Business health insurance, sometimes known as corporate health insurance, is a way for companies to offer their employees private healthcare. It is a form of private medical insurance taken out by companies for their employees, providing them with quicker access to appointments, diagnosis and treatment, as well as the option to stay in a private hospital.
For the company, it’s a way to reduce the short-term absence of their staff members, cutting the cost of sick days by giving them more efficient access to medical treatment, leading to faster recovery times. It’s also an attractive benefit for employees, which can contribute to improved staff retention and more applicants for new roles.
Types of Policy
Depending on the type of policy the business takes out, employees can access either entirely free private healthcare or private medical care for a heavily discounted price. Different providers offer varying levels of protection, but, typically, a policy can cover:
- physiotherapy
- chiropractic treatments
- scans and tests
- 24/7 access to GPs online or over the phone
- in-person consultations
- exclusive drugs which aren’t available on the NHS
- alternative therapies, such as acupuncture
- cover for surgery
- radiotherapy and chemotherapy, if cancer is included
- other hospital procedures
- hospital stays
- access to mental health care, including an initial assessment as well as counselling, psychiatric treatment and cognitive behavioural therapy.
Access to private facilities means that your employees can enjoy a range of features that are not typically available through the NHS. This may include:
- private rooms
- flexible visiting hours for friends, family and colleagues
- shorter waiting times for procedures, surgeries and treatments
- flexible appointment times
- a choice of consultants and specialists
- the option to choose the facility where they receive treatment.
In addition to the standard features of a policy, many insurers can offer optional add-ons for an extra price. These can include:
- additional cover for approved treatment abroad
- cover for the routine management of serious or chronic conditions, such as asthma or diabetes
- out-patient treatment
- travel insurance for access to health care when your employees travel for work or pleasure
- access to dentists and opticians.
Common Exclusions
Cover varies between providers, and what may be an exclusion on one policy may be available as an optional add-on from another insurer. That said, most policy plans come with general limitations, typically excluding:
- routine pregnancy and childbirth
- out-patient drugs
- cosmetic treatment which is not medically required
- treatment an employee needs a result of training for a sport for which they are paid or sponsored
- emergency care
- fertility treatment
- treatment or rehabilitation for alcoholism or substance abuse
- treatment of medical conditions that employees had before they joined the company
- chronic conditions.
Health Risks to Businesses
Business health insurance is not a legal requirement. It’s simply an option for companies to offer their staff an attractive employee benefit while profiting themselves from a healthier workforce taking fewer sick days. Indeed, a 2019 survey showed that company medical insurance was the second most sought-after benefit from employees, suggesting that business health insurance could contribute to more applications and increased staff retention.
Similarly, business health insurance can have drastic economic benefits for companies. Staff sickness can cost companies a considerable amount every year. The financial pressure this puts on businesses can filter down to staff, causing them to return to work before they have fully recovered. This phenomenon is known as presenteeism and has a significant negative economic impact on companies. By spreading illness to other colleagues, this prompts others to take sick days and reduces overall productivity. In 2017, presenteeism and the accumulation of sick days were reported to cost British firms over £77 billion annually in lost productivity.
Cost and Tax Treatment
The price you pay for your business health insurance depends on a multitude of factors relating to the business itself, and the individuals you wish to insure. Typical considerations that insurers will use to assess your risk and determine a rate for your premiums are:
- the size of the group you want to insure. Although there is an individual cost per employee, the larger the group, the greater the discount tends to be, which can lower the cost per employee
- the age of employees. Typically, younger employees are cheaper to insure than older people
- the occupation of your employees. Some jobs carrier a higher risk of illness or injury, which can boost the price of your premiums
- the location of the company. The fees and costs for treatment, appointments and procedures vary between private practices and hospitals and are typically more expensive in certain areas, such as central London.
Some insurers may ask for further information on the employees that have insurance under the policy, such as their smoker status and details of their medical history and current state of health.
Tax Treatment
Typically, HMRC considers private health insurance for your staff as a ‘benefit-in-kind’ for your employees, meaning they would have to pay tax on the benefit amount. Usually, employers must declare this benefit-in-kind to the relevant tax authorities by completing a P11D expenses and benefits form for each employee who has received the health insurance benefit on top of their salary, so that HMRC can tax employees accordingly.
HMRC typically considers company health insurance a business expense for companies who take out a policy. This means the premiums usually qualify for corporation tax relief, being tax-deductible. For tax advice, always seek professional guidance from a qualified tax adviser or HMRC.
Extent of Coverage Required
As this is an optional form of insurance, there’s no guideline to how much cover your business needs. Of course, the more comprehensive cover you choose, the more benefits to your staff, which could mean better long-term savings for your company if it could contribute to fewer sick days and a happier team.
When determining the level of cover you require, consider the needs of your employees. Companies in specific industries may have a greater need for certain features of cover. Access to opticians, for example, might be especially relevant to your firm if your staff spend extended periods looking at screens.
Another element to consider is opting for a policy that includes mental health care. Around 300,000 employees quit work every year due to long-term mental health struggles, and 1 in 3 SME staff members reported that they’d taken sick leave due to a mental health condition or stress, according to a 2019 study. Accessing mental health support, care, and treatment is notoriously difficult, typically consisting of an arduous referral process and extensive waiting periods. Taking out a policy with mental health care included can drastically increase the wellbeing of your employees and could be a worthwhile investment for the business, too, to retain your employees and keep them as happy and healthy as possible.
Final Thoughts and FAQs
As life becomes faster-paced, jobs become more stressful, and society becomes more aware of the effects of stress on general wellbeing, investing in your health has become more critical than ever. Private health insurance can offer faster access to medical advice and a broader scope of treatments. By purchasing a health insurance plan for your business, you can offer your staff a highly-sought-after employee benefit. It can also help you attract and retain talent, reducing staff turnover.
Not only can business health insurance improve your employees’ wellbeing and boost company morale, but it’s also a worthy financial investment. Companies can minimise their financial losses from the economic impacts of sick days and reduced productivity owing to poor health. The success of any company relies on its employees. Consider taking out a business health insurance policy to invest in the health of your greatest assets, boost profits and foster a happier, healthier working environment. Still have questions on business health insurance? Find answers to common queries, below.
- Employee Health Cover Post Leaving Role? – When a person leaves their company, the company will cease to pay for the employee to have medical health insurance. However, many insurers provide the option for these individuals to move onto a personal plan, which they would pay for themselves, making sure that there are no gaps in their cover if they are seeking to continue having private health care.
- Only Two Employees? – Business health insurance is available for almost all business types and size across all sectors. Typically, most insurers offer business health insurance to small companies and multinationals alike, starting with cover for businesses with as few as two employees. Indeed, many suppliers have tailored policies to cater specifically to the needs of small businesses.
- Cheaper Than Individual Private Health Insurance? – Typically, yes. Many businesses can benefit from group pricing plans that can save them considerable money compared with taking out separate policies for each individual. However, it’s essential to check the pricing with each supplier to work out the most cost-effective solution for your company.
- Include as Part of Employee Benefits Package? – Company health insurance is one of the most popular employee benefits and is often the first company benefit that a business introduces. Many insurers can build this policy into an employee benefits package with other employee benefits, such as group life insurance, group critical illness cover and group income protection.
