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

What is small business health insurance?

Small business health insurance is a type of business insurance that can help business owners and employees get fast access to private medical care improving 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.

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What does small business health insurance cover?

Business health insurance plans provide employees with access to private healthcare including medical:

• consultations
• investigations
• diagnostics
• treatment

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

• private virtual and in-person GP consultations
• mental health support
• therapies including physiotherapy
• a second medical opinion service

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.

The benefits in terms of productivity, supportive work culture and general well-being can be some of the valuable byproducts of providing health insurance for employees. 

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

^ 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 company 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 group 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 medical insurance options. 

Does business health insurance cover existing medical conditions?

Yes, business health insurance can cover 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 which could include health checks, 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 health insurance for small businesses.

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.

Small business health insurance application types explained

Which 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 group 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. This could be preferable to personal health insurance arranged privately and not through the business. 

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 conditions 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
• Early interventions can improve employee health and reduce sick days
• 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.

If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. The following link can be used if you do not wish to help Money to the Masses – Howden Life & Health