Updated 03 December 2020
One of the many employee benefits a business owner can offer to attract and retain the best people is health insurance. Traditionally, it’s larger companies that have been able to offer these group schemes. But if you run a small business, you too could reap the rewards by adding a healthcare policy to your employee benefits programme.
Business health insurance is much like an individual health insurance policy. It pays for a large portion of the cost of various private medical treatments and care, but it’s taken out by employers to cover employees. When an employee is diagnosed with an illness, they can pay a small excess while the insurer pays for the cost of treatment.
Your business will have one policy to cover everyone and you can choose who you offer it to, as long as this decision isn’t made on discriminatory grounds. By spreading the risk across a group, the cost of premiums is generally lower than that of individual polices.
Having a health insurance policy for your employees can deliver significant long-term benefits to both your business and your employees.
For your employees, the benefits include:
As a business, you could benefit from a group health insurance policy for these reasons:
Prices for group health insurance policies tend to start around £250 per employee per year but they can reach £1,000. A number of aspects will affect the cost of premiums, including:
Business health insurance is a benefit in kind, so you will also need to factor in the costs of National Insurance contributions. Your employees also have to pay income tax on them.
You usually need at least two employees to take out a group health insurance policy, and you’ll probably need specialist small business health insurance if you have less than 250 employees.
If you run a limited company and you’re the director, you can take out business health insurance for yourself, but it will be a taxable benefit-in-kind.
Even small businesses may find that taking out corporate health insurance is cheaper than individual policies. Spreading the risk between as little as two people can help bring down the cost of premiums. Plus, group policies tend to be less flexible and personalised, which can make them cheaper.
Contractor insurance is available for those who work on a freelance basis, but these are specialist policies. You’ll need to work out whether it’s more cost-effective to get an individual policy if you want health insurance.
You can search online for a business health insurance policy, with schemes on offer with well-known providers such as Bupa, AXA, Aviva, Vitality and more. Lots of businesses choose to go through a broker or financial adviser to access more specialist policies and to take the legwork out of finding the most suitable and valuable cover.
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