What is company health insurance?
Company health insurance gives your employees access to private healthcare in the UK should they ever need it. By avoiding potential delays on NHS waiting lists and having more treatment options, they’ll be better and back to work as soon as possible. Remember, much the same as private medical insurance, you should always compare your options at medical insurance renewal time.
Do we need small business health insurance?
Health insurance is one of the most sought after paid benefits from prospective employees. Providing medical insurance to your team will protect them should the worst happen, but also demonstrates your commitment to their health and wellbeing.
Benefits of business health insurance for employees:
- Access to high quality treatment at a time that suits them
- They’ll be seen quicker and avoid potential delays on NHS waiting lists
- Choice over treatments and specialists
- Access to medicines which may not be available on the NHS
- Mental health protection and help managing stress
Benefits of business health insurance for employers:
- Reduce absenteeism, get unwell employees back to work sooner
- Stand out in the employment market by providing a sought after benefit
- Lessen employee turnover and improve staff retention
- Look after your staff and create a culture where every employee’s wellbeing is important
What does small business health insurance cover?
Like private medical insurance, business health insurance will only cover acute conditions, meaning those which can be cured with medical treatment. Chronic conditions, which aren’t curable, or conditions for which you’ve recently received treatment for, won’t be covered.
Inpatient treatments - included as standard in most policies
Basic health insurance will typically cover the treatment of acute conditions where a hospital bed and overnight stay is required -commonly called inpatient treatment. While this gives your employees access to potentially faster treatments, they would still need to be diagnosed through the NHS first.
This isn’t always an issue, but if there is a waiting list for a certain diagnostic test and your team member’s problem is deemed as non-urgent, they could find themselves waiting for diagnosis and therefore have their treatment delayed.
Outpatient diagnosis and treatment
Outpatient diagnosis and treatment covers the cost of initial investigations and tests into acute conditions and treatments where an overnight hospital stay isn’t required. The level of outpatient cover you provide your staff is up to you, but as you would expect, the more you provide, the higher the premiums will be. You could choose to include outpatient cover in full; limit it to a cash value per year (typically £1000) or exclude it entirely to keep the cost of the policy down.
Comprehensive cover will of course vary from provider to provider, but essentially it will give your staff full access to both in and outpatient treatments, alongside private diagnostics and testing, to establish a diagnosis quickly.
Why small businesses benefit most from private medical insurance
Most large corporations provide health insurance to their employees and it has almost become standard practice for them have policies in place. But it’s actually smaller businesses that can benefit most from company medical insurance. These are the top benefits of health insurance to small businesses:
Reduce staff absenteeism
If you have a small workforce and one of your key team members is signed off for even a short period of time, it can seriously affect the performance of the business. Business health insurance helps get your team better quicker, reducing disruption and keeping the business on track.
Attract new employees
While it may be common for large employers to offer private medical insurance to staff, it isn’t widespread amongst smaller businesses. That means there is an opportunity to stand out from the crowd, demonstrate your commitment to your people and hopefully attract the brightest talent.
Stress in some form is inevitable today, and it’s likely members of your team will suffer from stress or other mental health issues at some point. Many small business health insurance policies include mental health support as standard and others give you the ability to add it as an optional extra.
How is small business health insurance taxed?
Small business health insurance is paid for by the company with pre-tax profit. Most often, the cover is a business expense and not liable for corporation tax. Health insurance is, however, a P11D/benefit in kind for the employee receiving it. That means that the employers are required to fill out a P11D form and declare it to HMRC, with employees then being taxed accordingly.
How much does small business health insurance cost?
The cost of your company’s medical insurance policy will be impacted by a number of factors which we have detailed below. Some of these you will have control over, whereas others you won’t.
Cost of health insurance for a small business
The cost of cover will vary depending on a range of factors, but we want to give you an example so you can get a ballpark idea of costs. Assuming there is £1,500 outpatient cap, a £100 excess on the policy and a mid-tier hospital list, you could expect to pay around £60 per employee-per-month for a 10 employee company and around £40 per employee-per-month for a 50 employee company. As we say, there are many variables which will affect this price so please take it as just an example and speak to us to get your own quotes.
1. The number of people you want to cover
You can choose the number of people within your business that you would like to cover with the health insurance policy. It could just be yourself and another director, or your entire team. Either way, you have control over who has this benefit.
2. The average age of the group
The average age of your employees will directly impact the cost of the policy. While it may be tempting not to include junior team members on the policy, adding them will bring the average age down and therefore positively impact the premium you pay.
3. The type of underwriting chosen
The three most common types of insurance underwriting for small businesses will consider the risk of your application in different ways. The most common is Moratorium, then Full Medical Underwriting and finally Medical History Disregarded, when you speak to your myTribe account manager, he or she will make sure the best type is chosen for your requirements.
4. The level of cover you choose
You have control over the level of cover you provide your employees. As mentioned earlier on in this article, this could range from full in and outpatient cover to only inpatient cover, with of course there being variations in between. To limit the cost of the policy you could choose to put in place a cash maximum for outpatient services, or add an excess to the policy.
5. Your company’s location/s
Where your offices are based will impact the cost of covering your employees for a number of reasons.
6. Your industry and employee occupation
As you would expect, the industry you and your employees work in and their occupations will affect the cost of your small business health insurance. If you work in construction for instance, there is a higher risk of injury in comparison to office workers and the premium will reflect that.
7. Optional additions you may choose
There are a number of optional extras you could choose to add to your policy. With some insurers that could be mental health cover, whereas with others that may be included as standard.
Private medical insurance for a business owner
For small business owners, directors and single employees, you can take out a policy which is paid for through the business and treated as a P11D benefit. Often, the company director is an invaluable asset within the small business and therefore ensuring that he or she is firing on all cylinders is vital.
The main types of company health insurance underwriting
We previously mentioned that underwriting is a significant factor in the price of your company’s health insurance policy, in this section, we outline the three main types of underwriting and their associated benefits and disadvantages.
Full Medical Underwriting (FMD)
Full medical underwriting is often the cheapest option for companies looking to arrange health insurance. It involves each of your employees completing a detailed medical questionnaire and in some cases, the insurer writing to your employees GPs to gain an accurate understanding of their medical history. The great thing about full medical underwriting is that everyone knows exactly what is or isn’t going to be covered up front. The insurer will clearly point out when an employee’s historical condition leads to an exclusion and will equally be open to discuss and review those exclusions at a later date. The drawback of full medical underwriting is that it is extremely time consuming and unless you have less than five employees, it’s a route we would tend to advise against.
Moratorium underwriting is the most common type of both company and private medical insurance underwriting. The reason for that is the insurer effectively defers the underwriting process until such time a claim is made. Moratorium underwriting will cover your employees on the basis that any pre-existing conditions which have been present in the past five years will be automatically excluded. In the event of a claim, the insurer will look at your employees’ medical history to determine whether or not they will pay the claim. This approach is often far more attractive to small businesses, as the amount of paperwork and the time it takes to get a policy in place is significantly reduced. However, it does mean that your staff won’t know if they are covered until such time as they make a claim. As we mentioned, it is the most commonly used but it is important to understand its limitations.
Medical History Disregarded (MHD)
Medical History Disregarded does as the name suggests and disregards your employees’ medical history and covers them for acute conditions, regardless if they are pre-existing. Typically, only companies with 20 or more people on the scheme can access this type of underwriting and as you would expect, the cost of these policies tends to be higher due to the increased risk.
What’s not covered by business health insurance
The conditions which are and aren’t covered by business health insurance will differ depending on the policy chosen, however, you will find with most policies, the following will be excluded:
Whether under either Full Medical Underwriting or Moratorium Underwriting, pre-existing conditions will be excluded. Under Moratorium Underwriting, if the condition doesn’t recur for 2 years and requires no treatment at that time, it will then become covered under the policy.
Chronic conditions are always excluded from private health insurance policies and can be defined as long term illnesses which cannot be reversed by treatment. Diabetes is a good example of a chronic condition, which will require management rather than cure.
Emergency care is excluded from all private medical insurance policies and if it is needed should always be via the NHS.
Fertility treatment is usually excluded from private medical insurance covers, as it isn’t deemed to be an acute illness or condition.
Most policies will exclude standard pregnancy without complications and only some policies will include more complicated pregnancies.
Cosmetic and plastic surgeries
Cosmetic and plastic surgery which isn’t medically necessary isn’t usually included on business health insurance policies.
If you're looking for private medical insurance be sure to read our guide "best private health insurance uk" where we cover the top providers and their policies.
Frequently asked questions about small business health insurance
How much is health insurance for a small business?
The cost of health insurance for small businesses can vary significantly depending on a variety of factors, such the number, age and location of your employees.
A basic policy with a high excess could cost as little as £25 per employee per month, a mid-range policy would be around £60, with comprehensive costing up to above £85 per employee per month.
Is health insurance a business expense?
Yes, health insurance paid for by a company is a business expense. It is, therefore, eligible for Corporation Tax Relief, however, the company will have to pay Employers National Insurance contributions.
Business health insurance is classed as a P11d Benefit in Kind, so the employee will pay personal tax on the value of the benefit they have received.
How do I get health insurance for my business?
There are a few ways you can get business health insurance:
You can speak to the insurers yourself and obtain quotations directly
To get a fair comparison you will need to approach each insurer independently and obtain quotations to make a decision yourself. As the insurers cannot offer independent advice, you will need to consider all of the information they provide and decide which you feel best suits your business.
You can speak to a business health insurance specialist
A business health insurance specialists will know about all of the available products from the leading providers and will be able to source pricing on your behalf and provide independent advice on which policy would suit your business.
How many employees do we need to qualify for group health insurance?
You will usually need three employees to set up a group scheme; anything less than that will usually be a similar price to setting individual policies.
How many employees do we need to get a Medical History Disregarded (MHD) policy?
You will need to have at least 20 employees to access Medical History Disregarded underwriting. As the name suggests, this type of underwriting disregards all of the members’ medical histories and gives them full cover for both new and pre-existing acute conditions. As you might expect, this is the most expensive type of health insurance underwriting.