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Can I Pay for Private Health Insurance Through My Business?

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What is Private Health Insurance?

Private Medical Insurance is a type of insurance which gives you access to private medical treatment when you need it the most.

  • Skip NHS waiting lists for operations as well as diagnostic tests, consultations and scans depending on the options you choose.
  • Receive cutting-edge treatment at the UK’s best private health facilities, including drugs and treatments not routinely available on the NHS.
  • It can be paid for personally, from post-tax income, or alternatively you can buy Health Insurance through a limited company from pre-tax earnings.

Can I Pay for Health Insurance Through My Company?

If you have your own limited company, as well as being able to set-up Group Health Insurance for your staff, it is also possible to purchase an individual policy for yourself using your company to pay for it.

With Business Health Insurance, your policy will be paid for and owned by your company rather than being paid for personally out of your post-tax income.

This works in a similar way to a Group Health Insurance policy, in that the policy is technically owned by the business and you may consider yourself as an employee benefiting from a company-owned policy.

Although some insurers will allow you to pay for a personal Health Insurance plan with a business bank account there are tax implications. You need to bear in mind that Private Medical Insurance is considered a P11D Benefit in Kind when a business pays for a policy on behalf of an employee.

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How Much Does Private Health Insurance Cost?

Health Insurance costs vary so much based on your individual profile and what you need from the cover.

  • Age
    The older we are, the more likely we are to need medical treatment and so the more a policy costs.
  • Outpatient cover
    Outpatient cover involves any treatment where you don’t need a bed. You have the option for full outpatient cover, outpatient cover up to a set limit or no outpatient cover at all.
  • Location
    Where you’re based in the UK will impact your policy; if you live near expensive hospitals, such as in Central London, you’ll pay more for your cover.
  • Hospital lists
    The list of hospitals you’re eligible for treatment in will affect the cost of your Health Insurance, with more expensive hospitals meaning higher premiums.
  • Excess 
    How much you’re willing to pay upfront for your treatment before the insurance policy takes over, e.g. the first £100 towards your care.
  • Additional extras
    Optional extras on your policy, such as dental and optical cover, will increase the cost of your premiums.

To work out the average cost of Health Insurance below, we’ve searched all the major players in the UK market and assumed:

  • All the individuals are in good health
  • They’re non-smokers
  • They’re looking for a mid-range policy with a mid-range hospital list
  • They’re willing to pay a £100 excess
  • They’ll be underwritten on a moratorium basis
  • They don’t want any additional extras on their policy
  • They’re based in the same postcode as our Brighton office.

With these assumptions we have calculated pricing of a Mid-Range Health Insurance policy for different age groups as well as for individuals and couples.

25-Year-Old

50-Year-Old

£63 per month

£113 per month

Buying Health Insurance Through a Limited Company: Taxation

When you purchase a policy independently, you don’t have to worry about tax because you will be paying your premiums from your post-tax income.

However, don’t forget that you’ll have to generate more from the company in gross income than the premium because your net income will be reduced by the appropriate taxes from the gross level.

For example, to meet a cost of a £1,200-a-year Health Insurance policy from dividend income taxed at the higher rate (32.5%), you’d need to receive a dividend payment of £1,778.

Then, because dividends are paid net of corporation tax, you’d need to earn £2,195 within the company to pay your Private Health Insurance premiums personally.

Buying Health Insurance Through Your Limited Company…

Meanwhile, Health Insurance policies bought using your business count as a benefit in kind and you’d need to declare these on a P11D form.

As Health Insurance is paid for by the company with pre-tax earnings and is given in addition to your remuneration, your salary has effectively been increased without the additional amount being subject to PAYE tax.

So to reclaim the additional tax, HMRC requires employers either to take the owed tax from their employees through their payroll, or declare these expenses at the end of the tax year in order for them to be valued and taxed accordingly.

As the business owner, you will also need to pay National Insurance contributions, but your business will benefit from corporation tax relief.

So to use a £1,200 premium as an example again, you’d have to pay National Insurance contributions of £166 for a total cost of £1,366, less corporation tax relief of £260.

You’d be taxed personally at 40% as a higher-rate taxpayer on the value of the benefit (£1,200) for a total tax bill on your Private Health Insurance of £480.

This would have to be met from dividend income using the same principles as above, requiring you to earn £878 within the company to meet the cost, providing a total bill to the company for your Private Health Insurance of £1,984, marginally less than paying for it personally.

These calculations are for guidance purposes only. They are not tax advice. Tax legislation varies depending on your personal circumstances and is subject to change. We’d always recommend discussing buying Health Insurance through your limited company with your accountant first.

Get Expert Private Medical Insurance Advice

Deciding on the relevant options you want to include in your Health Insurance is confusing enough let alone deciding on whether to pay for it personally or through a limited company.

We are independent experts who are here to help you make an informed decision whilst finding you the most competitive premiums on the market.

Why Speak to Us?

We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve 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.

  • There is no fee for our service
  • We are independent and impartial
    Drewberry isn’t tied to any insurance company, so we can provide completely impartial advice to make sure you get the most appropriate policy based solely on your needs.
  • We’ve got bargaining power on our side
    This allows us to negotiate better premiums for you than you going direct yourself.
  • You’ll speak to a dedicated expert from start to finish
    You will speak to a named expert with a direct telephone and email. No more automated machines and no more being sent from pillar to post – you’ll have someone to speak to who knows you.
  • Benefit from our 5-star service
    We pride ourselves on providing a 5-star service, as can be seen from our 2149 and growing independent client reviews rating us at 4.92 / 5.
  • Benefit from the protection of regulated advice
    You are protected. Where we provide a regulated advice service we are responsible for the policy we set-up for you. Doing it yourself or going direct to an insurer won’t provide this protection, so you won’t benefit from these securities.
  • Claims support when you need it the most
    You have support should you need to make a claim. The most important thing when it comes to insurance is that claims are paid and quickly. We are here to support you during the claims process and make sure it’s as smooth and stress free as possible.
Drew Nelson Health & Wellbeing Expert at Drewberry

We help Company Directors set-up there Health Insurance every day.

If you need some help please do not hesitate to pop us a call on 02084327333 or email help@drewberry.co.uk.

Drew Nelson
Health & Wellbeing Expert at Drewberry

Very professional, kept me informed at every stage, easy to communicate with, no stress!

Alasdair Railton
12/03/2019
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  • 1You Come FirstWe are a client focused business who always aim to put you first.
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