Employee Health Insurance

How Does Employee Health Insurance Work?

There are many aspects to a group Health Insurance policy. As a result, the specifics of how employee Private Health Insurance works will depend on your business and budget.

As an employer, you will own and be responsible for the policy. This includes making any changes and staying on top of renewals. To pay for the policy, there are two options:

• Employer paid
  Your company pays for premiums and your staff pay a Benefit-in-Kind tax
• Employee paid
  The employee pays for cover from their pre-tax salary.

If an employee needs to make a claim, they can do this directly with the provider. If you have confirmed an excess amount, the employee will pay this excess, then be referred for treatment.

Does It Replace The NHS?

No, Employee Health Insurance is designed to work alongside the NHS. The NHS will always be needed for emergencies, chronic conditions, and pregnancy, even if employees have Private Medical Insurance.

However, the level at which they will rely on the NHS depends on how much cover you provide—more on this next.

The Type Of Cover

In order to understand Employee Health Insurance, it’s important to understand the different types of cover. Generally speaking, it can be split into two types; inpatient and outpatient.

Inpatient Cover Only

When setting up Employee Private Health Insurance, you’ll pick a specific level of cover. If you select “Inpatient Cover” only (without outpatient cover), the GP will refer the employee to the NHS for all tests, consultations, and diagnostics. Only after this can the employee be referred to the most suitable private healthcare facility.

The following infographic shows the journey to private care without outpatient cover.

With Outpatient Cover

If you set up the policy to include outpatient cover, your employee’s access to private care is different.

Rather than an NHS referral, they will be sent straight to a private facility for diagnostics and treatment. This route is typically faster than using the NHS.

It’s important to note that all policies, whether it’s for your employees or a personal plan, will have exclusions. In some situations, employees will still receive full medical care from the NHS.

This infographic shows the route to private care if the policy has outpatient cover.

Chronic Vs Acute Conditions

An important aspect to understand about Employee Health Insurance is that it won’t cover everything. Medical conditions are split into two categories. These are:

• Chronic conditions
  These conditions are with you for life. Doctors can only manage them, rather than cure them. For example, diabetes or asthma
• Acute conditions
  Conditions within this category are those that can be cured with time and medical treatment. For example, cataracts requiring surgery.

Employee Health Insurance will only cover acute conditions. So, if an employee has a chronic health condition, the ongoing care for it will always be provided by the NHS. This is why having a policy will never fully replace the NHS.

What Does Employee Health Insurance Cover?

So, what does Medical Insurance for employees cover?

As we’ve said, it only covers treatment for acute medical conditions. But to what extent will depend on the policy options you choose. Regardless, all policies cover a range of conditions and treatments as standard. You’ll see these on every health policy.

For some types of care and private medical treatment, it will cost more to add these to the policy. We explain how different levels of cover work next.

Level Of Cover

How much coverage your employees get is down to you as their employer.

All medical treatment is split into two categories: Inpatient or Outpatient. This applies to both private healthcare and NHS care.

• Inpatient / day-patient care
  All private healthcare insurers in the UK cover inpatient and day-patient care as standard. This is any treatment requiring a hospital bed, either overnight (inpatient) or for the day (day-patient), including surgeries
• Outpatient care
  Outpatient is the opposite. This is treatment carried out with no need for a hospital bed. Diagnostic tests and scans, for example, are classed as outpatient.

When setting up Employee Private Health Insurance, you will choose the level of cover for your employees. The most basic policies will only offer inpatient treatment and extensive cancer cover. This means if employees need diagnostic testing, such as CT / MRI scans and blood tests, they will have to go through the NHS.

Why Include Outpatient Treatment?

If you’d like your staff to access private diagnostic tests, you will need to add outpatient cover. The more outpatient cover you add to a policy, the more comprehensive it is.

Mid range plans will offer cover up to a certain amount, e.g. £1,000. Fully comprehensive plans will offer full outpatient cover.

The more outpatient cover included on the policy, the more expensive the plan becomes. Depending on the level of cover you opt for, your staff could also get access to:

• Mental health support
• Complementary therapies
• Physiotherapy.

Some providers will also allow you to add extra cover to your policy, such as dental and optical care, for an additional premium.

We recommend at least some level of outpatient cover on your group policy. This can speed up the diagnosis of conditions compared to waiting for the NHS.

Joseph Toft
Senior Consultant, Employee Benefits

Cancer Care

One of the most valuable parts of any Private Medical Insurance policy is Cancer Care. Patients can access drugs, treatments, and therapies that are not available on the NHS due to cost.

All UK health insurers offer policyholders some level of cancer cover as standard. This includes:

• Chemotherapy & radiotherapy
• Biological therapies
• Cancer surgery / reconstruction
• Cash towards prosthetics / wigs you need as a result of cancer treatment.

What Doesn’t Health Insurance For Employees Cover?

Like all types of insurance, there are always certain things that are not covered on a policy. The following exclusions apply to everyone, not just your employees:

• Pre-existing medical conditions
• Emergency care
• Issues caused by alcohol / substance abuse
• Pregnancy / fertility treatment
• Cosmetic treatment, which isn’t medically necessary
• HIV / AIDS
• Kidney dialysis
• Self-inflicted injuries, such as those sustained through dangerous sports / hobbies.

What Are The Benefits Of Employee Private Health Insurance?

Offering Employee Private Health Insurance as a benefit has many advantages, including:

• Promoting a healthy workplace
• Prevention of serious health conditions
• Increased engagement and productivity.

That’s not all, though. While offering protection to your staff benefits them, it also benefits you, the employer.

All businesses should consider Employee Health Insurance for the following reasons:

Reduced Absenteeism Caused By Ill Health

Absenteeism in the workplace can significantly disrupt a business and its productivity. If staff take time off due to poor health, this can affect the day-to-day of business, and even your clients / customers. Although sick days can’t always be avoided, Employee Health Insurance can help reduce the number of absences.

It gives staff access to healthcare in the best private facilities. They can skip long NHS waiting lists and get the treatment they need to return to work as soon as possible. When they don’t have to wait too long for care, your business is less likely to feel the strain of absenteeism.

Shows Employees You Value Them

Your health is your wealth. The employee benefits you offer can go a long way in showing that you care for their health and wellbeing. Supportive employers can boost staff morale and retention rates.

Employees will feel more valued at their workplace if their employer plays an active role in their wellbeing. And employees who can get the care they need as soon as possible are likely to be in better health, helping to create a happy, productive workforce.

Helps Your Business Remain Competitive

We’ve already explained how an employee benefits package, including Private Medical Insurance, can help retain your staff. It may also enable your business to stay ahead of competitors and recruit from a wider talent pool.

The benefits you offer play an important part in the success of your business. Access to private healthcare at a time when the NHS is struggling can help you to remain a top employer.

Nadeem Farid
Head of Health & Wellbeing Benefits

Shorter Waiting Times And Accessible Hours

Another benefit of Private Medical Insurance for employees is the flexibility. They’ll have access to private facilities and get the medical attention they need at a convenient time. Staff can skip those long waiting lists and make a full recovery faster!

They can book GP appointments to suit their schedules, whether that’s their working hours or childcare responsibilities, for example. Health insurers now offer 24/7 remote GP services, so people can get medical care outside the traditional 9-5.

Access To Treatment & Medication Not Available On The NHS

Going private sometimes means patients receive medications and procedures that aren’t available on the NHS. Cutting-edge treatment is often too expensive for the NHS, while private care has more scope and funds. This is especially true for cancer care, as patients may get access to new experimental medicines.

Benefits Of Small Business Health Insurance

Employers may feel the strain of several employees off sick at the same time. For small businesses, this is particularly true. While large corporations have the resources to manage multiple absences, a small business might not handle it as well.

For instance, there may not be enough staff to pick up the slack. Workloads can quickly build up and service levels may drop.

Small Business Health Insurance can be set up with as few as three employees. Your employees can get a fast diagnosis and treatment, which helps to reduce long periods of absence.

How Much Does Employee Health Insurance Cost?

There isn’t a one-size-fits-all approach to Employee Health Insurance. As the policy is tailored to your business, the costs will depend on the policy options you choose.

These four factors are major players when an insurer calculates your premiums.

• Number of employees
  Depending on the size of your business and the number of employees, you may get a discount if you’re a large company. This is due to the economies of scale that larger groups bring to the table
• How old your employees are
  The older we get, the higher our risk of developing illnesses and diseases. Health Insurance for older people is more expensive. You’ll find that your premiums are dependent on the average age of your employees
• Your location
  The cost of Employee Private Medical Insurance is influenced by your location. Private facilities in Central London cost more than those elsewhere in the UK. Your location also affects where your employees can have treatment
• Your underwriting and chosen level of cover
  How the health policy is underwritten determines what policyholders can claim for. There are several options here, but we’ll cover that soon. The level of cover also impacts the cost. A basic policy without outpatient cover will cost less than a comprehensive plan, for example.

Example Costs

To give you an example of costs, here are some quotes for different levels of cover and group numbers. These are the costs per employee per month.

No matter what kind of insurance you’re buying, comparing quotes from all the UK insurers on the market is key.

But not all insurers are willing to offer quotes directly to groups of employees. Many request you go through an intermediary, such as us at Drewberry, to make sure your cover is set up correctly.

If you’d like help to do this, get in touch with us on 02074425880. You can also email us if you prefer at help@drewberry.co.uk.

How Is Employee Health Insurance Taxed?

As Employee Health Insurance is classed as a business expense, it’s not liable for corporation tax. This is good news for employers. However, it’s important to understand that it is classed as a P11D / taxable benefit in kind.

Employees are therefore liable to pay income tax on the value of the benefit. And employers must declare it to HMRC. To do this, you’ll need to fill out and submit a P11D form. After this, HMRC will tax the premiums through a reduction in an employee’s personal allowance.

What To Consider When Setting Up UK Employee Health Insurance

When setting up Employee Health Insurance for your staff, there are many policy factors to consider. One key factor you’ll have to think about is the level of outpatient cover you want. On top of this, you will need to consider:

Number Of Employees Covered

Most insurers ask for a minimum of at least three employees to qualify for any form of group cover. This allows small businesses to provide Health Insurance to their employees. How many employees you buy cover for also impacts the underwriting.

The Excess

Group policies tend to have an excess. Just like Car Insurance, the excess is the amount the employee will need to pay upfront for treatment.

Excesses can range from £0—meaning the employee pays nothing towards their treatment—up to £1,000 or more. The higher the excess, the cheaper the policy.

Keeping affordability in mind is key here. You don’t want to price any of your workers out of the policy, so the excess amount needs to be affordable for all. Most employers opt for a £100 excess.

Underwriting

There are three options for the underwriting of your Employee Health Insurance.

• Full Medical Underwriting (FMU)
  FMU is used for Employee Health Insurance schemes where only a few workers are covered. Pre-existing conditions are excluded from the outset, but you’ll know what isn’t covered straight away
• Moratorium Underwriting
  The insurer assesses an employee’s medical records from the last 5 years and checks the condition they’re claiming for. With Moratorium, it’s possible for an exclusion to be reassessed if they haven’t had any treatment, medication, or advice for it over a 2-year period
• Medical History Disregarded (MHD)
  Here, an employee’s medical information is disregarded, so policyholders are covered for everything. This type of underwriting gives full cover to employees who might not be able to get it anywhere else. But it’s the most expensive and only available to larger groups.

6 Week NHS Wait

One way to reduce the cost of your Employee Health Insurance is to add the 6 week NHS wait option.

If the treatment an employee needs is available on the NHS within 6 weeks, they’ll get care with the NHS. If the waiting list is longer than 6 weeks, the employee will get private care immediately.

Optional Extras

Most Private Medical Insurance providers have various optional extras to add to your policy. Popular add-ons include Dental and Optical cover, Travel cover, and Psychiatric cover. These will come at a higher price, though.

Psychiatric Cover

Mental health cover isn’t always included as standard with Health Insurance. Psychiatric care offers a number of mental health treatments or therapy sessions per year.

This might be a fixed number of therapy sessions, inpatient days, or consultations with a psychologist or psychiatrist. For example, Bupa offers mental wellbeing and psychiatric services in full for up to 45 days per year.

Routine Dental And Optical Cover

Employee Health Insurance usually covers emergency and surgical procedures to the eyes and mouth. This includes the loss of a tooth, removal of an impacted wisdom tooth, or a cataract operation, for example.

What isn’t covered is routine optical and dental care. So, with this add on, employees can claim for a number of dental/optical checkups a year. They can also get a part of the cost of an eye test covered with some insurers.

Cover For Family Members

Some employers allow employees to extend their private medical cover to immediate family members. The premiums of which are either paid for by the company or the employee.

By extending cover to families, the benefit becomes even more valuable. It can help families get the treatment they need fast and limit any financial burden associated with private healthcare.

As we have access to all the UK insurers at Drewberry, it puts us in a great position to secure the best deal. In fact, going through an adviser can sometimes mean you get exclusive offers.

If you want to discuss putting a policy in place, give us a call on 02074425880 or email help@drewberry.co.uk.

Joseph Toft
Senior Consultant, Employee Benefits

Compare Employee Health Insurance Quotes & Get Expert Advice

With so many policy options to choose from, setting up a policy yourself can be long-winded. We know this to be true from our experience with our clients. To help ensure you pick the right policy terms for your business, it’s always best to get in touch with the experts.

Our advisers know the UK’s private health insurers inside out, putting us in a great position to find you the best policy. We can do all the heavy lifting on your behalf, so you can continue running your business as normal.

If you’d like extra support setting up your employee benefits, please don’t hesitate to call us on 02074425880 or email help@drewberry.co.uk.

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We all deserve a first class service when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.

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