Company health insurance for employees

Support your staff’s wellbeing by offering company health insurance

Everything you need to know about company health insurance; from the benefits to what's covered for employees
Last updated
April 16th, 2024

What is company health insurance?

It’s vital your employees are happy and healthy as it helps your business to run smoothly. This is one of the reasons many employers decide to offer company health insurance as it gives employees access to healthcare as and when they need it. 

Company health insurance is typically offered to full-time or part-time members of staff and gives them peace of mind that support is available if they become unwell. This insurance acts in a similar way to individual health insurance, as employees can claim on the insurance for treatment costs, but may need to pay a small excess. 

Who is eligible?

You may be able to get company health insurance if you are a: 

  • Small business

  • Corporate business

  • Sole trader with employees

Does my business need it? 

Businesses are not legally obliged to offer company health insurance to their employees, but it is definitely worth considering as it’s an attractive benefit for your workforce. Company health insurance is also available for small and corporate businesses - so there's no excuse not to explore it...

Number of employees who rank health insurance as their number one employee benefit[1]
1 in 3

What are the benefits of company health insurance?

The good news is company health insurance has many benefits for your employees - and your business. 

The first point to consider is that this type of insurance helps an employee to access healthcare quickly, as private healthcare normally has shorter waiting times compared to the NHS.

This means your employees can get the treatment they need to feel better and they’ll be back at work faster, which minimises sick days. Consequently, you’ve helped to reduce the impact of absence on your business, whilst also putting your employees health first.

Company health insurance also offers cover for treatments that might not be available on the NHS. Without this support, your employees could experience a lot of stress and worry as they try to find a suitable treatment. 

Some policies also offer employees the opportunity to choose their own hospital and the option to get their own private room - another perk which can make your employee feel valued in your business. 

Overall, the main benefit of company health insurance is that it shows your staff that you care about their wellbeing. This can help staff retention and means that in the long run, you’ll have happy and loyal employees.

What is the difference between corporate and small business health insurance?

Whatever the size of your business, there is health insurance available that supports workplace health - you’ll just need at least two employees to take out a group policy. 

  • Cheaper per employee: Some providers state that if you have more than 250 employees, then you’ll need corporate health insurance and providers will offer an extensive package for your business. This might work out cheaper per employee, as you’ll be able to spread the cost between more members. 

  • Flexible packages: Small business health insurance works in a similar way, but providers will offer packages which are suitable for the size of your business. A small business could be up to 250 employees and it also works well for sole traders who have employees.

  • Individual health insurance: If you are a sole trader with no employees, you can choose an individual health insurance policy through your business. 

You’ll need at least two employees to take out a group policy." 

What’s covered and not covered in some policies?

What's covered

Short-term illness or injuries
Cancer cover
Specialist consultations
X-rays and blood tests
Counselling
Hospital accommodation
Mental health

Not covered

Treatment of ongoing, recurrent and long-term conditions (chronic conditions)
Pre-existing conditions
Cosmetic procedures
Treatment for addictions
Routine pregnancy and childbirth
Fees if you choose to use a hospital that is not listed as included in your policy

Can I tailor the cover to suit my business?

There are a range of providers in the market offering company health insurance, so it’s important to explore all the options before making a final decision. 

You should be able to adapt your cover to suit the needs of your employees, and this will impact the premium depending on whether you are adding or removing benefits. For example, you might decide to increase the cover to include dental and optical expenses or you could reduce the amount of out-patient cover. 

Always take the time to think about what cover matters to you and your employees. Then make sure your chosen provider can adapt the cover to suit your needs. 

You can decide whether the insurance includes extras like dental or optical cover."

What is the cost of company health insurance?

Similar to other private health insurance policies, the cost will depend on a few different factors.

Level of cover

If you decide to take out company health insurance which includes a range of extras, then you’ll need to pay more.

Size of workforce

The bigger the workforce, the more insurance will cost, but it could work out cheaper per head overall. Details of staff, like their age and job type, can also be a factor in the cost.

Location of business

Where your business is located is important as private healthcare access varies across the country, so this will impact the final cost.

The excess

If you would like to lower the premiums, then you’ll need to pay more excess for coverage, which will then influence how much money you will need to pay overall.

What are the tax implications of company health insurance?

It’s important to note that employers will have to pay tax on this insurance. For example, they will need to pay the total premium of the policy and this includes the Insurance Premium Tax; the standard rate is 12%. This is because health insurance doesn’t include VAT in the UK. 

However, you can claim tax relief on health insurance premiums as it’s an allowable expense for corporation tax purposes. But HMRC does consider company health insurance as a taxable benefit, so employees will be taxed on the premiums too. 

Remember, tax rules and regulations can be complex and subject to change. Consult with a tax professional or accountant to understand the specific implications for your business and ensure compliance with all HMRC requirements.

How do I set up company health insurance?

If you are interested in setting up company health insurance for your business, then the first steps you can do are:

  • Explore the different providers available, for example Bupa, AXA, Vitality and Aviva offer company health insurance.

  • Fill in the online form to apply via the provider website

  • Speak with a financial advisor if you need guidance through this process

Speak with a financial advisor if you need more information or guidance."

FAQs

What is the minimum number of employees required for company health insurance?

The minimum number of employees for company health insurance is two.

Can employees opt-out of company health insurance?

Yes, some policies will include an opt-out option. This means the employee is in control of whether they want to take advantage of the benefit or not.

Can you change your policy throughout the year?

It depends. Some providers will allow the employer to make changes during the year but they may be faced with restrictions and costly penalties. Employees can normally make changes when they enrol or when the insurance renews, but this will be clearly stated in the policy terms and conditions. 

Does company health insurance cover mental health?

Yes, some company health insurance will include mental health. Depending on the provider, this might come as standard or alternatively, you’ll need to add it into the cover as an extra.

Should I choose individual or small business health insurance?

It depends. It’s worth comparing insurance policies to see the costs involved, but usually it is worth taking out a small business health insurance if you have two or more employees. This is because the cost per head is normally cheaper in a group plan compared to an individual.

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About the author

Lucinda O'Brien
Lucinda O'Brien has spent the past 10 years writing and editing content for regional and national titles. She applies her industry knowledge to ensure readers can make confident financial decisions.

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References

1. Bupa: Wellbeing index 2022