Small Business Health Insurance UK (2022 Guide To Company Cover)
What is small business health insurance?
Small business 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. Like private medical insurance, you should always review 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 and demonstrate your commitment to their health and well-being.
Benefits of business health insurance for employees:
Access to high-quality treatment at a time that suits themThey’ll be seen quicker and avoid potential delays on NHS waiting listsChoice over treatments and specialistsAccess to medicines that may not be available on the NHSMental health protection and support
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 well-being is important
Health insurance is a sought after employee benefit
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, won’t be covered.
Inpatient treatments – included as standard in most policies
A basic health insurance policy 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 need to be diagnosed through the NHS first.
This isn’t always an issue, but if there is a waiting list for a specific diagnostic test and your team member’s problem is deemed 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 it will give your staff full access to both in and outpatient treatments, alongside private diagnostics and testing, to establish a diagnosis quickly.
Why do 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 to have policies in place. But it’s 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, it can seriously affect the performance of the business. Business health insurance helps get your team better quicker, reducing disruption and keeping the company 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.
Reduce stress
Stress in some form is inevitable today, and your team members will likely 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. The cover is often a business expense and not liable for corporation tax. However, health insurance is a P11D/benefit in kind for the employee receiving it. That means that employers must fill out a P11D form and declare it to HMRC, with employees being taxed accordingly.
The cost of small business health insurance is often quite affordable
How much does small business health insurance cost?
The cost of your company’s medical insurance policy will be impacted by several factors, which we have detailed below. You will have control over some of these, whereas, in 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 to get a ballpark idea of costs. Assuming there is a £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 ten employee company and about £40 per employee-per-month for a 50 employee company. As we say, many variables will affect this price, so please take it as an example and speak to us to get your 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 decrease the average age and 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 health insurance broker, they will be able to advise you on the best fit for your circumstances.
4. The level of cover you choose
You have control over the level of cover you provide your employees. As mentioned earlier in this article, this could range from complete in and outpatient cover to only inpatient cover, with 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 employees are located will affect the cost of your policy for several reasons. Probably the most significant factor is the cost of treatment in private hospitals close to your employees. For example, being treated in London is more expensive than outside of the capital, and therefore small businesses with employees there will pay more for cover.
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. For instance, if you work in construction, there is a higher risk of injury than office workers, and your premium will reflect that.
7. Optional additions you may choose
There are many optional extras you could add to your policy, with some insurers that could be mental health cover, whereas 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 that 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 they are firing on all cylinders is vital.
The main types of company health insurance underwriting
We previously mentioned that underwriting is a significant factor in 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 covered upfront. The insurer will point out when an employee’s historical condition leads to exclusion and will equally be open to discussing and reviewing those exclusions later. 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
Moratorium underwriting is the most common type of 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 means that your staff won’t know if they are covered until they claim. It is the most commonly used, but it is essential to understand its limitations.
Medical History Disregarded (MHD)
Medical History Disregarded does as the name suggests. It disregards your employees’ medical history and covers them for acute conditions, regardless of whether 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 that aren’t covered by business health insurance will differ depending on the chosen policy. However, you will find with most policies; the following will be excluded:
Pre-existing conditions
Pre-existing conditions will be excluded under either Full Medical Underwriting or Moratorium Underwriting. Under Moratorium Underwriting, if the condition doesn’t recur for two years and requires no treatment, it will become covered under the policy.
Chronic Conditions
Chronic conditions are permanently excluded from private health insurance policies and can be defined as long term illnesses that cannot be reversed by treatment. Diabetes is a good example of a chronic condition requiring ongoing management rather than cure.
Emergency Care
Emergency care is excluded from all private medical insurance policies and, if it is needed, should always be via the NHS.
Fertility Treatment
Fertility treatment is usually excluded from private medical insurance covers, as it isn’t deemed an acute illness or condition.
Standard Pregnancy
Most policies will exclude normal 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 factors, such as 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 quotes 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 specialist 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 at least 20 employees to access Medical History Disregarded underwriting. As the name suggests, this type of underwriting disregards 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.
