How can my business choose the best employee health insurance?

The benefits of employee health insurance

It's a jobseekers' market, meaning your company needs to stand out to attract the best new talent. The COVID-19 pandemic brought 'the great resignation', with many workers reviewing their options and leaving jobs to seek a better work-life balance elsewhere. Whilst resignations have slowed, some commentators predict that UK businesses will face another round of resignations towards the end of 2023. Offering health insurance as part of your employee benefits package can help retain staff.

Enabling your team to access high-quality private healthcare services also reduces absenteeism. It allows staff to get GP appointments and seek health advice at a time to suit them. If they become ill, they can be treated quickly and return to work, benefiting both your business finances and their well-being.

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All health insurance allows the policyholder to seek private treatment, subject to the coverage their policy provides. A group health insurance plan works similarly and provides health insurance to your entire workforce. Group health insurance plans are typically cheaper per head than individual policies. Insurance companies assess the risk of a claim on the policy and set the premium accordingly. With group health insurance, your insurers can spread the risk across a larger group of people and reduce the cost.

When you choose a health insurance plan, you can tailor it to suit your business needs and budget. Coverage begins as soon as you start paying your monthly or annual premiums.

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Health insurance offers a variety of different types and levels of coverage. SMEs face different challenges to large corporations, so health insurance companies provide health insurance plans that reflect this. Small business health insurance includes some of the same services as corporate health insurance, but corporate plans include features that reflect the demands of managing a larger workforce.

Small business health insurance

You can choose a small business health insurance plan if you have two or more employees. Small business health insurance typically covers up to 249 employees. Group health plans usually cost less per head than individual policies, so they can offer cost savings even if you have a very small business.

Small business health plans have similar features to individual policies, for example, virtual GP services, healthcare helplines and mental health support. However, business health insurance typically also adds features such as training and resources to help you promote workplace well-being and identify potential physical and mental health issues affecting your team. You'll also find online portals to enable you to add new starters and remove leavers more easily.

Corporate health insurance

Corporate health insurance plans offer the same services as small business health insurance but add enhanced support to reflect the demands of managing a larger workforce. Corporate plans are available to businesses with over 250 employees. If you have a much larger workforce, it's also worth looking for an insurance company offering health insurance plans designed for companies with more than 500 employees.

Corporate health insurance can include features such as crisis or change management and outsourced occupational health or HR services. You can also access employee health evaluation tools that look at the general health of your workforce and identify any potential health issues that could cause problems in the future. Most insurance providers offer support with developing a workplace wellness strategy that can help to improve employee engagement and prevent health issues before they arise.

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Health insurance provides care for acute conditions and comprises core coverage and optional extras. You can choose your added extras to suit your business needs. It's wise to compare insurance companies as the cover you receive as standard can vary widely. Here are some of the features you can expect to find.

Core coverage

Every health insurance provider offers coverage for inpatient treatment, cancer care and mental health support. The level of care you can expect as standard varies between insurers.

Generally, you'll be covered for surgery and the costs of a stay in the hospital, along with care in a day-patient unit. Cancer care covers the costs of surgery, radiotherapy and chemotherapy, with some insurers also covering the cost of wigs, prosthetics and support services.

Most health insurance includes some form of counselling or CBT, while other providers have enhanced mental health insurance, including inpatient admissions.

Optional extras

Optional extras increase your premium cost but can also add valuable extra coverage, significantly increasing your ROI. They allow you to tailor your health insurance coverage to meet the needs of your workforce.

Outpatient care

We think outpatient health insurance is one of the most valuable options to add to your policy. It covers an initial appointment with a consultant and diagnostic tests and scans. Without it, an employee would need to wait for an NHS diagnosis before being referred for private surgery. NHS waiting list figures remain high, which could mean your employees face a lengthy wait for treatment and a more prolonged absence.

Outpatient coverage can also enable quick treatment for conditions that may not require surgery. For example, a back condition can impact an employee's ability to carry out tasks. Outpatient physiotherapy can get them back to health and work at full capacity.

Mental health insurance

Whilst all health insurance includes some mental health care, you can enhance the type of treatment or the number of available sessions. Depending on the insurance company you choose, this could include adding inpatient treatment, CBT or more counselling sessions.

Additional mental health insurance is extremely valuable if you work in a high-stress industry.

Optical and dental care

Optical and dental health insurance can often be added as a single package or separately.

If your staff use display screen equipment, you're legally required to pay for eye tests and glasses for display screen work. Your health insurance can cover these tests at a reduced cost and allow your employees to claim for other treatments.

Free dental checks and treatment are only available in a limited range of circumstances, so your employees are likely paying for private care. Dental coverage can help them to save money, which could make a real difference during the cost of living crisis.

Both optical and dental check-ups can act as an early warning system for some health conditions, enabling your employees to seek advice and treatment at an early stage.

Hospital list

Every health insurance plan includes a standard hospital list detailing hospitals, clinics and treatment centres where policyholders can go for treatment. Some insurers have a network of private hospitals, while others collaborate with other providers and the NHS to use their facilities. It's a good idea to check your chosen insurers' list to see what's available where you are.

If you're based in a major city or Central London, it's worth considering adding an enhanced hospital list to your policy. Some providers focus on city centre locations, where wages, facilities and utility costs are higher, so your treatment will cost more. However, it's a worthwhile addition if it allows your employees to receive treatment close to their homes or workplace. Depending on your location, you can opt for an enhanced list or an enhanced list plus London.

International health insurance

Suppose your employees regularly travel overseas for work or are based full-time in another country. In that case, international health insurance allows them to access private treatment where they are instead of having to travel back to the UK. Travel insurance can be suitable for short, infrequent trips but only usually allows emergency treatment abroad.

Different levels of international health insurance cover specific regions or offer worldwide coverage.

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Health insurance provides coverage for acute illnesses that are treatable with a course of treatment. If you or one of your employees has a chronic condition, for example, diabetes or heart disease, your health insurance plan won't cover it, and you'll need long-term care and monitoring via the NHS.

Your health insurance plan will also have a list of standard exclusions, typically including cosmetic surgery, straightforward pregnancy and birth and treatment for addiction. Standard exclusions vary, so checking the small print is vital.

Other exclusions on your employee health insurance depend on individual employees' medical history. Conditions they've been treated for or sought advice about in the five years before they joined the policy will be excluded for the first two years.

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Your budget is likely a significant factor in the health insurance plan you choose and the coverage level you can afford. Insurance costs are assessed using a variety of factors. Some relate to the policy, while others are evaluated based on your business profile. Individual insurers assess risk in different ways, so it's a good idea to get a range of quotes to see what's available.

Here are the main factors that insurers look at when they assess your premium cost.

Your business

Different factors influence the likelihood of an employee making a claim and how much treatment will cost. These include:

• The number of employees covered
• The average age of your employees
• Your location - treatment is more expensive in major cities
• Your industry and how high-risk each job role is

Policy coverage

You can tailor your health insurance coverage to suit your needs. The elements you include will influence the cost. You can also set financial limits on the types of treatment your health insurance plan covers. Each of these will impact your health insurance costs:

• Your level of coverage and financial limits
• The optional extras you choose
• Your chosen hospital list
• Underwriting options

Underwriting

You can choose the type of underwriting you want your policy to have. This can be pretty technical, so here's an overview of the options.

Moratorium underwriting

As we've already mentioned, any conditions that required medical attention in the five years before an employee joined the policy are excluded during a two-year moratorium at the start of the policy. If they stay symptom-free, your insurer can remove the exclusion. If you choose moratorium underwriting, employees don't have to provide medical details when joining. However, claims can take longer and are more likely to be rejected, as your insurer will investigate when an employee makes a claim.

Full medical underwriting

Full medical underwriting also has a two-year moratorium, but your employees provide health information when joining. They'll have more certainty about what's covered, and the claims process is typically quicker. Premiums are also usually cheaper than moratorium underwriting.

Medical history disregarded

This type of underwriting is only available to businesses, including small businesses and larger corporations. It's the most expensive option but doesn't exclude any pre-existing conditions. It allows employees to get quick treatment regardless of their history and can help avoid a situation where they need to disclose their medical information to you. For example, an exclusion could result in an extended absence while they wait for NHS treatment.

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There are tax implications to consider when you provide health insurance to your team. There are some tax benefits, as premiums are deductible against corporation tax.

Your employees pay income tax on the value of the benefit, which is equivalent to the cost of the premium. You must report the benefit to HMRC using form P11D and pay employers' National Insurance contributions.

Getting professional advice

Our independent brokers can help you to find the right health coverage for your business. Get in touch for a comparison quote.

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