How Much Does Business Health Insurance Cost?

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21-10-2020

If you’re looking to implement Business Health Insurance for employees, the first thing many people consider is just how much it will cost.

There are a variety of factors that will influence the cost of the scheme, however, which makes it tricky to give a general idea of the cost.

We’ve laid out quotes below for two very different companies with different needs to give a rough idea of pricing, but please be aware the cost of a scheme per employee varies considerably and depends on a range of factors.

Average Cost of a Business Health Insurance Scheme per Employee

Business Health Insurance schemes are very similar to Private Medical Insurance paid for by individuals, with the main difference being that the policy is paid for by the company rather than the individual receiving the cover.

This means that the same factors affecting the cost of Private Medical Insurance will also have an impact on your group scheme.

Group size

Generally speaking, the more employees you add to Private Medical Insurance the cheaper cover becomes per worker. Larger groups achieve economies of scale unavailable to smaller companies.

Employees’ ages

Older employees cost more to insure than younger ones. This reflects that they’re more likely to make a claim. 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.

Occupation

Private Medical 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 scaffolders, say, who might be at greater risk of a claim.

Location

The cost of private healthcare varies depending on where you are in the UK. Central London hospitals tend to be the most expensive, while those in the regions are generally cheaper. If you’re located in an area where treatment is costlier, cover costs more per worker.

The prices per employee below are for illustration only and much about your circumstances can affect the cost of your policy, including the age of your employees.

The policy options you choose will also affect the cost of your policy and many of these choices will depend on your needs as a company.

CLIENT SUCCESS STORY 🥳
Trailmix is a London-based mobile gaming startup who wanted to look after its 18 staff with a small business private health insurance scheme. Check out their story here →

Case Study: Cantilever Architects, London

Cantilever Architects is a small team of London based architects consisting of 5 members that want a Business Health Insurance scheme that covers all of their employees.

They’re looking for a scheme with full outpatient cover, psychiatric cover, £100 excess, and moratorium underwriting. Below are some rough quotes of how much this type of policy will cost from each of the different insurers on an annual basis as well as per employee.

Insurer

Average per Employee
(Annual)

Total Premiums
(Annual)

aviva

£805.10

£4,025.52

AXA PPP Healthcare

£887.01

£4,435.07

bupa

£823.97

£4,119.84

vitality

£1,332.94

£6,664.68

Case Study: BitWare Ltd, Manchester

BitWare is a Manchester based company with a total of 76 employees that they want to have covered by their Group Health Insurance scheme. This company is also looking for moratorium underwriting, a £100 excess and full outpatient and mental health cover.

While there are more employees than the above example, there can be a group discount for larger schemes, leading to a lower cost per employee.

Insurance Provider

Average Per Employee
(Annual)

Total Premiums
(Annual)

aviva

£467.86

£35,557.20

AXA PPP Healthcare

£572.53

£43,512.31

bupa

£541.86

£41,181.36

vitality

£619.14

£47,054.28

It’s important to note that Company Health Insurance is a taxable P11D benefit in kind for employees, so there’s usually additional tax due from employees on the value of premiums paid on their behalf.

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Which Policy Options Will Affect Your Premiums?

On top of the demographics of your workforce, the policy options you choose will also impact the cost of premiums. These policy options are laid out below.

Health Insurance Excess

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 Health Insurance premiums. However, employers should always consider affordability for their staff when choosing an excess.

Adding Outpatient Cover

All medical treatment, private or NHS, is split into:

  • Inpatient / day-patient care
    Inpatient treatment requires a hospital bed for at least one night, whereas day-patient treatment only needs a bed for the day. All Health Insurance policies cover this as standard.
  • Outpatient cover
    All treatment / tests not needing a hospital bed. This includes diagnostic tests / scans and care such as physiotherapy. It’s an optional extra on all Health Insurance schemes.

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.

To help mitigate this, you can decide to introduce a mid-range option known as limited outpatient cover. Instead of covering outpatient treatment in full for every employee, it places a cap on outpatient care per worker. This is often set at around £1,000 per worker per policy year.

6 Week Wait

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 way 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.

Hospital List

Every Health Insurance policy has a hospital list outlining which facilities around the country your staff can use for private medical care.

Most insurers have several different hospital lists to choose from — which one you opt for will impact the cost of premiums.

A reduced hospital list (the least expensive option) usually only includes facilities in your local area or private rooms within NHS hospitals.

A standard hospital list will cover a good range of private hospitals across the UK, giving workers more options as to where they can receive treatment. This list will not usually cover pricier private facilities, however.

Meanwhile, 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.

Additional Cover Options

Most providers offer optional extras that you can add to a policy to increase coverage for an additional premium. For example:

  • Psychiatric cover
    With the UK losing £70 billion annually as a result of mental health issues, access to quality mental healthcare is vital. However, patients often struggle to get the treatment they need on the NHS in a timely manner. Adding this option to your Health Insurance gives employees access to private mental healthcare / therapy sessions.
  • Dental and optical cover
    While Health Insurance covers surgical procedures such as cataract and wisdom tooth removal as standard, policies don’t usually cover routine optical and dental care. This might include the cost of check-ups, fillings, new glasses etc. Adding this option expands your policy to cover such routine dental and optical care.
  • Cover for family members
    You can expand coverage to workers’ families if you prefer, something which may reduce the amount of time employees are absent while caring for ill family members. This can be at your expense or you can ask that workers pay to add their family.

Private Health Insurance Underwriting

You have three main underwriting options to choose from, each of which will impact the cost of cover. These are:

  • Full medical underwriting (FMU)
    While it’s the cheapest option, it requires lots of paperwork to get it off the ground. This is because you’ll have to make a full disclosure of each worker’s medical history. An insurer will then exclude any pre-existing conditions outright from the start.
  • Moratorium underwriting
    The most common option, moratorium underwriting needs far less initial administration than FMU as it doesn’t require upfront medical disclosures. Here, the insurer excludes conditions an employee has had in the 5 years up to the policy start date. However, the insurer may look to cover that condition if the employee serves 2 years on the policy without any advice, medication or treatment for it.
  • Medical history disregarded (MHD)
    Larger companies have the option to choose the best medical underwriting on the market: medical history disregarded underwriting. It’s only available to groups of 20+ workers. It ignores all pre-existing conditions, regardless of when staff suffered from them, which means employees can claim for any condition eligible under the policy’s terms.

Compare Company Health Insurance Quotes & Get Expert Advice

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 work with all of the UK’s leading insurers, understand all the T&Cs and have processes in place to make setting up a new company health insurance scheme is as hassle free as possible.

Why Speak to Us…

We started Drewberry because we were tired of being treated like a number.

We all deserve first class service when it comes to employee benefits. Below are just a few reasons why it makes sense to talk to us.

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If you need help setting up employee health insurance give us a call on 02074425880 or email help@drewberry.co.uk.

The staff has been very knowledgeable and I have enjoyed working with Nadeem on setting up our plan.

Kim S
22/06/2020
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