6 Ways To Reduce The Cost Of Corporate Health Insurance
You have a number of options when arranging Private Medical Insurance for your employees. Each will impact the overall cost of the cover.
Choose how much outpatient cover your staff receive. Your options are:
- Full cover, where all eligible treatment is covered
- A capped policy, where outpatient treatment is limited, say to £1,000 per year
- A basic inpatient-only policy, where staff aren’t entitled to any outpatient care.
Naturally the less outpatient cover you provide the lower the cost of cover.
Excesses typically start at £100. The larger your excess, the more staff will have to pay towards their treatment but the cheaper premiums will be.
Adding an excess can help reduce unnecessary or trivial claims which end up increasing the overall cost of your cover.
Mental Health Cover
Every year the UK loses £70 billion as a result of mental health issues, making access to quality mental healthcare vital.
Many firms are choosing to include mental health cover with their corporate health insurance given the focus on employee wellbeing. This additional option can be expensive though and one you may wish to scale back if your budget is limited.
Dental and Optical Cover
Most plans cover surgical procedures such as cataract and wisdom tooth removal. However, a policy usually won’t cover routine optical and dental care, such as the cost of check-ups, fillings, new glasses etc.
This option expands your Health Insurance to cover such routine care.
If you wish to include a level of dental cover you may also want to consider a standalone policy which could be more cost effective.
6 Week NHS Wait
It means staff can only claim if the NHS waiting list for the inpatient treatment they need exceeds 6 weeks. If not, they’ll use the NHS.
This option can significantly cut the cost of premiums.
Cover for Family Members
You have the option to add employees’ families. The business can pay for this or you can ask the individual worker to pay.
Including family members may be beneficial as it could reduce the amount of time employees are absent while caring for ill family members.
Underwriting Corporate Medical Insurance
You have three underwriting options, plus a fourth if you’re looking to move between providers. Each is different and will determine just what staff can claim for based on their pre-existing conditions.
- Full medical underwriting (FMU) requires upfront disclosures of employees’ medical history. Once the insurer has this information, it usually excludes pre-existing conditions.
- Moratorium underwriting requires far less initial administration. Any condition the employee has had in the 5 years leading up to the policy start date will be excluded. Moratorium tends to be the most popular option.
- Medical history disregarded underwriting is the best available on the UK market. Available to groups of at least 20-25 members, it ignores any pre-existing conditions, no matter when your staff suffered from them. Employees can therefore claim for any eligible condition under the policy’s terms.
- Switch or Continuing Personal Medical Exclusions (CPME) can be used if you have an existing scheme and want to switch providers. It ensures that the new insurer will cover any pre-existing conditions which the old policy covered.
How Does HMRC Tax It?
Private healthcare benefits are usually an allowable business expense against your corporation tax bill.
For employees, corporate health insurance is a P11D / taxable benefit in kind.
As such, HMRC levies tax against premiums by reducing employees’ annual income tax allowance by the same amount of the premiums paid on their behalf, meaning staff can earn less before becoming subject to tax.
As an employer, you’ll need to fill out a P11D form to declare to HMRC that you’ve provided your employees with a benefit in kind and pay employer’s National Insurance on the premiums.