Small business health insurance: Who can get it and how does it work?

10 min Read Published: 16 Aug 2022

Group private medical insurance - who can get it and how does it work?Many small and medium-sized businesses, as well as sole traders, are showing a keen interest in providing private medical insurance for their employees, a policy often referred to as group health insurance. Group health insurance provides business owners and employees fast access to medical diagnosis and treatment, avoiding waiting times with the National Health Service. Employee benefits that include private healthcare help businesses attract and retain the best employees and reduce time off work too making it desirable for employers as well as their workers.

In this article, I explain how group health insurance works, which types of businesses can get it as well as answer some important questions about tax. You can jump ahead if you would simply like to Compare group health insurance providers

1 minute summary

  • A range of policies available starting from around £7 per employee per month
  • Premiums are an allowable business expense and can help to reduce your corporation tax bill
  • Can help to improve staff retention as well as attract talented individuals to your business
  • Can help to reduce staff sickness levels
  • Get FREE and impartial advice from a leading independent business health insurance specialist*

What is small business health insurance?

Small business health insurance is a type of business insurance that can help business owners and employees to get fast access to private medical diagnoses and treatment. This means that they are able to avoid delays that may exist within the National Health Service (NHS) and enjoy greater flexibility when it comes to when and where they receive medical treatment.

What does small business health insurance cover?

Business health insurance plans provide employees with access to private medical diagnosis and treatment including:

  • consultations
  • investigations
  • diagnosis
  • treatment

As well as medical diagnosis and treatment, many group health insurance policies provide access to additional consultations, support and therapy including:

  • GP consultations
  • mental health support
  • physiotherapy
  • second medical opinion

The increase in NHS waiting times has, in turn, increased the desire for private health insurance and business owners are increasingly aware that private health insurance for employees will help with staff retention and attraction while potentially reducing time off work when employees fall ill.

How does small business health insurance work?

Although group health insurance essentially provides employee members with access to private medical services, the level of cover and the specific benefits will vary depending on the plan you choose. We have described the key features of group health insurance in the table below, but do note that the same features and benefits may be included within a plan under a slightly different description and may be limited by the terms and conditions of the specific plan you choose.

Key features of a business health insurance plan

Business health insurance feature^ How it works
24/7 Private GP Access
  • Telephone or video consultations with a private GP can be arranged at your convenience 24 hours a day and 7 days a week
  • The number of consultations you can book may be limited per person, per year
Medical investigations and diagnosis
  • Referrals can be made to a specialist consultant by your own GP or by the private GP service
  • Costs of tests, scans and any other investigations are usually covered subject to an excess
Medical treatment
  • Covers the cost of the treatment of acute medical conditions but exclusions may apply
Hospital lists
  • The hospitals that health scheme members can access
  • Most health insurance schemes offer a choice of lists with limited lists being cheaper than comprehensive ones
  • Hospital lists that include private hospitals in London are usually the most expensive
Physiotherapy, Osteopathy and other therapies
  • Members can usually self-refer to physiotherapy, osteopathy, acupuncture and other therapies
  • Caps on the number of treatment sessions usually apply
  • Some plans will only cover the cost of authorised therapists
Mental health cover
  • Cost of consultation with a private mental health specialist including psychiatrists
Mental health therapies
  • Access to mental health support including bereavement counselling
Dental cover
  • Cost of private dental check-ups and treatment
Optical cover
  • Cost of optical check-ups and prescription eyewear
Dedicated nurse service
  • Access to a trained specialist nurse to guide you through an acute serious illness

^Not all features are included with every group health insurance plan as some will be more comprehensive than others and some options have to be selected and may come at an additional cost

How much does business health insurance cost?

Group health insurance costs can start from as little as £7 per employee for very basic health insurance but the actual cost will depend on:

  • Number of employees – some plans are limited by a minimum or maximum number of employees that can be added to the scheme but larger group schemes can cost less per employee due to economies of scale
  • Age of employees – older employees cost more to insure than younger employees
  • Type of employment – workers in clerical jobs are usually less expensive to insure than those in more manual jobs and higher-risk occupations are likely to cost more
  • Location of employment – health insurance quotes usually factor in the postcode for where employees are located due to the cost of private healthcare in the vicinity 

The options that you select will also affect how much you pay for group health insurance and we detail some of these below.

  • Excess – the amount that you personally pay towards your health insurance claim will affect the cost of the group health insurance scheme – a lower excess will cost more than a higher excess
  • Hospital lists – choosing a wider range of private hospitals to be included within your cover will cost more and London-based hospitals generally cost the most
  • Outpatients cover – any medical consultations or diagnostic testing that does not require you to be admitted can be included with or without limits, the latter being the more expensive option
  • Psychiatric cover – although counselling, including bereavement counselling, is usually included within your core cover, access to psychiatric treatment may cost more to include
  • Therapies cover – access to therapies such as physiotherapy, chiropractors, osteopathy, and acupuncture are sometimes included within the core cover but may cost more to include with some insurers

Quotes for small business health insurance are difficult to compare as they are rarely on a like-for-like basis. Some insurers provide more opportunities to use your cover through ancillary services while others give members access to a larger list of hospitals and consultants. It is complex, so speaking to a business health insurance specialist* is very useful in sourcing the best business private medical insurance options. 

Does business health insurance cover existing medical conditions?

Yes, business health insurance covers scheme members for existing medical conditions so long as they have not sought any advice, consultation or treatment in the last 2 to 5 years, depending on the insurance company. If, however, you want the cover to be unrestricted, then you would have to choose a Medical Health Disregarded policy, which can be more expensive than Moratorium or Fully Medically Underwritten policies.

These definitions apply to the way that you are assessed, a process known as underwriting, when you apply for business health insurance and depending on how you've been assessed, your insurance may or may not cover health issues you have had in the past.

Below, we explain three different ways you can be assessed for business health insurance.

How to buy business health insurance

Businesses can choose how they apply for group health insurance. These include medical health disregarded policies, fully medically underwritten policies or moratorium policies. We explain the key differences in the below table.

Application assessment used: How it works
Medical health disregarded (MHD)
  • Scheme members are not required to disclose their medical health information
  • The scheme will cover all members for all medical claims regardless of whether they have a history of the medical concern
  • Costs are higher as this is the least restricted type of group private medical cover
  • You will need at least 10 members within your small business health insurance scheme to qualify for this type of assessment
Full medical underwriting (FMU)
  • Scheme members will be required to complete a medical questionnaire disclosing their health history
  • Each member's cover is provided based on their health disclosures and could be subject to specific disclosures based on the insurer's assessment of their medical history
  • Costs less than MHD cover
  • Available regardless of the number of members in your business health insurance scheme
Moratorium underwriting (MU)
  • Scheme members are not required to disclose their health history
  • Pre-existing health conditions will usually not be covered until after the member has been part of the scheme for, between 2 to 5 years depending on the insurer's moratorium period
  • Any conditions for which you experience symptoms, see your doctor or receive treatment during the moratorium period will restart the clock so you have to wait for 2 to 5 years before that condition will be covered.
  • Usually the cheapest option 
  • Available regardless of the number of members in your business health insurance scheme

Small business health insurance application types explained

  Medical health disregarded Fully medically underwritten Moratorium underwriting
Staff medical information is not needed tick
Staff can claim for new health issues tick tick tick
Staff can claim for all existing health issues tick

What is the cheapest small business health insurance?

Budget group health insurance schemes can provide basic healthcare insurance cover to include with your employee benefits package. These plans can be attractive to a business that wishes to put a basic plan in place that allows employees to upgrade to a higher level of cover at their own expense. However, it is important to note that many budget group private medical schemes can be limited even once upgraded and may exclude access to cancer treatment, mental health treatments and are sometimes limited to diagnostic cover only where they exclude private medical treatment. 

Exclusions within the terms and conditions of a group health insurance scheme may leave employers and employees disappointed, so we would suggest that you speak to a specialist health insurance adviser* to weigh up the pros and cons of opting for the cheapest small business health insurance scheme. 

What is the minimum number of employees on a business health insurance policy?

There is no minimum number of employees that a business is required to have in order to buy small business health insurance as there are now plans that can provide private health insurance for any business type; from sole traders to large corporations with thousands of employees.

Small business health insurance policies for individuals

It may seem contradictory but because a group health insurance plan is basically private medical insurance paid for by a business rather than an individual, it can be arranged even if the business only employs one person. It may not have the same economies of scale but by arranging insurance through the business, you can benefit from offsetting your private medical costs as a business expense. 

The cost of the group health insurance can offset tax on profits for registered businesses but employees will have to pay tax on receiving the benefit through a P11D form as it is treated as a benefit in kind.

Is small business health insurance worth it?

Employers and employees will benefit from fast medical consultations and treatments when needed, cutting down time off work and potential lost income. Even in the event that none of the members of the scheme ever make a claim, business health insurance can be a valuable employee benefit as it can help attract the best talent to your business while enhancing loyalty and productivity amongst the existing workforce.

Additionally, access to mental health services and therapies like physio and acupuncture can reduce the impacts of chronic illnesses such as stress, anxiety, depression and musculoskeletal issues reducing time off work and increasing wellbeing amongst staff.

Pros and Cons of small business health insurance

Business health insurance comes at a cost to the business and so it is useful to weigh up the pros and cons of investing in this type of employee benefit.

Pros

  • Allowable business expense – the cost of group health insurance is an expense that can reduce the amount of corporation tax payable
  • Reduced employee absence – faster doctor appointments, investigations, diagnoses and treatment can mean an employee is back at work sooner after ill health
  • Enhanced staff retention – employees are less likely to leave employment due to the value of private medical insurance within their benefits package
  • Enhanced staff attraction – good people are attracted to jobs that offer benefits like private medical insurance so it helps with recruitment
  • Enhanced staff wellbeing and productivity – access to faster medical care and extra health perks can make employees happier in their work environment which can have positive effects on productivity
  • Possibility to cover pre-existing medical conditions – only with ‘medical health disregarded' schemes which require at least 10 scheme members

Cons

  • Cost to business – there is a financial outlay and time investment involved in setting up and annually renewing a group health insurance scheme
  • P11D tax for employees – employees will have to pay tax on the premium payable for their private medical insurance as it is a benefit-in-kind

Compare business health insurance providers

You will find a number of insurance companies that provide group health insurance solutions for different types of businesses but it can be difficult to compare schemes as the detail is usually buried within extensive pages of terms and conditions. The best group health insurance solutions for your particular business will depend largely on:

  • budget 
  • employee demographic
  • specific needs of your business

For example, a business that largely employs desk-based employees may be interested in the therapies that will support staff who suffer from back pain whereas a business whose employees are exposed to high-stress or emotionally challenging situations may be keen to include full mental health therapies and psychiatric treatment. Of course, some employees may be exposed to multiple health risks due to the environment in which they work as well as their duties. It can be difficult to compare the best health insurance providers for business health insurance and so we have provided further details below.

Get a business health insurance quote

At Money to the Masses we have vetted a business health insurance specialist* company where the advisers are experts in business health insurance and provide unbiased bespoke advice without charging a fee. It can benefit your business to discuss your needs and budget for group health insurance so that an adviser can explain the pros and cons of particular schemes on a tailored basis. Besides the guidance and support that you will receive to set up your group health insurance scheme, you'll also get access to some bespoke deals that are not available directly through insurers.

The advisers have access to a range of group health insurance providers including:

  • Aviva group private medical insurance which can start from just one member to qualify
  • AXA group medical insurance with its guided option that saves you money while using a fast-track appointment service
  • Bupa where you will receive an NHS cancer cash benefit as standard
  • Vitality with perks and rewards including an Apple Watch
  • Other providers such as Cigna and WPA

Complete this short form* and a business health insurance expert will call you to discuss your needs and provide no obligation quotes.