How does company health insurance work in the UK?

This guide explores the fundamentals of company health insurance in the UK, such as its definition, cover options, policy details, and how it compares to personal health insurance plans. We’ll also examine the costs involved and offer guidance on selecting the right policy for your business.
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July 14, 2024
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What is company health insurance?

Company health insurance, also known as corporate or group health insurance, is a policy purchased by an employer to cover medical costs for their employees. The coverage typically extends to a range of health-related expenses, from routine check-ups and preventive care to more significant medical treatments and surgeries. These policies may be seen as a key employee benefit by staff which may enhance a company's ability to attract and retain talent

One of the main advantages of company health insurance over individual insurance plans lies in its pooling risk across a group of people – the employees. This often results in lower premiums per person, over personal private medical insurance policies, as the risk is spread over more individuals. Employers will pay the employee's portion of the premium and also may choose to cover the cost of the dependent’s premiums or share it with employees through payroll deductions.

Furthermore, these policies may provide employees with quick access to medical treatment, potentially reducing the amount of time they are absent due to illness. The extent and specifics of what is covered can vary widely depending on the policy chosen by the employer.

Company health insurance at a glance

To help you understand company health insurance, we’ve summarised some of the key points that employers and employees can expect from this type of insurance:

  • Definition: Company health insurance is a type of policy that employers purchase to cover their employees’ medical costs.
  • Coverage: It typically includes diagnosis, medical treatments, and surgeries. It may also include extended cover, such as dental and optical, for an additional premium.
  • Cost advantages: Premiums are generally lower per person compared to individual health insurance as the risk is spread across a group of employees.
  • Employee benefits: Insurance may attract and retain talent by offering valuable health benefits.
  • Fast access: Employees may benefit from quick access to treatment and diagnosis.
  • Cost sharing: Employers may fully cover premiums or share costs for dependents with employees through salary deductions.
  • Customisability: Policies vary widely, allowing employers to choose options that best fit their budget and employees’ needs.

What policy options are available for companies?

When considering company health insurance, employers are faced with a variety of policy options. Each type is designed to meet different needs and budgets, allowing for a tailored approach to employee benefits. Understanding these options is crucial for selecting the right cover for your team.

Number of employees

The policy options available will often depend on the number of employees being covered. Insurers offer plans tailored to different business sizes, such as medium-sized companies and large corporations. 

Basic vs comprehensive coverage

Many providers offer different levels of coverage, ranging from basic to comprehensive health policies.

Basic coverage: Typically covers in-patient only treatments. This option is cost-effective for businesses needing straightforward medical support for their employees.

Comprehensive coverage: Includes all the benefits of basic coverage, with additional services such as specialist treatments and mental health support.

Modular policies

Some providers allow you to include or exclude certain cover options.

Customisation: Modular policies allow employers to start with a base of essential cover and add modules as needed. Options might include outpatient care, dental treatment, and alternative therapies.

Flexibility: This approach provides flexibility and control over the costs and coverage level, making it ideal for businesses that require custom solutions for diverse employee needs.

Example company health insurance policies

There are many providers to choose from when looking for company health insurance, with some examples including:

  1. Bupa
  2. Vitality
  3. The Exeter
  4. AXA Health
  5. Aviva
  6. WPA
  7. Freedom Health Insurance

Every provider structures their offerings and cover in different ways, and we can help you compare business health insurance policies so you understand what’s available to you.

How does company health insurance differ from personal health insurance?

Understanding the difference between personal and company health insurance may help employers and employees understand the value of a company-wide scheme. We’ve summarised some of the key differences below.

Premium costs

Company health insurance: Premiums are generally lower per person as the risk is spread across a larger group of individuals. Employers pay for the employees premium and may often subsidise premiums for dependents which can make this option more cost-effective for employees.

Personal health insurance: Premiums are calculated based on individual risk factors, including age, address, and some lifestyle choices such as smoking. This can make personal insurance more expensive compared to the group rates available through employers.

Extent of coverage

Company health insurance: Typically offers a standard set of benefits that provide coverage for a broad range of medical services, and may include additional options such as dental and optical.

Personal health insurance: Provides a customisable range of coverage options that individuals can tailor to their specific health needs. However, more comprehensive coverage can significantly increase the cost.

Ease of use

Company health insurance:  Employees of larger schemes, typically 25+ members, may benefit from medical history disregarded underwriting where exclusions are not placed on pre-existing conditions.

Personal health insurance: Individual policies are typically subject to underwriting terms that exclude pre-existing conditions

How much does company health insurance cost?

The cost of company health insurance in the UK can vary widely depending on several factors, such as:

Size of the company: Larger companies often benefit from lower per-employee costs due to economies of scale. Insurers are typically able to offer more competitive rates to larger groups.

Age and health of employees: The average age and overall private medical claims of the workforce can significantly impact premiums. Younger and/or employees who claim less generally result in lower premiums, whereas older or employees with frequent or large claims may increase costs.

Level of coverage: The extent of the coverage options selected (e.g., basic vs. comprehensive) will also affect the price. More extensive coverage generally increases premiums.

Location: Costs can also vary regionally, as premiums are based on postcode rating influenced by an insurers claims experience of local healthcare costs

Choosing the right policy for your company

Selecting the appropriate company health insurance policy requires a thoughtful analysis of both your business's needs and the needs of your employees. Making the right choice may enhance employee satisfaction and contribute positively to your company's culture and operational success.

Assessment of needs

Understand employee demographics: Consider the ages, family circumstances, and general health profiles of your employees. These factors will influence the type of coverage that will be most beneficial.

Evaluate business objectives: Align the choice of health insurance with your business goals. Whether it’s reducing absenteeism, attracting top talent, or improving employee retention, your objectives should guide your policy selection.

Comparison shopping

Compare quotes: Go through a comparison process to get a range of quotes and find the right balance between cost and coverage.

Check for value-added services: Some policies offer additional benefits such as wellness programs, online health resources, or access to mental health support, which can be valuable extras.

Consulting with professionals

Use brokers and advisors: Health insurance brokers and financial advisors can offer insights and advice tailored to your specific needs. They understand the market trends and can guide you through the policy selection process.

Compare company health insurance policies

If you’re ready to explore company health insurance policies or you have further questions, please reach out to our team, who will be happy to help. 

We’re independent health insurance brokers who work with the major UK providers, and we aim to find you the most inclusive policy at the best value for money for you. You’re under no obligation to purchase, and this is a free service we offer to any UK company considering health insurance. Complete the form below to get started.

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