Business Health Insurance (2025 Best Cover Guide)

How does health insurance work for businesses?

Company health insurance works by giving your employees access to private health treatment options if they become ill with certain illnesses. With private treatment, your team can avoid potential NHS delays and get back to work sooner. All health insurance policies, whether business or private, only provide treatment for illnesses that are considered acute and curable – chronic illnesses that cannot be cured are usually excluded. Of course, what is and isn’t covered by your policy will depend on your service provider and the terms you’ve accepted.

Benefits of company health insurance

There is a huge range of benefits of company health insurance, both for the individual and the employer. Employees can expect all of the following:

• access to high-quality private health services
• to bypass NHS waiting lists and be seen more quickly
• greater selection of treatments and specialists
• access to treatments and medicines not available on the NHS
• improved mental health support

As for you as an employer, there are a number of benefits that you will enjoy. Firstly, you can expect a reduction in staff absenteeism, with employees returning to work more quickly after illness. Second, because private health insurance is considered such a worthwhile benefit. You are likely to reduce employee turnover and improve staff retention. Finally, by providing benefits like this, you’ll stand out in the job market as an employer who values ​​and cares about their staff.

What does company health insurance cover?

As we mentioned before, the company’s health insurance will only cover acute conditions that are treatable – chronic conditions will not be covered by your policy. In addition, and in most cases, preexisting conditions will not be covered either, unless you have opted for the more expensive “Medical History Neglected” warranty. This means that if your employees have sought any medical treatment or even advice for a particular condition in recent years, that condition will automatically be excluded.

A workplace health insurance policy usually covers:

• Tests and scans
• Consultations
• Surgical interventions
• Therapies (eg physiotherapy or osteopathy)
• Alternative therapies
• Medicines and treatments are not available on the NHS
• Hospital stay

Inpatient and day treatment

All private health insurance policies cover the cost of treatment for conditions that require an overnight, and usually one day, hospital stay. Inpatient and day treatment are the basis of all health insurance policies.

One of the disadvantages of only having this level of cover and not opting for out-of-hospital cover is that when someone in your team becomes ill they will usually need to be diagnosed on the NHS before being referred for private treatment. This may mean that private treatment may be delayed as the employee waits for a diagnosis. To avoid this, we recommend getting a more comprehensive cover, as we explain in the next section.

Outpatient diagnosis and treatment

To avoid delaying your employee’s treatment due to an NHS diagnosis and to provide them with a wider range of benefits, you can opt for more comprehensive insurance to include outpatient diagnosis and treatment. This means that if your employees become ill, they will almost always be referred directly by their GP to private healthcare for diagnosis and then treatment. The best private health insurance in the UK will always include comprehensive outpatient insurance.

What is not covered by small business health insurance?

Small business health insurance covers a wide range of illnesses and treatments, but it won’t cover everything. In this section, we look at what is not covered by a company health insurance policy:

• Ambulance
• Fertility treatment
• Standard pregnancy and birth
• Treatment of alcoholism/addiction
• Cosmetic surgery that is not medically necessary

Of course, what insurance companies do and don’t cover will vary from provider to provider and policy to policy, so it’s always a good idea to talk to a health insurance broker to make sure your policy covers everything you expect.

What is the cost of company health insurance?

The cost of company health insurance will, of course, vary from company to company. However, to give you an example, with a few assumptions, if there is a £1,500 out-of-hospital limit, a £100 excess on the policy and a list of mid-tier hospitals, you can expect to pay anywhere from £40 to £80 per employee per month for a comprehensive policy.

Some of the factors that will affect the price of your premiums are:

• Number of staff you want to cover
• Selected type of insurance, i.e. moratorium, full health insurance or medical history that is not taken into account
• Selected coverage level
• Average age of the group
• The location of your workplace
• Your occupation and activity
• Optional additional options such as mental health cover or routine dental cover

Health insurance policy options

As we’ve mentioned, one of the most important choices you can make when it comes to your small business health insurance is whether you have basic coverage, which only includes hospital treatment, or whether you want to expand your coverage to include patient coverage as well. That’s just one of the choices you’ll need to make – in this section we look at some other considerations you’ll need to think about and discuss with your broker.

Surplus

Your excess is the amount of money your employees will have to pay for the claim before the policy covers the balance. Excesses are usually annual, although some providers will impose them on a request basis. Adding an excess can dramatically reduce the cost of your premiums, but trust that your employees will be able to afford them if they need medical treatment. Small business excess health insurance usually starts from £100, although it’s possible to have none at all if you so choose.

Mental health cover

Not all policies will include mental health cover as standard, but almost all will allow you to add it as an optional extra. Psychiatric care is one of the most sought after small business health insurance benefits, but it’s also one of the most expensive to add. When your broker is going over the rules with you, be sure to ask if this is included or if it will be an extra.

Dental and optical cover

Most business health insurance policies will cover surgical procedures such as cataract removal or wisdom tooth extraction, however, routine dental and optical treatments are usually excluded. You can include routine exams and eye tests for a small additional fee on your premium.

6 week NHS wait

The NHS 6 week waiting option is a way of reducing the cost of your premiums by agreeing that if treatment is available within 6 weeks on the NHS, then your employees will opt for it instead of going privately. It’s useful if you want to reduce the cost of your health insurance, but it also undermines one of the fundamental reasons for private health insurance.

Cover for family members

Finally, some employers will choose to cover family members as well, or at least allow staff to add them to the policy for a small fee. For many employees, the ability to include family members, especially children, is extremely valuable, so while it might be expensive to add, it’s something that should be seriously considered.

Should we get company health insurance?

As an increasingly popular type of business insurance, we recommend it to many of the small businesses we work with, and there are a number of reasons why you might want to introduce it in your workplace.

While we are very fortunate to have the NHS in the UK, it is also true that it is under great pressure, particularly due to the Covid-19 pandemic. At the end of March 2020, there were more than 4.24 million people on NHS waiting lists, with more than 1 in 5 of those people waiting more than 18 weeks for treatment.

For many companies that put the health and well-being of their staff first, statistics like these can spur investment in health insurance.