What is business health insurance and how does it work?

The wellbeing of your employees is essential to their happiness, and therefore commitment, as well as being vital for daily business operations running smoothly. Delays for GP appointments, drawn-out medical care and on-going complaints can lose your company unnecessary time without your valued staff and can prolong their discomfort. Business health insurance is a way for companies to mitigate their employee absence and improve their general wellbeing, not to mention being an attractive perk for current employees and potential applicants.

Find out how this kind of insurance can benefit your company and employees in this business health insurance guide, which covers the following sections:

What is business health insurance?
What is covered by a business health insurance policy?
Do I need business health insurance for my business?
How much cover do I need?
How much does business health insurance cost?
How to find a business health insurance provider
Final thoughts & FAQs.

What is business health insurance?

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.

What is covered by a business health insurance 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.

Are there any typical 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.

What’s the difference between chronic and acute conditions?

Private health insurance can cover acute conditions, but usually excludes treatment for chronic ones. This is an important distinction to make before taking out a policy so that employees know what kind of treatment is available to them. Insurers tend to define a chronic condition as one that has one or more of the following characteristics:

It requires on-going treatment or monitoring through consultations, examinations, tests or check-ups
It requires on-going or long-term control of symptoms or relief for these symptoms
It requires rehabilitation or training for the individual to deal with it in their daily life
It is on-going and continues indefinitely
It is recurrent or is likely to come back
There is no known cure.

Based on the above criteria, some examples of chronic conditions excluded by business health insurance are:

asthma
arthritis
diabetes
heart failure
high blood pressure

Acute conditions, on the other hand, are defined as conditions that can pass if treatment is successful. Examples of acute conditions include:

appendicitis requiring removal of the individual’s appendix
cataracts
hernias
joint replacement surgery.

Do I need business health insurance for my business?

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 by Drewberry Insurance 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.

What are the benefits of private health insurance?

Private health care can offer several advantages for the patient and their employer alike. If you’re unsure whether to invest in business health insurance, consider how the following benefits could help your firm:

employees have faster access to appointments, treatment and surgeries, bypassing NHS waiting lists
out-patient treatment can encourage long-term recovery
cover for treatments not available through the NHS, which may contribute to better recovery
the option for employees to choose the hospital where they receive treatment
access to mental health services without the notoriously long waiting times
increased flexibility for employees over where and when they receive treatment, making it easier to plan their appointments around their work and personal commitments.

Business health insurance is available for start-ups and international corporations alike. Based on the benefits it can offer to staff, the savings companies can make and its popularity among job-seekers, it ought to be a consideration for any company.

How much cover do I need?

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.

How much does business health insurance cost?

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.

How to reduce your business health insurance premiums

There are several ways that businesses can reduce how much they pay for business health insurance. You can also speak directly with your provider to see if they can offer reduced rates. Typical ways to secure lower premiums include:

Opting for a larger excess. Many plans offer excess amounts anywhere from £50 to £500. Insurers typically apply the excess once per member every policy year, no matter how many claims are made during that period. The more you pay in excess for your employees, the lower your monthly premiums tend to be, which may work out more cost-effective for your business.
Some providers offer a reduction for companies that choose to use the NHS for any in-patient or day-patient treatments that are available on the NHS within six weeks. The policy can still cover the employee’s out-patient treatment or any treatments where the NHS wait time would be longer than six weeks.
Reducing your cover. Some providers offer optional add-ons, such as dentist care and opticians services. By choosing the basic or standard level of cover, you can avoid extra charges. Where insurers include these features as standard, it is sometimes possible to request to remove these elements to reduce the price of your premiums.
Paying annually. Most companies can make savings on the price of their policy if they choose to pay in one lump sum per year, rather than by monthly subscription.
Fixing your subscription for two years. Many insurers allow you to set your policy for several years. Although this has no bearing on the price they offer you, you can be sure that it won’t increase for the period for which it is fixed, which might save you money on a policy that would have otherwise increased in price the following year. It also allows you to know exactly how much the company will be investing in each employee for the duration of the fixed period.
Using only hospitals in the list provided by the insurer. Most insurers give a hospital list as part of a health insurance policy, which stipulates the facilities in the UK where you can have your private medical treatment or procedures. Suppliers tend to offer multiple lists from which you can choose, which affect the price of the policy. Opting for a reduced hospital list, or a list featuring cheaper hospitals, can keep your premiums lower.

How to find a business health insurance provider

As more and more people take an interest in their health and wellbeing, companies are following suit. As such, more and more insurance providers are offering business health insurance solutions to meet this demand. When browsing business health insurance providers, it’s essential to establish the features of cover you require as part of your policy, whether that’s mental health care included or cover for dentist treatment.

Once you’ve established the type and extent of cover you need in a policy, it’s time to find a suitable provider. There are three ways you can find an insurer.

Approaching insurers directly

You can choose to conduct your own market research when looking for business health insurance by approaching insurance suppliers directly. Many insurers provide details of the cover they have available on their website, where you can review the features of coverage they provide as well as any perks to their policy, such as health incentive schemes. You can often generate a personalised quote online, or speak to one of their advisers to find an appropriate level of cover.

Bear in mind that it’s not always possible to compare policies on a like-for-like basis when it comes to the price of the premiums. It’s best to conduct a cost-benefit analysis, to take into account the features of cover each policy provides, as a more expensive policy may come with a far broader scope of coverage. Be sure to choose a provider authorised by the Financial Conduct Authority (FCA). This UK regulatory body protects consumers by ensuring that their regulated companies adhere to exacting industry standards.

Going through a broker

Brokers offer the benefit of being industry experts, with years of experience and in-depth knowledge of the insurance market. Their insight can help companies find policies that cater to their specific insurance needs. With access to a greater portion of the market, they can often find more extensive products for more competitive prices which insurers may offer exclusively to brokers.

Despite taking a cut of commission, many companies can find themselves with a cheaper premium when using a broker than had they sought insurance alone. With complex insurance products such as health insurance, brokers can help negotiate better terms backed with industry expertise.

Comparison websites

One way of scoping out the market and beginning your market research is by using a comparison website. These sites can compile the policies on offer from various providers in one place, allowing you to easily access a broad range of insurance solutions. Comparison websites display each product together with the main features of the policy. Usually, they have the option to filter search results according to specific criteria or to order the plans by price or level of cover. These sites are a helpful way to get a snapshot of the market and to seek out policies that tick all the boxes.

Final thoughts & 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.

What is the tax treatment of company health insurance?

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.

Can employees continue their company health insurance after leaving their jobs?

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.

Can I take out business health insurance for my company with 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.

Is business health insurance 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.

Is business health insurance for employees or employers, too?

Many insurers can offer flexible plans according to the requests of the company. These plans can typically provide health insurance to cover just the business owners, only the employees, or everybody at the business. Some suppliers can offer policies with customised eligibility conditions arranged with the company, such as cover for employees who have been at the company for a certain length of time or those with a specified level of seniority.

Can business health insurance be part of an 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.