Personal Finance and Healthcare Expert
Health insurance provides quick access to high-quality private healthcare, which is excellent news when you're unwell and have a business to run. This guide explains how it works, the benefits, and how to choose the best policy if you're a business owner.
As a company director, you can choose to buy health insurance personally (private medical insurance) or, if you have three or more employees, opt for a small business policy.
The policies are very similar in many ways, with the biggest difference being how they are paid.
If you pay personally, the money will come out of your personal bank account and, therefore, isn't subject to any more taxation. If you pay for it via your business, it's a tax-deductible expense, but you will be liable to benefit-in-kind taxation and class 1a national insurance contributions on the premium value.
If you're a company director and unsure which is best for you, it pays to speak with a broker. They can help you decide on this and many other choices when arranging your policy. Brokers don't charge for their service, and you'll usually get the same price through them as you would going directly to an insurer.
As a business owner, your success depends on you. Whether you're the sole director of a one-person limited company or in charge of a large corporation, sickness absence may mean that work doesn't get done or income begins to drop if you aren't around to make crucial decisions. Depending on your business structure, you may not receive sick pay and lose income when you're away from work.
Private health insurance lets you access treatment quickly and skip the NHS waiting list. Some policies also offer health monitoring and well-being support that could help prevent illness.
Private health insurance provides treatment for acute medical conditions. Depending on your chosen policy, you can tailor your cover and access eligible treatment by claiming online, by phone or via an app for medical conditions you suffer from after taking out a policy.
As a company director, you can choose a policy that fits your circumstances. An individual private medical insurance policy will likely be suitable if you're a one-person business or only want to provide private health insurance for yourself as the business owner with your family, too.
If you have a larger workforce, an SME or Group health insurance policy might be a better git.
A private medical insurance policy is ideal if you're the sole director and employee of your company or if you want to cover for yourself, your partner or your family. The main advantage of this type of cover over an SME plan is that you can precisely tailor your cover to meet your individual needs and requirements. While some insurance providers offer SME health insurance for small companies, typically, this starts with at least three employees, so if you have less than that, private medical insurance may be your only option.
For businesses with between 3 and 249 employees, an SME policy is typically the best bet. In many ways, an SME scheme is similar to that of a larger group policy, and you'll need to decide what level of cover you wish to offer all of your employees and whether that differs based on seniority or job role.
If you have more than 25 employees on your policy, then in addition to the usual Moratorium and Full Medical Underwriting options, you'll also get the option to go for Medical History Disregarded underwriting, which costs more but means that pre-existing conditions will be covered.
A group scheme is typically the best option for businesses with more than 250 employees. In most cases, the human resources team arranges these for businesses of this size to cover all employees and, of course, the directors.
Finally, some businesses choose to go for an alternative: instead of providing a company-wide policy, they will give employees a personal health insurance allowance, which is added to their pay. This enables the employees to have the flexibility of choosing the type of policy and benefits they would like while also avoiding having a large group scheme to administer.
Similar cover is available in individual or group policies. Group private medical insurance often provides additional benefits and services to help you manage your employees' health needs. Core cover forms the basis of every policy, and you can add optional extras to enhance your cover at an additional cost.
Here are some of the elements you'll usually find.
Core private medical insurance coverage provides access to a limited range of treatments and services, such as 24/7 virtual GP appointments.
Most insurers also have a customer reward scheme, which provides perks and discounts that can help you save money. You can join this even if you choose a basic policy.
Here's what most private medical insurance offers as standard:
If you're admitted to hospital for treatment of an eligible condition, be that as an in-patient or day patient, your insurance will cover the private hospital fees and that of the medical specialists looking after you. Core cover also may cover medication and some follow-up rehabiliation.
1 in 2 of us will get cancer in our lifetime, so most private medical insurance policies include cancer treatment as standard. Policies vary in terms of the type of treatment they cover. Most health insurance includes surgery, chemotherapy and radiotherapy. Others fund cutting-edge private medical treatment such as stem cell therapy or breakthrough cancer drugs not currently available via the NHS.
Many policies also offer services such as nutrition support.
Life can be stressful for small business owners and mental health issues can impact your ability to work effectively. Fast access to good mental health support can benefit you and your business enormously.
Private health insurance policies typically provide counselling or CBT treatment sessions as part of their core coverage without needing a GP referral so that you can start treatment quickly. You can also pay more to enhance your mental health cover and get more treatment sessions and a broader range of treatments.
Comprehensive out-patient treatment is only available as an optional extra. However, many insurers offer limited cover with their core policies. Some provide out-patient procedures such as cataract surgery, while others offer private diagnoses. You'll usually find one or the other, but not both.
A private diagnosis usually includes a fixed sum for an initial consultant appointment and covers any diagnostic tests and scans recommended during your appointment.
A 24/7 virtual GP service lets you seek medical advice at a time that suits you. You can book an appointment online for either a video or telephone consultation. Some insurers also offer face-to-face appointments for an additional fee, limiting how many you can have each year. A private GP can refer you for further treatment or issue a private prescription, so it's ideal for straightforward health issues or referral requests.
Private health insurance includes access to telephone helplines offering general health advice. Many helplines are run by nurses, while others let you speak to a pharmacist, physiotherapist, midwife, or mental health specialist.
Many insurers also provide access to various self-help resources.
Adding optional extras to your policy will raise your health insurance premiums. However, they'll give you access to a broader range of private medical care and more treatment sessions. Most insurers offer increasing coverage levels so you can set financial limits that suit your needs and budget.
Here are a few of the options most private medical insurance offers.
As mentioned, most health plans include limited out-patient cover. Adding full out-patient treatment cover to your policy gives you access to consultant appointments, diagnostic tests and scans, and various out-patient treatments.
Some out-patient cover includes physical therapies such as physiotherapy, while other insurers offer this via separate therapies cover.
As mentioned, many medical insurance policies now offer separate therapies cover to allow you to tailor your cover closely. Therapies cover includes various treatments depending on your chosen provider. Most cover physiotherapy, osteopathy, and chiropractic treatment, with some policies offering alternative therapies such as acupuncture, homoeopathy, and reiki.
Basic medical insurance provides access to a few counselling or CBT sessions. Running a business can be stressful, so if you want to ensure you can access the best possible mental health treatment, it's worth adding enhanced mental health cover to your policy.
Additional cover can provide more counselling or CBT and offer different types of out-patient and in-patient treatment if needed.
If you already pay for private dental care and eye tests, adding optical and dental coverage to your medical insurance can be a cost-effective way to access treatment and reduce costs.
Most policies pay for regular check-ups, glasses, contact lenses, and dental treatments. However, depending on your chosen provider, some policies only pay for glasses and contact lenses but not eye tests. Other policies provide emergency treatment abroad.
You could also consider a cash plan that lets you claim cashback for medical expenses, including eye care and dental treatment.
When you buy medical insurance, your policy comes with a hospital list confirming which private hospitals and treatment centres the policy covers.
A standard list typically excludes hospitals in locations with higher treatment costs, such as London or other major cities. Suppose your nearest hospital isn't included on a standard hospital list. In that case, adding an extended list can help you access treatment close to your home or office to get the full benefit from your medical insurance. You'll typically be able to choose between a list that includes everything on the standard list plus all major cities except central London or one that consists of all of the above plus London.
If you buy a group policy rather than an individual one, your insurance will likely include services to help you manage your policy and employees' health needs. Most group policies include information to educate your team about their coverage and services they can use.
The services available to a small business differ from corporate policies, where services reflect the demands of managing a larger team. Providers vary, so it's worth shopping around to see what's available and what will benefit your team.
Every medical insurance policy has exclusions, meaning it won't cover every medical condition. Some exclusions are standard policy terms, while others vary depending on your medical history.
Medical insurance doesn't cover chronic conditions such as asthma or high blood pressure that need long-term monitoring. Other standard exclusions typically include:
If you sought medical advice or treatment for a condition during the five years before buying the policy, it'll be treated as a pre-existing condition and excluded from cover for the first two years. If you stay symptom-free, your insurers can add it later.
The cost of your private health insurance premiums depends on several factors. Each insurer assesses risk differently, so getting a range of quotes is wise.
Some risk factors are similar whether you choose an individual or group policy. Here are a few factors your insurers will consider whether you're buying individual or group health insurance:
Your circumstances can affect your premiums on an individual policy more than a group one. Premiums on a personal policy will likely be higher if you smoke, use nicotine products or engage in dangerous work or hobbies.
There are only two types of underwriting on individual policies: moratorium and full medical underwriting. The cost difference isn't huge, but full medical can be slightly cheaper.
With full medical underwriting, you provide medical history details, and your insurers can confirm exclusions for pre-existing conditions from the start. With moratorium underwriting, you don't give any medical information upfront, but claims can take longer.
Premiums on group policies vary depending on the number of employees you want to cover. More people may increase the cost, but it typically lowers the cost per head. The type of work your business does is also relevant; if your employees have high-risk occupations, they're more likely to claim.
You can choose medical history disregarded underwriting if your business employs over 15-20 staff. It's the most expensive option, but it lets employees access treatment without exclusions for pre-existing conditions.
Whether you choose a group or individual policy, your company pays for your company directors' health insurance out of pre-tax income. When you pay for your medical insurance personally it comes out of your net income. However, getting professional advice on your business and personal tax position is essential.
Medical insurance premiums are an allowable business expense, so when your limited company pays for coverage, you can claim them against your corporation tax bill.
However, HMRC also treats health coverage as a benefit in kind, meaning you'll need to report it and pay income tax on the value of the benefit (the cost of the premium). You must also pay class 1a national insurance contributions if you provide employee cover.
It's wise to get expert advice from your accountant or financial advisor regarding the tax implications when your limited company pays for your medical insurance. This can affect your personal tax position, and you'll need to consider the net cost to your business to determine the most tax-efficient way to pay. Factors such as whether you're a basic or higher rate taxpayer, whether you receive dividend income or salary, and whether you add family members to the policy all influence the tax implications.
Learn more about the tax implications.
We hope you've found this guide useful. At MyTribe, we offer information and guidance to help you understand your health insurance options and make informed choices. However, we always recommend getting professional advice to ensure your health insurance meets your needs. Contact us for a comparison quote, and we'll connect you with a regulated broker for tailored advice.
Disclaimer: This information is general and what is best for you will depend on your personal circumstances. Please speak with a financial adviser or do your own research before making a decision.
Kirsty is a personal finance and healthcare expert who enjoys demystifying legal and insurance topics for a wider audience. She’s a former solicitor with a personal injury and insurance background.
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