The business benefits of employee health insurance coverage

Providing your team with private health insurance coverage as part of their employee benefits package gives your employees access to private healthcare when they need it. They'll receive the same expert care they'd get with the NHS but with additional benefits such as a private room, access to cutting-edge treatments not currently available on the NHS, 24/7 GP services and various perks and discounts.

However, while the employee benefits of private health insurance are clear, your business can also benefit. Here are a few advantages of providing business health insurance coverage to your team.

Reduced sickness absence

Staff sickness absences can impact your business in various ways. You may lose valuable expertise due to a staff member's illness, affecting your customers' experience. Absences also put pressure on the rest of your team, who must cover the additional workload. Alternatively, there may be a financial cost in bringing in temporary help and training them as necessary.

Private health insurance can help in reducing absenteeism in various ways. All health insurance coverage includes access to virtual GP services that allow staff to seek medical advice 24/7. If your health insurance policy includes outpatient cover, they can also see a consultant and get diagnostic tests and treatment before a health issue becomes more serious. In some cases, this could help them to avoid an absence altogether.

If an illness does result in time off work, staff can access private treatment quickly and return to work sooner. NHS waiting lists are at an all-time high, which often means a lengthy wait for non-urgent treatment.

Some business health insurance coverage includes employee health screenings that can help them identify and prevent potential health issues altogether.

A more highly engaged workforce

Engaged employees are good for business. They're more productive, resulting in high-quality work, increased customer satisfaction and more profit. Creating a culture where your team members look after each other can even result in fewer workplace accidents, which could lower your employers' liability insurance premiums.

Business health insurance can help to increase employee engagement, as it demonstrates your willingness to look after your staff. It's particularly effective when you use your health insurance to create workplace well-being initiatives. Many business health insurance policies include access to health assessments and support, which allow employees to set well-being goals and work towards them. While individual results are confidential, your insurance company will provide anonymised data, allowing you to identify areas of concern and create appropriate wellness initiatives. For example, if your work is typically sedentary and your staff show signs of related health issues, you could set up activity sessions or lunchtime walking groups.

These programs can also improve employee engagement by helping them to forge closer workplace relationships.

Making you an employer of choice

Business health insurance is a valuable benefit in itself. As mentioned, it can also help create a positive workplace culture that values staff well-being. Happy employees are more likely to stay with your business rather than look for new opportunities elsewhere, making business health insurance good for employee retention. The obvious benefit includes saving costs on recruitment to replace existing employees.

Private health insurance can also make you an employer of choice. Creating a brand that values and supports its employees makes your company more attractive to potential employees. A high-quality employee benefits package that includes private health insurance means job seekers are more likely to choose you over your competition, allowing you to recruit top talent. A positive workplace culture can also turn your current employees into ambassadors who recommend you to their peers.

Tax savings

When you take out a business health insurance policy, your company pays the premiums unless you create a voluntary health insurance scheme where employees pay the premiums if they decide to join. Private health insurance premiums are an allowable business expense for tax purposes. You can offset the total cost of your premiums against corporation tax, thereby reducing your overall tax bill.

HMRC treats private health insurance as a taxable benefit in kind, so you'll need to pay Class 1A employers' National Insurance contributions on the cost of the benefit. Your employees will also pay additional income tax on the cost of their premiums. Whilst this doesn't directly impact your business, it is an important consideration. Communicating both the benefits of private health insurance and the financial impact encourages your employees to use their health insurance and take appropriate tax advice if necessary.

Happy employees in business meeting

How does business health insurance work?

When you invest in business health insurance, you buy a group health insurance policy that provides coverage for your whole workforce. Group health insurance is available to businesses of all sizes. Small business health insurance is typically available to companies with at least two employees and up to 249 workers. Corporate health insurance coverage is designed to meet the needs of larger businesses, usually with over 250 employees.

It's a good idea to shop around and compare health insurance quotes to find the best policy for your needs. Speaking to a specialist health insurance broker provides tailored advice and support in comparing quotes and coverage.

A private health insurance policy provides core coverage as standard, and you can add optional extras for a more comprehensive policy. When you're happy that your group health insurance policy meets your needs, your company pays the premiums for immediate coverage.

You'll need to do some admin work to add employees to the policy. The amount of work involved depends on the type of policy underwriting your health insurance has. You can add conditions to policy membership as long as they aren't discriminatory. For example, you might decide only to include employees who have passed their probationary period.

Factors to consider when considering offering health insurance

The right health insurance coverage for your business depends on various factors. Your business profile and needs are unique to you and influence the types of coverage you need and how much your health insurance premiums will cost. Individual factors will impact different aspects of your health insurance coverage, but considering them in combination will help you to decide whether group health insurance is cost-effective.

As with any business decision, a cost-benefit analysis is essential. When you offer health insurance to your team, your costs will increase, but you'll also reap the benefits in other ways, not least in corporation tax savings. Will the tax savings and potential for increased growth leave you better off overall?

Here are a few common factors impacting your business health insurance choices.

Financial benefits for employees

Private health insurance is a highly valued employee benefit for many reasons. While the central purpose of business health insurance coverage is to provide your team with access to high-quality private healthcare, it also comes with a range of other benefits and services.

The cost of living crisis has put many workers under increased financial strain. At the same time, UK businesses are struggling with increased inflation, higher energy costs and reduced consumer demand. You may wonder whether providing private health insurance as one of your employee benefits is worth the additional cost.

From an employee perspective, private health insurance can form part of a more comprehensive package of benefits that helps their money go further. Every health insurance policy comes with additional perks and discounts that can help employees save money on things like holidays, cinema tickets and Amazon Prime membership. Vitality's rewards program lets you earn access to a smoking cessation service, which could result in long-term savings and better health.

Private health insurance can bring tangible rewards and let you support your employees. It's beneficial if you haven't been able to increase salaries as much as you'd like.

Can you outsource services?

Business health insurance can come with additional services depending on your business size and the type of group health insurance policy you choose. Many services provide other employee benefits, such as mental health services, over and above the treatment available as part of your chosen policy.

These services could include an employee assistance program which provides advice and support for mental health issues and can also signpost members towards legal and financial advice. Some insurance companies also offer services aimed at families, such as helplines providing advice on young people's physical and emotional well-being. These can provide valuable support even if your business health insurance policy doesn't cover employees' family members.

Suppose sickness absence related to seasonal flu is a particular concern for your business. In that case, you can pay to have a nurse come to your office to provide flu vaccinations or issue vouchers to pay for private vaccinations elsewhere.

Some insurers offer outsourced occupational health services. Smaller businesses can often handle occupational health matters in-house, for example, by training your office manager to deal with occupational health and HR. However, if this has become impractical as your workforce grows, a health insurance occupational health service may be a cost-effective alternative to recruiting an in-house team.

Do you work in a high-stress profession?

Some professions naturally involve high levels of stress. You may need to work to tight deadlines or make decisions that can significantly impact you or your clients. You must identify potential sources of stress in your workplace and take appropriate measures to support your team. Supporting your employees' mental health can help them manage both personal and professional stress and avoid problems in the long term.

You may work in a high-demand profession where stressors are constantly present owing to the nature of your work, for example, due to long working hours or a need to make decisions under pressure. Equally, there may be factors related to your working environment. If you've moved to a working-from-home model since the pandemic, your employees may feel more isolated.

Private health insurance can help you support your employees' mental well-being by providing mental health treatment such as counselling or CBT. Your group health insurance policy may also include access to mental health helplines as standard. Alternatively, you can add an employee assistance program.

Many insurers also provide online resources to help individuals identify and manage their stress levels or include mental health benefits, such as mindfulness and meditation apps, as part of their rewards program.

What health risks does your work involve?

Most working environments carry some risk of stress, but if your company's risk profile also includes physical hazards, group health insurance can be a valuable source of support. A private health insurance policy covers treatment for acute conditions that can be resolved with suitable treatment. While private health insurance doesn't cover emergencies, it can provide quick access to follow-up care. For example, if an employee sustains a fracture, they'll likely go to an NHS A&E department for emergency care. However, their health insurance can fund private treatment, such as follow-up surgery or physiotherapy, depending on your policy coverage.

Your day-to-day work may expose employees to long-term risks, where health issues develop over time. Health insurance can reduce the risk and provide appropriate care if your staff develop work-related health issues.

If your work involves repetitive tasks, you've likely already developed a policy to minimise the impact on employees, for example, by using task rotation and ensuring workers take adequate breaks. Your business health insurance can provide health assessments which help you and your staff identify early warning signs of potential health issues and receive preventative care when necessary. Some health insurance can also provide support to help you design health initiatives that work alongside your health and safety training. These can make employees more aware of the risks and give them self-care tools.

Your business goals

Your business health insurance can support your business growth goals by helping you retain a highly engaged and productive workforce, recruit new talent and reduce sickness absences.

Any business decision results from a combination of factors, including your finances, company values and goals. Your business values and the impact of your decisions on your business brand and reputation can be a powerful guiding force. If supporting good health and employee well-being is a central part of your brand, business health insurance can be a worthwhile investment.

Two colleagues are sitting at the meeting room and discussing charts and statistics.

Choosing the right policy

Choosing the best health insurance policy for your business involves finding the right insurance company and health insurance that meets your needs and budget. Each health insurance company has a different focus, with some prioritising health and well-being while others offer more family-friendly health insurance.

Your business needs and goals will impact the features you need your health insurance policy to have. Here's a quick summary of the key considerations.

What coverage do you need?

Health insurance policies include core coverage as standard. This typically provides inpatient treatment, cancer coverage and basic mental health treatment. You can add optional extras to tailor your coverage and give you a more comprehensive policy.

Optional extras include elements such as outpatient cover and alternative therapies such as acupuncture, dental and optical cover. You can also increase the number of treatment sessions or financial limits to enhance your core coverage. Some health insurance policies include packages offering different levels of coverage, whilst you can tailor others more flexibly.

We always recommend adding some outpatient coverage to your health insurance policy if you can. Outpatient cover pays for private consultant appointments and diagnostic tests, which can give your employees a quick diagnosis and treatment and significantly reduce their time away from work.

Hospital lists

Each health insurance policy covers treatment at various hospitals and treatment centres. Your employee can choose their preferred hospital if your policy covers it. They could decide to have treatment at a hospital that specialises in the care they need, choose somewhere close to home or opt for a private hospital with hotel-style facilities.

A basic health insurance policy offers access to your chosen insurance company's standard hospital list. This list may include your insurer's network of private hospitals, while other insurance companies can access other private providers' treatment centres. Some providers also cover treatment in a private room within an NHS hospital.

Health insurers typically also have enhanced lists, which include hospitals with higher treatment costs. These generally are in major cities, where the costs of providing private treatment must take higher staffing and facilities costs into account. Treatment costs in Central London are usually higher than anywhere else. Most insurers offer an extended hospital list covering most big cities and another, including London.

A key consideration for you is which list offers a variety of treatment options in your area and whether you'll need to pay higher premiums to ensure your staff can receive treatment close to home.

Additional services

Many business health insurance policies include access to additional services such as an employee assistance program, occupational health services and workplace vaccinations. Your insurer can add most of these to your health insurance policy as you need them.

It's worth considering whether the service your insurance company offers provides the right level of support for your employees. For example, if you work in a stressful environment, you may want to provide health insurance with a high level of mental health support. It's always wise to look at the small print to assess what any additional services offer and whether they represent a cost-effective solution for your business before investing.

Member benefits

Health insurance companies differ in how they provide member benefits and discounts. Some discounts are available to anyone covered by your company's health insurance, whilst others are earned.

If improving your team's overall health is a key priority for your business, a health insurance rewards program that encourages your team to hit their well-being goals will likely be your preferred option. Vitality's entire health insurance offering centres around rewarding good health, including giving discounts to customers who stay healthy. They also offer perks, including discounts on gym memberships, spa days and holidays based on your performance against your health goals.

How much does business health insurance cost?

Ultimately, whether health insurance is a worthwhile investment for your business may come down to the cost. It's a good idea to get several health insurance quotes before you decide. Your health insurance premiums are based on your insurance company's assessment of the risk associated with providing health insurance coverage to your business and the likelihood that you'll claim. Each insurance company has a different approach to risk, meaning quotes can vary widely.

Your health insurance cost is based on policy factors, which you can often adjust, and factors related to your business, which you usually can't change. There are also ways to save money on your health insurance premiums, for example, by adjusting your excess.

Here are the most common factors your insurance provider will consider when providing a health insurance quote.

Your location

Your business' location is a significant factor in the cost of your health insurance policy because your insurers will assume that you want your employees to access healthcare close to their home or workplace. As we've mentioned, private healthcare typically costs more in larger cities where rents, utility prices and staffing costs are higher.

Your health insurance provider also looks at past claims in your area to assess the likelihood that a policyholder will claim in the future. This is why insurance companies can vary in their risk assessments; each will have a different claims history.

However, some insurers don't take your postcode into account when they quote. If you do business in an area where premiums are traditionally higher, getting a non-postcode-dependent quote could reduce your business health insurance costs.

How many employees you want to cover

A group health insurance policy typically costs less per head than a personal health insurance policy because it allows your health insurer to spread the risk over more people. While other factors apply, the more people covered, the lower the cost per person will likely be.

Most insurers also offer business health insurance at different levels depending on the number of employees your business has. Small business health insurance is typically available to companies with up to 249 employees, with corporate health insurance available to larger firms with over 250 employees.

Corporate health insurance typically costs less per employee simply because your policy covers a larger number of people. However, you can buy small business health insurance if you have at least two employees, and premiums will still be lower per head than a personal health insurance policy. Corporate policies typically also offer more services designed to reflect the demands of managing a larger workforce.

Your employees' average age

You'll generally pay more for your health insurance the older you get because you're more likely to make a claim. This also applies to business health insurance. However, your insurer will look at the average age of your employees. If you have many younger workers with fewer older managers and supervisors, your premiums will be lower than if your team comprises middle-aged professionals and employees nearing retirement.

Your employees' ages can also influence the health insurance policy and provider you choose. Most insurers place age limits on new policyholders, ranging between 60 and 75 years old. If you want to invest in health insurance but already have employees over 60, this can affect which policies are available.

Your industry

If you work in a high-risk injury carrying out dangerous tasks, your health insurance premiums will be higher than those of a lower-risk industry. Physically demanding or hazardous jobs such as construction or manufacturing carry a higher injury risk than sedentary, office-based roles. Of course, every industry has potential hazards. Your employees might be more likely to sustain injury in an accident if they work at height or with machinery. However, office workers may experience long-term health issues if they spend all day sitting at a desk.

Insurers will consider individual roles within your company when providing a medical insurance quote. For example, your premiums will be higher if most of your employees carry out potentially hazardous work but are supported by a handful of administrative staff who work in an office environment. The reverse is also true. Whilst your industry impacts your premiums, the overall profile of your workforce is a key consideration.

The level of cover you choose

You probably won't be surprised to learn that a comprehensive policy costs more than a basic one. As we've mentioned, medical insurance includes core coverage as standard, and you can choose to enhance your coverage by adding optional extras. You might be tempted to save money by sticking with core coverage. However, this can mean you lose some of the benefits that private medical insurance has to offer. We think it's worth paying more to add outpatient cover that allows your employees to access a private diagnosis rather than spending time on an NHS waiting list.

Adding some optional extras to your policy can offer an excellent return on your investment. There are also ways to reduce your premium to work within your budget, such as increasing your policy excess or opting for a guided consultant list rather than unlimited consultant choice.

Whether you extend coverage to employees' family members

If you pride yourself on being a family-friendly employer and have many employees with children, consider allowing them to add family members to their health insurance policy. It will cost more, but can demonstrate that you care about looking after your employees and their families, which will positively impact your brand reputation.

Many insurers offer health insurance with family-friendly features. For example, some only charge an additional premium for the first child but cover any subsequent children free of charge. Some also pay a baby bonus when an employee gives birth or adopts a child. Even if you decide not to cover employees' family members under the policy, it's worth looking for an insurer that provides support services to families, such as online resources or helplines for advice on children's health and well-being.

You may also consider offering other health insurance options, such as adding a cash plan. Cash plans pay cashback when your employees or their children have routine health appointments such as dental check-ups. Alternatively, you can make family coverage a voluntary scheme where employees pay the premiums themselves if they want to include their family members.

Your chosen policy underwriting

The underwriting that your health insurance policy has affects the premium cost and the overall claims experience. The two most common underwriting types, moratorium underwriting and full medical underwriting exclude pre-existing medical conditions for the first two years after an employee joins the policy. A pre-existing condition is defined as any illness which an employee sought medical advice or treatment for in the five years before they joined the policy. If they remain symptom-free during the initial two-year moratorium period, the condition can be covered after that.

Moratorium underwriting

When your policy has moratorium underwriting, your employees won't have to supply any information about their medical history when they join the policy, which could mean less admin for you.

However, when they need treatment, their claim could take longer as your insurer will check their medical history to ensure the treatment they need isn't excluded. Moratorium underwriting premiums are more expensive. There's also a higher risk of rejected claims, which could increase your premiums in the future.

Full medical underwriting

With full medical underwriting, new employees need to provide details of their medical history when they join the policy. Your team will likely need to ensure that they complete the paperwork, which can mean more admin upfront. However, full medical underwriting costs less as your insurers can assess the risk more accurately.

Your employees also benefit from greater certainty about what their medical insurance covers and a faster claims process when they need treatment.

Medical history disregarded underwriting

Medical history disregarded underwriting is typically only available to companies with at least twenty employees. It does exactly what it says on the tin; there are no exclusions for pre-existing conditions. Unsurprisingly, this is the most expensive type of underwriting. However, it's worth considering if you have key employees with complex health needs and want to ensure they can get back to work quickly.

It can also help you offer your team complete privacy. If an employee has a pre-existing condition, they may have to wait for NHS care rather than receiving private treatment via their health insurance. They'll likely have to disclose their medical history to your HR or occupational health teams to explain why their return to work is delayed.

Get in touch

Health insurance can be a worthwhile investment for your business, offering a range of benefits to you and your staff. Finding the right policy for your needs and budget is essential. However, obtaining and comparing health insurance quotes can be a complex, time-consuming process. Speaking to a regulated broker for tailored advice can help you find the right health insurance coverage for your needs.

At Globacare, our experienced specialist brokers provide a personal service to help you find the best health insurance for your business. Get in touch with us for a comparison quote.

Tobias Britton

Tobias Britton

With over 15 years of experience, Tobias leads the expert team at Globacare. A CII IF7 qualified adviser himself, with a Diploma of Insurance to his name too, he's our resident expert in health, life, income and business protection insurance.

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