How Does Group Medical Insurance Work?
The level of cover and type of treatment required will determine the exact process but the main variation depends on whether the policy includes outpatient cover.
PMI without Outpatient Cover
PMI including Outpatient Cover
Naturally, holding a policy with no outpatient cover does run the risk of an employee having to go through the NHS outpatient waiting list for testing and initial consultations.
This Guide
- What is Group Health Insurance?
- Why offer PMI?
- What does it cover?
- How does it work?
- How much does it cost?
- Your options
- How is it taxed?
- Expert advice
Written by:
Michael Englefield
Content Manager at Drewberry
What is Group Health Insurance?
Group Health Insurance provides employees with Private Health Insurance paid for by their employer. It offers staff treatment in private facilities for a range of medical conditions, usually faster and with superior amenities (e.g. private rooms) than would be offered on the NHS.
Group Medical Insurance is highly-valued by employees and can boost employee retention and make it easier to hire new workers. As the employer you get the benefit of reduced staff absenteeism and the ability for workers to be treated quicker and therefore recover faster.
Nadeem Farid
Employee Benefits Consultant at Drewberry
Health Insurance offers treatment for acute (i.e. curable) conditions. This might include the need for a joint replacement or treatment for cancer. It will also cover chronic conditions (e.g. heart failure) up to the point of diagnosis.
There are many options to consider when setting up a group PMI scheme; to make sure you’re getting the right policy for you and your company, it’s worth speaking to an expert such as the team at Drewberry.
Neil
Pensions Advice
Robert
Income Protection
Why Group Health Insurance?
Benefits for Employees
- Fast access to private medical care paid for by employer
- Can reduce time spent off sick on reduced sick pay
- Potentially offers cover for therapies, e.g. physiotherapy, which can help with back pain often suffered by office workers
- Employers may choose to allow you to add family members to the scheme, offering them the same cover
- Potential cover for pre-existing conditions if your group scheme is large enough.
Benefits for Employers
- Reduced staff absenteeism 👍
- Gets employees treatment faster and therefore back to work sooner
- It’s a valued employee benefit and can therefore improve employee retention and recruitment
- Premiums are usually an allowable business expense against corporation tax (although there are other tax implications – see below)
- Choosing to allow family members to be paid for via salary sacrifice may reduce your National Insurance bill.
Can I Get Group Health Insurance if I’m Self-Employed?
You can get Health Insurance if you’re self-employed, but this would usually be a personal policy paid for out of your own pocket.
Contractors’ Health Insurance is available for those who contract through their own limited company. Sometimes people prefer to run insurance products through their business and have their limited companies pay for Health Insurance.
However, it is important to be aware that the employee will have to pay additional tax if your limited company pays for the Health Insurance because PMI is a P11D or benefit in kind.
Excellent service renewing our medical insurance, professional advice, good rates found and excellent professional after service, highly recommended.
What Does Group Medical Insurance Cover?
Just like any Private Health Insurance, it is designed to cover acute conditions. No PMI is designed to treat long-term, chronic conditions – these will be referred back to the NHS for treatment.
Broadly speaking, the main difference between chronic and acute conditions is that while an acute condition can be cured with treatment and then go away, chronic conditions remain with you and there’s no treatment that can improve them.
Acute conditions include broken bones, cataracts, nasal polyps and hernias. Chronic conditions include diabetes, arthritis, high blood pressure and psoriasis.
While your Employee Health Insurance will cover the diagnosis of chronic conditions, it will only do so up to the point of diagnosis. At that point, you’ll be referred back to the NHS to continue your treatment.
The difference between chronic and acute conditions is not, as many people assume, their severity. For instance, the common cold and a heart attack are both acute conditions because, with time and assuming you receive the correct medical care, both can respond to treatment and then pass.
Emma Wilson
Employee Benefits Consultant at Drewberry
How does inpatient-only cover work?
If you’ve got inpatient-only cover, then any diagnostic tests (e.g. x-rays, CT scans, MRIs, blood tests) would have to be carried out by the NHS, as would any therapies required (e.g. physiotherapy) to get you better.
With inpatient-only cover, the insurance wouldn’t kick in until you needed an operation, although the wait for this private operation would be almost non-existent once the need for it was established.
This is compared to current NHS waiting lists – there were 3.7 million people in England alone waiting for an NHS operation at the end of March 2017.
How does outpatient cover work?
If you have a plan with at least some outpatient cover, then once your employees receive a referral from a GP the Private Medical Insurance kicks in and they’re entitled to some level of private outpatient treatment, up to any outpatient limit you might set for your employees (see below).
This includes not just diagnostic tests but may also include physiotherapy etc.
What is Excluded by Group Health Insurance?
In the UK Health Insurance isn’t designed to provide all medical treatment. In some cases, especially for chronic conditions, you’ll still need to use the NHS for care. Common PMI exclusions include:
- Emergency care
- Ongoing management and treatment of chronic conditions
- Kidney dialysis
- Fertility treatment/IVF
- Pregnancy and childbirth (unless there’s complications)
- Treatment for alcoholism/other substance abuse issues.
Will PMI Cover 🤕 Pre-Existing Conditions?
Whether or not your policy will cover employees’ pre-existing conditions depends largely on the type of underwriting you choose and the cover that you buy.
How Does Employee Health Insurance Work?
Group Health Insurance is paid for by the company for the benefit of employees. The employees receive an insurance that allows them to receive healthcare in top-notch private medical facilities across the country.
Making a claim
When your employees need to make a claim, they’ll need to get authorisation from the insurer, who’ll look at the medical need for the claim (e.g. a GP referral).
Once the employee has received the claims authorisation number, they can take it to an appropriate private facility to receive treatment.
This treatment will usually be faster than would be available on the NHS. However, the vast majority of private healthcare, even that paid for by the best Private Medical Insurance, will start with a referral from an NHS GP. GP care is known as primary care and is generally not covered by a domestic Private Health Insurance policy.
Once your employees have a GP referral, their treatment will depend on the type of Health Insurance cover you’ve provided.
How is Group Health Insurance Underwritten?
As a company, your decision on how to underwrite your employees is very important. It will likely effect the cost and what your policy covers your workers for.
The underwriting options available to you will depend partly on the size of the group, as only larger companies are eligible for certain types of underwriting.
As a business looking for Corporate Health Insurance, you have three underwriting options plus a fourth option if you’re looking to move between schemes at renewal.
Full medical underwriting (FMU)
Full medical underwriting involves employees making a full disclosure of their medical history. Any pre-existing conditions will likely be excluded, but employees will know exactly what these are and which exclusions apply to them from the outset.
This option is available to schemes of all sizes and is usually the cheapest option because of its upfront exclusion of pre-existing conditions. However given all medical history is declared upfront there is a significant amount of paperwork per employee to get the policy set-up.
Moratorium underwriting
Unlike FMU, insurance with moratorium underwriting requires less in the way of administration. A moratorium underwriting means that a condition will be excluded if, at the start of the policy, the employee has suffered from it in the past five years.
No medical disclosures will be made upfront – rather, when it comes to a claim the insurer will check the employee’s medical history to make sure that condition hasn’t occurred during a time period where it would be disqualified. Providing it hasn’t, the employee will be eligible to claim for it.
Moratorium underwriting is one of the most commonly chosen options as it allows for pre-existing conditions to be covered after employees have spent two consecutive years on the policy without receiving any advice, medication or treatment for that condition. Plans with any number of employees are eligible for moratorium underwriting.
Matteo Mockler
Health & Wellbeing Expert at Drewberry
Medical history disregarded (MHD)
MHD underwriting is the best Medical Insurance underwriting available. It ignores any pre-existing conditions, no matter when your employees have suffered from them. As the name suggests, your employees’ previous medical history is totally disregarded and they’re able to claim for any eligible condition under the policy’s terms.
It’s the most expensive type of medical underwriting because it’s so all-encompassing. Medical history disregarded underwriting is only available to large groups, usually starting with at least 20-25 people.
This is because the risk of a claims is spread wider over many more people, making it more economical to offer such a comprehensive Health Insurance option.
Switch or Continuing Personal Medical Exclusions
Lastly, switch or continuing personal medical exclusions (CPME) underwriting are terms you need to look at if you’re moving from one insurer to another. This will ensure any pre-existing conditions you’ve suffered from and received treatment for under the previous policy should continue to be covered going forward with the new insurer.
You’ll need to provide your new insurer with your current insurance certificate and possibly answer some questions about your employees and any members who’ve received treatment under the old policy. Any exclusions already on the old policy will also be copied across.
Switching your own Individual Private Medical Insurance can be complicated enough, let alone switching an entire Group Medical Insurance scheme containing a large number of employees.
Not only can Drewberry research the entire UK market to find you the best deal on your Employee Medical Insurance, we’re also here to handle any switch you may decide to make to secure cheaper cover or better terms, saving you all the hassle while ensuring vital continuation of cover.
Emma Wilson
Employee Benefits Consultant at Drewberry
How Much Does Group Private Medical Insurance Cost?
The cost of your group policy is determined by five main factors:
- The size of the group – although larger groups obviously cost more to insure as there are more employees, you may be entitled to a group discount for larger schemes
- The age of each individual member – as we get older, the risk of us developing illnesses and diseases rise, so PMI for older people is more expensive as a general rule
- The gender of each employee – as women live slightly longer than men their longer lifespans mean they’re more likely to suffer from illnesses
- Your location – incidence of various illnesses varies depending on where you are in the country, as does the cost of private medical treatment (London hospitals are far more expensive than those in the rest of the country).
- The underwriting and level of cover you choose.
The cost of your group scheme will depend on so many different factors that it’s impossible to just provide a ‘ball park’ price!
We need to go away with the employee data you provide us and research the entire market. That way, we can be sure we’re offering you the best deal for your PMI scheme.
Matteo Mockler
Health & Wellbeing Expert at Drewberry
Group Health Insurance Options
There are a number of factors which have an impact on your policy’s premiums that can’t be changed, such as where the employees are based for work or the demographic of your workplace.
However, there are also a number of factors which you can adjust within your policy to increase the level of cover or reduce your premiums.
Level of outpatient cover
Health insurance is designed around inpatient cover (or ‘core’ cover). You can add outpatient cover to inpatient to make up Comprehensive Health Insurance.
Outpatient treatment includes consultations and diagnostic tests as well as outpatient therapies such as physiotherapy, which means this tends to be the area which results in most claims. As a result because more cover is being provided adding outpatient cover can increase the cost of your scheme.
One way to mitigate rising costs that come with adding outpatient cover can be to put a limit on your outpatient treatment.
This means each employee has a limit per year as to how much they can claim on the policy for outpatient treatment. (Note that imaging tests, such as MRIs and CT scans, which are very expensive, don’t usually count towards an outpatient limit because of their high cost.)
Nadeem Farid
Employee Benefits Consultant at Drewberry
Excess
An excess is the option to have employees pay a set amount per year or per claim towards any treatment they may receive. Including an excess and having the employees pay for a proportion of the treatment reduces the risk to the insurer and so can lower premiums.
Psychiatric Treatment
Psychiatric cover is another additional option that can be chosen on most plans. It can provide both inpatient and outpatient treatment for many forms of mental illness and behavioural disorders, potentially covering up to 45 days of treatment per policy year.
Psychiatric cover is a popular option to add, especially with the rise of workplace stress and a push by employers to improve mental health and wellbeing in the workplace.
However, psychiatric claims tend to be among the most expensive – they’re even dealt with by a separate claims channel by insurers, along with heart conditions and cancer – so adding this cover will increase premiums notably.
Emma Wilson
Employee Benefits Consultant at Drewberry
Six week NHS wait option
Choosing a six week wait option will result in your plan only paying for treatment if the waiting list on the NHS for that particular procedure exceeds six weeks. If the waiting time on the NHS is below six weeks, then employees have the operation on the NHS.
Although this limits the cover provided, it can make significant savings on your premiums as for certain acute conditions many NHS trusts have had waiting lists below six weeks.
Adding family members
Some employers allow spouses and/or dependant children to be added to the Employer Medical Insurance plan. This entitles employees’ families to the same healthcare that the employees receive through the scheme.
For tax reasons, the employer must pay for their employees’ Group Health premiums. However, there’s no obligation for family members to be paid for by the company if the business does choose to allow them to be added to the plan.
The employer can pay for family members if they wish. Alternatively, spouses and children can be paid for by the employees via salary sacrifice if the company chooses.
Matteo Mockler
Health & Wellbeing Expert at Drewberry
Additional hospitals
To keep the cost of your scheme down, many providers offer more than one ‘tier’ of treatment facilities. The most expensive and exclusive hospitals and clinics are on the top tier and access to these may be included for an extra premium.
Dental and optical cover
While standard Private Health Insurance will offer cover for occular surgery (e.g. cataracts) and oral surgery, adding routine optical and dental cover to the plan is an additional option.
This will provide cover up to set limits for routine appointments, such as fillings and checkups for dentistry, and opticians’ fees, such as eye tests and the cost of glasses.
Adding a Health Cash Plan
Some employers choose to implement a Health Cash Plan alongside their Private Medical Insurance. This offers cash towards certain routine health expenses, such as dental and optical treatment. It can also be used to cover any excess you implement on the plan.
The employee can claim back the cash they’ve paid upfront as an excess from the Health Cash Plan. Despite having two policies, this often works out cheaper than having just Group Health Insurance with no excess.
Naturally, the more options you add to your Group Medical Insurance scheme the more comprehensive it becomes. However, this will result in increased premiums as a result.
Is Group Health Insurance Taxable?
As an employer, you can usually pay for your employees’ Health Insurance from pre-tax earnings, thus making the premiums allowable as a business expense against corporation tax.
For employees, their employer paid private medical insurance is known as a P11d benefit or a taxable benefit in kind. This refers to a benefit your employees receive that’s not counted as part of their salary but is nonetheless a benefit and so HMRC will levy tax against it.
As HMRC views Group PMI as part of employees’ remuneration, as a company you’ll generally need to pay employer’s National Insurance on the premiums, also.
That usually means employees have their annual income tax allowance reduced by the same amount of the premiums paid on their behalf, meaning they 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.
Neil
Pensions Advice
Robert
Income Protection
Get Expert Group Medical Insurance Advice
Many Group Insurance providers only offer quotes via intermediaries such as Drewberry, so if you want to research every UK provider you may have to use an expert. Fortunately, the team at Drewberry are here to help you get the best picture of the market and ensure you can make an informed decision when it comes to your group private health insurance policy.
At Drewberry we have a team dedicated to finding the best scheme for your company and your employees. We’ll search the entire market so you can be sure that you’re not only getting the best price but also cover that’s as comprehensive as you need it to be.
For help and advice with all your employee benefit needs, don’t hesitate to pop us a call on ☎️ 01273646484.
Tom Conner
Director at Drewberry
