How Much Does Business Health Insurance Cost Per Employee?

What Affects The Cost Of UK Business Health Insurance?

Business Medical Insurance works much the same as personal Private Medical Insurance, except the policy is paid for by your company rather than the individual themselves.

Just like with the cost of Private Medical Insurance, there are many factors that can affect how much you pay. We look at these below.

Business Factors Affecting Cost

Your business and employee demographic will play a part in determining how much your Business Health Insurance policy costs. Factors insurers take into account include:

Employees’ Ages

Older employees cost more to insure than younger ones (as they’re more likely to make a claim in later years). For example, you might expect to pay around £40 per month for a worker in their 30s, while an employee aged 60+ could cost more than £120 per month.

Industry

Business Health Insurance premiums depend partly on the occupational risk your workers face. Insurers take your industry into account when calculating premiums.

Location

The cost of business private healthcare depends on where you are in the UK. For example, Central London hospitals tend to be the most expensive.

Group Size

The number of employees you want to add to a scheme will have a direct impact on how much you pay.

Policy Factors Affecting Cost

There will also be certain policy factors that will impact how much you pay. These include:

Health Insurance Excess

An excess works similarly to that on a car insurance policy. It’s the amount employees pay upfront towards their medical treatment before the insurer pays the rest.

Adding an excess cuts premiums by reducing the overall bill for medical care the insurer receives. The higher the excess, the lower your premiums. However, employers should always consider affordability for their staff when choosing an excess.

Adding Outpatient Cover

All medical treatment, private or NHS, is split into:

• Inpatient / day-patient care
  Inpatient treatment requires a hospital bed for at least one night, whereas day-patient treatment only needs a bed for the day. All Health Insurance policies cover this as standard
• Outpatient cover
  Outpatient cover includes all treatment / tests that do not need a hospital bed. This includes diagnostic tests / scans and care, such as physiotherapy. It’s an optional extra on all Health Insurance schemes.

Adding outpatient cover to a Business Health Insurance plan is valuable as it speeds up diagnosis of medical problems. It means staff can skip NHS waiting lists for outpatient care, as well as inpatient procedures. However, adding this policy option does increase the cost of premiums.

6 Week Wait

The 6 week NHS wait add-on reduces the cost of cover. If an employee needs inpatient treatment, the insurer examines the NHS waiting list for that treatment in your local area.

If it exceeds 6 weeks, then the worker has the treatment privately at the insurer’s expense. Should the wait be less than 6 weeks, the employee uses the NHS for that procedure. This only applies to inpatient care. Your employees’ right to outpatient care under the policy is unaffected.

Hospital List

Every Business Health Insurance policy has a hospital list outlining which facilities around the country your staff can use. Most insurers have several hospital lists to choose from — which one you opt for will impact the cost of premiums.

• Reduced hospital list: (the least expensive option) usually only include facilities in your local area or private rooms within NHS hospitals
• Standard hospital list: covers a good range of private hospitals across the UK. It provides your workers with more options as to where they can receive treatment. This list will not usually cover pricier private facilities, however
• Comprehensive hospital list: covers most, if not all, private hospitals in the UK. Including some of the most renowned in the country. Some insurers also include Central London hospitals as an additional tier, and is usually the most expensive list to choose.

A comprehensive hospital list covers most, if not all, private hospitals in the UK. This includes some of the most renowned in the country.

Some insurers then include Central London hospitals as an additional tier, which are the best but priciest UK facilities. This is the most expensive hospital list to opt for.

Nick Nelms
Senior Consultant, Employee Benefits

Additional Cover Options

Most providers offer optional extras that you can add to a policy to increase coverage for an additional monthly premium. For example:

• Mental health cover
  With 31% of employees saying that their mental health is a top reason for stress outside of work, access to quality mental healthcare is vital. However, patients often struggle to get the treatment they need on the NHS in a timely manner. This option gives employees fast access to private mental healthcare / talking therapies
• Dental and optical cover
  Business Health Insurance covers surgical procedures such as cataract and wisdom tooth removal. However, policies don’t usually cover routine optical and dental care. Adding this option expands your policy to cover the cost of check-ups, fillings, new glasses, etc.
• Cover for family members
  You can expand coverage to workers’ families if you prefer, something which may reduce the amount of time employees are absent while caring for ill family members. This can be at your expense or you can ask that workers pay to add their family.

Private Health Insurance Underwriting

You have three main underwriting options to choose from, each of which will impact the cost of cover. These are:

• Full medical underwriting (FMU)
  While it’s the cheapest option, it requires lots of paperwork to get it off the ground. This is because you’ll have to make a full disclosure of each worker’s medical history. An insurer will then exclude any pre-existing conditions outright from the start
• Moratorium underwriting
  The most common option, moratorium underwriting, needs far less initial administration than FMU as it doesn’t require upfront medical disclosures. Here, the insurer excludes conditions an employee has had in the five years up to the policy start date. However, the insurer may look to cover that condition if the employee serves two years on the policy without any advice, medication or treatment for it
• Medical history disregarded (MHD)
  Larger companies have the option to choose the best medical underwriting on the market: medical history disregarded underwriting. It’s only available to groups of 15+ workers. It ignores all pre-existing conditions, regardless of when staff suffered from them, which means employees can claim for any condition eligible under the policy’s terms.

How Much Does Business Health Insurance Cost?

This is a tricky one to answer, as there’s no “one size fits all”. What you’ll pay can vary wildly depending on the unique needs of your business and your employees. However, to give you a rough idea, we’ve provided some examples of costs below.

Example Business Health Cost Per Employee

We’ve generated quotes for two different businesses. This is for illustrative purposes only, so what your business will pay completely depends on your specific circumstances.

Example 1: Small Architect Firm, London

Let’s use the example of an architecture firm with five team members. They want Business Health Insurance to cover all of their employees. They’re want a scheme with:

• Full outpatient cover
• Psychiatric cover
• £100 excess
• Moratorium underwriting.

This is what their costs might look like:

Insurer	Average Per Employee (Annual)	Total Premiums (Annual)
	£805.10	£4,025.52
	£723.38	£3,661.92
	£689.72	£3,448.62
	£904.68	£4,523.40

Group health quotes accurate as of March 2024

Example 2: Large Tech Company, Manchester

Let’s take another example of a 76-person technology company based in Manchester. They’re after a Business Health Insurance scheme with:

• Outpatient treatment covered in full
• Mental health cover
• £100 excess
• Moratorium underwriting.

While they have more employees than the architects firm, they benefit from a group discount, leading to a lower cost per employee.

Insurance Provider	Average Per Employee (Annual)	Total Premiums (Annual)
	£334.44	£35,557.20
	£403.20	£30,674.20
	£574.80	£43,717.44

Group health quotes accurate as of March 2024

How Is Business Health Insurance Taxed?

Business Health Insurance is generally classed as a business expense, meaning you can claim it against your corporation tax bill.

For employees, HMRC sees it as a taxable P11D benefit in kind, meaning there’ll be additional tax due from employees on the value of premiums paid on their behalf.

What About Business Health Insurance For UK Small Businesses?

Smaller businesses can benefit the most from Business Health Insurance, as they often feel the impact of staff absence more than larger companies. However, it can feel out of budget.

That’s where Small Business Health Insurance comes in: it provides health cover for businesses starting from just two employees—and it’s cheaper than taking out individual policies for each team member.

Startup founders or small business owners can pay for a policy through their company with a Director Health Insurance policy. It’s taxed the same as other health plans and counts as a P11D benefit.

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How To Reduce The Cost Of Business Health Insurance

When it comes to reducing the cost of Business Health Insurance policy, there are some things you just can’t change (such as your workforce demographic). However, there are certain tweaks you can make to your policy that bring down the cost.

Set A Higher Excess

The higher the excess on your policy, the less you will pay. So by increasing it from say £100 to £250 would reduce your premiums. Some insurers let you increase it to as much as £5,000. However, you should always consider what your employees can afford before deciding on an excess amount.

Have Inpatient Cover Only

Inpatient-only cover is the most affordable option and will be cheaper than if you add any form of outpatient cover. However, it’s important to remember that without any outpatient cover, your staff could be waiting longer for treatment due to having to go through the NHS for diagnostics and tests.

If full outpatient cover is too expensive, consider a mid-range policy which provides a limited level of outpatient cover. Most insurers will allow you to add up to £1,000 per worker, per policy year.

Choose A Reduced Hospital List

As mentioned above, every Health Insurance policy has a “hospital list”, which outlines which facilities around the country your staff can use. Rather than opting for a comprehensive option, choose a reduced or standard list. This will help you to keep your premiums down.

Select The Right Underwriting Option

The underwriting you choose will also impact your premiums significantly. Full Medical Underwriting will be the cheapest option, however it can lead to less cover for some employees. This is because insurers will assess each employee’s medical history before providing cover. Medical history disregarded, on the other hand, will ignore any previous health conditions, because of this it’s by far the most expensive.

Review Your Policy

Once you have a policy, it’s always best to review it every few years. Over time, things change. New products and insurers come to market. By regularly reviewing, you can make sure that your policy remains fit for purpose and you can ensure you are still getting the most competitive price.

Compare Business Health Insurance Quotes & Get Expert Advice

Not everyone has time or the expertise to do all the work involved in taking out an insurance policy for a group of employees.

We have great relationships with the UK’s leading insurers, so we know how to get the right cover at the right price. That’s why setting up a Business Health Insurance scheme is hassle-free when you work with us. Get in touch by calling 02074425880 or email help@drewberry.co.uk to set up health coverage for your staff.

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