If you’re looking to implement Business Health Insurance for employees, the first thing you’ll want to know is how much it costs.
There’s no “one size fits all” when it comes to cost per employee, as what you’ll pay can vary wildly depending on the unique needs of your business and your workforce. But to give you a general idea, we’ll show you some examples in this guide.
Business Health Insurance is an employee benefit that pays for your workers to have medical treatment in private hospitals and facilities.
Offering private healthcare lets your staff bypass potentially long NHS waiting lists, getting back on their feet – and back to work – faster. Read more in our Guide To Business Health Insurance.
Health insurance is a popular benefit with UK businesses, and for good reason.
While the NHS covers most healthcare needs for free, it’s facing a lot of pressure. As of January 2024, 6.32 million individual patients are currently waiting for treatment. And over half of those have been waiting longer than 18 weeks to receive care.
Offering Business Health Insurance means your team can skip lengthy waiting lists and get treatment in premium facilities, getting them back to work faster. They can also get access to perks such as virtual GPs and mental health support.
Our workplace satisfaction survey found that 36% of employees wanted their employers to offer Business Health Insurance.
Offering benefits that your staff really value, not only benefits them, but you as an employer too. It can boost engagement, morale and overall productivity.
Joseph Toft
Senior Consultant, Employee Benefits
Business Health Insurance schemes work much the same as personal Private Medical Insurance, but the policy is paid for by your company rather than the individual themselves. Just like with the cost of Private Medical Insurance, there are a number of factors that can impact how much you pay. We look at these below.
Your business and employee demographic will play a part in determining how much your Business Health Insurance policy will cost. Factors insurers will take into account include:
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.
Business Health Insurance premiums depend partly on the occupation risk class your workers are in. Office-based workers tend to cost less to insure than a team of construction workers, as they operate in a higher-risk environment.
The cost of company private healthcare varies depending on where you are in the UK. For example, Central London hospitals tend to be the most expensive.
The number of employees you want to add to a scheme will have a direct impact on how much you pay.
There will also be certain policy factors that will impact how much you pay. These include:
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.
All medical treatment, private or NHS, is split into:
Adding outpatient cover to a Health Insurance policy 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.
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.
Every Health Insurance policy has a hospital list outlining which facilities around the country your staff can use. Most insurers have several different hospital lists to choose from — which one you opt for will impact the cost of premiums.
A comprehensive hospital list covers most if not all private hospitals in the UK. Including 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 facilities in the country. This is the most expensive hospital list to opt for.
Nick Nelms
Senior Consultant, Employee Benefits
Most providers offer optional extras that you can add to a policy to increase coverage for an additional premium. For example:
You have three main underwriting options to choose from, each of which will impact the cost of cover. These are:
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 workforce. However, to give you a rough idea, we’ve provided some examples of costs below.
We’ve generated quotes for two very different businesses. Bear in mind this is for illustrative purposes only, so what your business will pay completely depends on your unique circumstances.
Let’s use the example of an architecture firm with five team members. They want a Business Health Insurance scheme to cover all of their employees. They’re after a scheme with:
This is what their costs might look like:
Insurer | Average per Employee | Total Premiums |
|---|---|---|
£805.10 | £4,025.52 | |
£723.38 | £3,661.92 | |
£689.72 | £3,448.62 | |
£904.68 | £4,523.40 |
Let’s take another example of a 76-person technology company based in Manchester. They’re after a Business Health Insurance scheme with:
While they have more employees than the firm of architects, they benefit from a group discount, leading to a lower cost per employee.
Insurance Provider | Average Per Employee | Total Premiums |
|---|---|---|
£334.44 | £35,557.20 | |
£403.20 | £30,674.20 | |
£574.80 | £43,717.44 |
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.
Smaller businesses can benefit the most from Business Health Insurance, as they feel the impact of staff absence more than larger companies. However, it can often 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.
If you’re a startup founder or small business owner, you can pay for your policy through your company with a Director Health Insurance policy. It’s taxed the same as other health plans and counts as a P11d benefit.
Ready to get started? Submit an enquiry to find out how much your Business Health Insurance could cost. It only takes 60 seconds, and one of our experts will call you right back with fee-free advice. Enquire now.
CLIENT SUCCESS STORY 🥳
Mobile gaming startup, Trailmix, wanted to look after its 18 staff members with a small business Private Health Insurance scheme. Check out their story
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.
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.
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.
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.
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 due to the fact insurers will assess each employees medical history before providing cover. Medical history disregarded on the other hand will ignore any previous health conditions, because of this it is by far the most expensive.
By relying on the NHS for treatments that can be provided within a six-week period, the insurance provider’s risk is reduced. This decreased risk is often reflected in lower premiums.
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 the 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.
EXPERT TIP 🤓
Remember: the cheapest policy isn’t always the best. While we know budgets are top of mind for most businesses, you should always get expert advice so you can find the best cover for your employees’ needs – and get the most value for your money.
Not everyone has time or the expertise to do all of the work involved in taking out an insurance policy for a group of people.
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.
We started Drewberry™ because we were tired of being treated like a number.
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.