your employees won’t be asked to provide any medical information when you take out the policy. This can sometimes mean that claims take longer as your insurer needs to work out what’s covered and what is excluded.

Full medical underwriting

When you take out private health cover with full medical underwriting, you and your employees will be asked to complete a medical questionnaire. This allows your health insurance provider to exclude any pre-existing conditions from the outset. It enables claims to be dealt with quickly and also allows your insurer to accurately assess the level of risk, which makes it cheaper than moratorium underwriting.

Medical history disregarded underwriting

Medical history disregarded underwriting does what it says on the tin. Your insurer won’t ask for any information relating to your employees’ medical history, which means they can claim for any acute condition. Chronic conditions, for example, asthma and diabetes, aren’t covered.

This type of cover is only available on group policies and you’ll generally need to have at least 20 employees to apply. Unsurprisingly, it’s also the most expensive option, but maybe worth considering depending upon the nature of your business and the risks involved. 

Health insurance taxation

When you calculate the cost of employee healthcare insurance you also need to remember to give HMRC its share. Private medical insurance is a taxable benefit in kind that varies according to the type of cover you provide and how it’s paid for. There are also various exclusions. You’ll need to report the benefit using form P11D for HMRC to calculate the income tax and/or National Insurance payable. This will be included in your tax bill and will also apply to your employees. Further information is available from HMRC to allow you to consider your tax liability.

Who are the best providers of employee health insurance?

The best employee healthcare insurance provider for you will depend on your business, the risks associated with your work and your employees’ needs. Many common conditions are covered by the major health insurance providers as standard, however, there is a range of optional extras that may benefit your team. Health insurance for employees can also come with additional support that they can choose to access to improve their health and wellbeing at work and in their personal lives.

Here’s our summary of the major employee health insurance providers and the services they offer.

Bupa

Bupa is one of the most well-known players in the health insurance market, with its own network of hospitals, clinics and care homes. They provide cover for outpatient consultations and hospital charges, both in their own hospitals and any recognised treatment provider in their network. The cover includes treatment for musculoskeletal conditions, mental health conditions and cancer as standard. They also offer additional support including their Anytime Health Line, which allows you to call a qualified nurse 24/7, and the Bupa Digital GP app where you can book appointments and track your symptoms.

The Bupa Boost app works like a game so employees can challenge themselves to reach their health and wellbeing goals and take part in challenges.

Axa

Axa’s employee health insurance offering is divided into two sections, with different plans for larger corporations and small businesses. Their policies cover musculoskeletal conditions, mental health support and cancer care as standard. They also provide you and your employee's access to an online, 24/7 GP service to offer advice and treatment at a time to suit you. There are also provisions for employees to access independent mental health support.

Axa also offers workplace healthcare surveillance to their corporate clients, designed to detect and prevent healthcare issues. You can outsource your occupational health provision to them too.

Their small business health insurance lets you and your employees claim 40% off memberships at Nuffield Health fitness and wellbeing centres.

Vitality

Vitality’s 5 star rated private medical insurance offers different packages based on the size of your business. They’ve also teamed up with some key health and wellbeing businesses, like Nuffield Health and PureGym, to provide discounts and rewards for healthy living. 

Every policy includes cover for : 

  • Primary care treatment
  • Cancer treatment
  • Mental health support. 

Vitality also provides easy access to treatment with their GP app and the Care Hub, which allows them to self refer for physiotherapy or CBT, report a new condition and access treatment information.

Their small business health insurance is designed for companies with up to 249 employees and includes access to the Vitality Programme. This offers rewards for activity, including free coffee and discounts on an Apple Watch.

If you have over a hundred employees, their corporate health insurance includes a range of tools that allow you to create an effective health and wellbeing strategy. Your employees can also access enhanced versions of the Vitality Plan with cashback on healthy food, along with deals on cinema tickets and free coffee.

WPA

WPA are a not for profit insurer offering flexible plans which also include relationship management for larger corporate clients. Their policies are tailored to each client and include a range of support options, including mental health support, health guidance and financial and legal advice. 

Cigna

Cigna offers three different employee health insurance options. These are designed to provide different levels and types of cover based on the size and needs of your business. One policy only covers musculoskeletal conditions and mental health treatment, whilst others are more comprehensive. You also have the option to add dental cover at two different levels.

Your employees can also access mental health support and self-refer for a range of psychological treatments and therapies.

Aviva

Aviva’s healthcare insurance is divided into different levels based on the size of your business. They offer the Solutions package for businesses with up to 250 employees, with the Optimum service for larger businesses. 

Both policies cover: 

  • All acute conditions
  • Musculoskeletal treatment
  • Cancer care
  • Mental health treatment
  • Fees for consultations, tests and hospital stays. 

The Optimum service also offers a range of options for you to add further treatments or to reduce your premium. You can also choose to add a range of different services to support your employees’ well-being.

Freedom

Freedom is a family-run, specialist healthcare insurance provider. They cover all the conditions and treatments you would expect and a few more that you might not. As well as comprehensive cancer and mental health cover they offer a maternity cash benefit and help with pregnancy-related complications. They’ll provide a private ambulance and home nursing if necessary. Their list of approved treatments includes alternative therapies such as osteopathy, acupuncture and homoeopathy. You’ll also be able to claim a cash payment if you’re treated in an NHS hospital.

Freedom policyholders also have the option to allow their employees to add close family members, including resident children up to the age of 29, whilst only paying a premium for the first child. Their support services include telephone access to a GP 24/7.