Business health insurance for UK SMEs made simple

As an employer, it’s important to offer the benefits and perks that help you attract and retain the best talent while keeping your team healthy and productive. One key benefit to offer is private medical insurance for your employees – helping to lighten the load on the National Health Service (NHS) and reduce the cost of private medical treatment for your team. 

Let’s explore how business health insurance works, which team members will be included and how much this healthcare will cost your business. 

What is business health insurance and who needs it

Business health insurance is a way for your organisation to provide private medical health cover for your employees and directors. 

Rather than being wholly reliant on NHS care, employees can be diagnosed, treated and supported by a private medical provider. Some (or all) of the costs of this treatment will be covered by your business health insurance. 

Providing health insurance is something any employer can do, whether you’re a small micro-business with two employees or a small to medium-sized enterprise (SME) with hundreds of employees. Healthcare can sometimes be a directors-only scheme, or have varying levels of cover for employees, depending on the seniority of their role. 

Healthcare cover is usually a major perk within your employee benefits package and a vital way to attract new talent to the company. 

How is business health insurance usually set up?

Providing healthcare cover for your employees needs to be carefully structured and organised. There will be clearly defined processes in place for signing up eligible employees, carrying out medical checks and providing cover.

Let’s look at how a healthcare scheme will typically be set up:

• Which employees will be eligible for the scheme? The specific group of staff covered by your health insurance will be defined by you. It may cover all employees, or it may only cover specific groups, like directors or managers. 
• What are the underwriting options? The insurance underwriter's primary role is to evaluate, quantify, and price the risk that your employees pose if they were to make a claim for private medical costs. There are various options for the underwriter to use when assessing your employees:
  
  • Moratorium underwriting (Morí): This is the quickest and most common option. The insurer agrees to cover staff without pre-screening them, but coverage is immediately excluded for any condition for which the employee has received treatment, advice or medication in the five years prior to joining. These conditions may become covered later if the employee remains symptom-free.
  • Full medical underwriting (FMU): All employees complete a confidential full medical questionnaire at the outset. The insurer reviews the history and formally confirms which pre-existing conditions are accepted, excluded or subject to special terms before the policy starts. This provides absolute certainty regarding their coverage.
  • Continued Personal Medical Exclusions (CPME): This is an underwriting option that requires your employees to provide details of their entire medical history. This allows the insurer to directly apply all previously held policy exclusions to the new plan without having to undergo a new moratorium or full medical review.
• What are excess levels? The excess is the fixed contribution amount your employee must pay towards any claim before the insurer covers the remaining costs. A higher excess will usually mean a lower business premium.
• What are outpatient limits? Outpatient limits are the maximum monetary cap the insurer will pay annually for things like diagnostic tests, scans and specialist consultations – i.e. things that don't require the employee to be admitted to a hospital bed.

Spreading the cost of business health insurance

For your business to provide private healthcare to your employees and directors, you’ll need a business health insurance policy in place. This means paying either an annual premium or monthly payments towards the costs of that premium. 

Paying a lump sum annually is the most cost-effective way to do this. But if covering that annual premium is stretching your cash flow, you could take out a flexible loan – like an iwoca Business Loan – to fund your insurance overheads. 

You can borrow only what you need and repay early with no fees.

Can self-employed people get business health insurance?

Yes, self-employed individuals and sole traders can get private health insurance, but they typically purchase it as an individual private medical insurance (PMI) policy, rather than through a business health insurance policy.

Note: The treatment of premiums and benefits will differ by legal structure, so a sole trader will need a different policy from a limited company. Make sure you get tax advice on the technical implications and the impact on your Benefits in Kind (BiK).

Types of business health insurance plans in the UK

If you’re considering offering private healthcare cover to your team, there are multiple business health insurance options to consider.

We’ve highlighted some of the more common types of health insurance, so you can make an informed decision about what’s right for your business:

1. Company private medical insurance (PMI): 

Company PMI plans are flexible multi-employee policies that use tiered cover levels based on the seniority of the employee’s role. Having this tiered structure allows you to provide fully comprehensive benefits to senior executives and directors while offering a cost-controlled, inpatient-only option for other staff members.

2) Directors-only policies: 

Directors' health insurance plans are specifically tailored for very small management groups. If you’re a limited company, this enables you to pay the premium as a tax-deductible expense, while guaranteeing private medical access for key personnel.

3) Healthcare cash plans vs full PMI: 

Cash plans reimburse your employees for any routine, preventative costs, like dental check-ups, optician visits and basic therapy. In contrast, full PMI is insurance that pays for the diagnosis and acute treatment of illnesses, rather than just covering the cost of preventative medical care. 

4) Healthcare add-ons: 

You’ll usually have a choice of optional healthcare extensions that can be bolted onto the core health insurance policy. This may include services like enhanced mental health support, virtual GP services, overseas business cover and guaranteed access to new cancer drugs and therapies.

How much does small business health insurance cost?

The price you pay for your organisation’s business health insurance can vary greatly. 

Simply Business has business health insurance quotes from £9 per employee, per month*, up to £66 per employee, per month*. The price you pay for your premium will be defined by the specific drivers relating to your business and your employee cover.

Let’s look at what the key drivers of price will be:

1. Headcount and ages of your workforce: The premium you pay is primarily driven by the number of employees you’re insuring. However, the average age of the employees being covered will also have an impact, as older groups pose a higher statistical risk of making expensive claims.
2. Location of your business and employees: Costs vary slightly from location to location as private treatment fees (hospital charges, consultant rates) are generally more expensive in specific high-cost areas, notably Central London.
3. Occupational risk of the work carried out: If your industry is associated with higher physical or psychological stress – for example, a manual labour or high-pressure finance sector – you may face a higher baseline premium due to the increased likelihood of claims.
4. Cover level (inpatient or outpatient?): Some policies cover full outpatient diagnosis (scans and tests, etc.) in addition to inpatient treatment. Policies that include outpatient care are significantly more expensive than policies that limit or exclude outpatient services.
5. Excess paid by the employee: The larger the fixed amount (or excess) employees agree to pay per claim, the lower the annual premium will be for the company. This is down to the reduced liability for the insurer. 
6. Underwriting type (Mori, FMU, CPME): Moratorium (Mori) is usually the cheapest starting option, as it places more risk on the employee to prove their lack of pre-existing conditions after joining.
7. Claims history: After the first year, a company with high usage and large claims will face a significant renewal price increase – also known as claims loading – while low claims usage earns a premium discount.

*prices correct as of December 2025

How can you reduce the cost of your business health insurance? 

There are a number of ways you can mitigate the cost of your business health insurance premium. The obvious one is to pay the annual premium outright. This removes the interest and additional admin fees associated with monthly payments. 

However, you should also consider:

• Increasing the amount of the excess paid by employees to cut the risk exposure for the insurer.
• Limiting who has access to outpatient services so your premium price is lower.
• Having a ‘guided hospital network’ that offers a restricted list of private hospitals and treatment facilities that an insured employee is permitted to use.
• Opting for virtual-first healthcare services, like virtual GPs and online therapy rather than in-person consultations and diagnoses. 

Paying annually is one of the most effective ways to secure a discount on your insurance premium. To cover this one-off cost, you can take out a flexible loan, like an iwoca Business Loan, to provide an injection of working capital. These funds help you pay the annual fee with surplus capital left over to reinvest in the business.

Is business health insurance tax deductible?

For companies, the premiums you pay for business health insurance will typically be allowable as a valid business expense. As such, they are likely to be tax-deductible, but make sure you consult your tax adviser to get confirmation of this. 

Note: there are P11D and benefit-in-kind implications for your employees and Class 1A NIC for you to pay as the employer. Again, flag this with your tax adviser. 

Key benefits of providing health cover for your team

Having business health insurance allows you to offer the best possible private healthcare for your team – and that has benefits for both your employees and the wider capabilities of your business. 

For example, some benefits of offering private healthcare include:

• Faster diagnosis of illness that gets your employees the treatment they need while also reducing staff absence rate and helping you remain productive.
• A good private healthcare scheme is a draw for attracting new talent to the business and giving you an edge over your competitors. Equally, good healthcare benefits can help you retain your key staff.
• With proper care and support, your team’s overall wellbeing is improved. Offering mental health support, physio service, virtual GP appointments, etc., you help create a healthy and happy workforce. 
• Taking good care of your workforce enforces a supportive and positive culture within the business. It can also be a positive part of your environmental, social and governance (ESG) narrative – an important metric for investors and potential partners who are looking to invest in the business. 

What does business health insurance typically cover?

The cover included in your business health insurance policy will typically fall into core and optional add-ons, with specific exclusions for certain conditions. 

Core areas of cover will include consultations, diagnostics (scans/tests), hospital treatment and any specialist fees incurred by employee patients. 

Optional cover that’s often available will include cancer care, therapies (physio and CBT, etc.), mental health provision and access to a private GP. Cash plans for dental and optical checkups are a common add-on, and some alternative therapies may be available, as long as these services are included within the policy.

Common exclusions are likely to include chronic conditions management, routine pregnancy, cosmetic procedures and experimental treatments. It’s important to check the policy wording so you have a full understanding of the stated exclusions.

How to compare business health insurance quotes

It’s good practice to review and assess the UK business health insurance market before you make any hard-and-fast decisions about insurance providers. 

Here are four key steps to include in your research and comparison process:

1. Prepare the right employee data and documents:

Before approaching insurers, gather precise data on employee age and location, define your budget and detail the minimum required cover levels. This will help you get quotes that are accurate for the specific needs of your workforce. 

2. Compare like-for-like details of all available policies: 

Focus comparison beyond price by matching hospital networks (Guided vs. Full), reviewing precise outpatient limits, checking the flexibility of claims service agreements (SLAs), and clarifying the terms when switching policies from one insurer to another via Continued Personal Medical Exclusions (CPME).

3. Decide if it’s better to deal direct or via a broker

With a specialist insurance broker you get expert knowledge to navigate the complex underwriting options and policy variations. Brokers can also save you time by offering invaluable ongoing claims management and renewal negotiation support.

4) Implement your new employee healthcare scheme: 

Define clear employee eligibility rules and drive take-up for the scheme by clearly communicating the key benefits of private healthcare. Establish renewal timelines early and monitor policy usage to justify the cost-effectiveness of the benefit and prepare for future price negotiation.

iwoca: Helping you remove the barriers to cost-effective business health insurance

Offering a private medical scheme for your employees is a great way to improve employee satisfaction and support the overall well-being of your business. 

To cover the initial outlay of the annual premium and scheme promotion to your workforce, it makes great business sense to take out a short-term loan from iwoca.

An iwoca Business Loan provides the funds you need to cover the insurance costs, with capital left over to reinvest in the future of your team and your business.  

• Borrow from £1,000 to £1 million
• Pay back the loan between 1 day and 60 months
• Zero fees for early repayment

Apply for an iwoca Business Loan

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