Why businesses offer health insurance
With NHS waits for planned treatment still long, a staff member waiting months for a diagnosis or operation can mean extended absence, reduced productivity or losing them altogether. Company health insurance helps employees get diagnosed and treated quickly and back to work sooner. It's also one of the most valued benefits in recruitment and retention.
Most schemes also come with extras that help day to day, such as a virtual GP service, mental health support and an employee assistance programme (EAP).
How big does my business need to be?
Schemes are available for businesses of almost any size. Many insurers cover small businesses from two employees, and some will insure a single company director. As the group gets bigger, you get more choice over underwriting and more stable pricing.
Underwriting options for groups
Business schemes offer more underwriting choices than individual policies:
- Moratorium — pre-existing conditions from the last few years are excluded until each member has had a clear period on the scheme.
- Full medical underwriting — each member declares their history and specific exclusions are set up front.
- Continued personal medical exclusions (CPME) — used when moving an existing scheme to a new insurer, so members keep their current terms.
- Medical history disregarded (MHD) — pre-existing conditions are covered from day one. Usually for larger groups, though some insurers offer it to smaller ones. The most generous option, and priced accordingly.
Tax and National Insurance
In general terms, for a limited company:
- The company can usually treat premiums as an allowable business expense for Corporation Tax.
- Employees usually pay income tax on the value of the cover as a benefit in kind (reported on a P11D or through payroll).
- The employer pays Class 1A National Insurance on the value of the benefit.
- Insurance Premium Tax (IPT) at the standard rate of 12% is already included in the premium.
Tax rules change and depend on your circumstances, so confirm your position with your accountant. Sole traders are treated differently — see our self-employed guide.
Controlling the cost
The same levers as personal cover apply: excess levels (per claim or per person), outpatient limits, hospital lists and six-week NHS wait options. Some businesses fund core cover for all staff and let employees pay to upgrade or add family members. A specialist can model different options side by side.
What employees get
Typically fast access to specialists, diagnostic tests, in-patient and day-patient treatment, comprehensive cancer cover, and — depending on the level chosen — mental health cover, physiotherapy and other therapies. Many insurers include digital GP and wellbeing apps as standard.
Questions and answers
How many employees do I need for a business health insurance scheme?
Fewer than many people think. Many insurers offer small business schemes from as few as two people, and some will cover a single company director. Larger groups get access to more flexible underwriting and pricing.
Is business health insurance tax deductible?
For a limited company, the premiums are generally an allowable business expense for Corporation Tax purposes, as part of the cost of employing staff. However, the cover is usually a taxable benefit in kind for each employee, and the employer pays Class 1A National Insurance on its value. Always confirm your own position with your accountant.
Do employees pay tax on company health insurance?
Generally yes. Employer-paid private medical insurance is usually treated as a benefit in kind, so employees pay income tax on its value — reported on a P11D or through payroll. Even so, the tax is normally far less than the cost of buying the same cover personally.
What is medical history disregarded underwriting?
Medical history disregarded (MHD) means the insurer covers employees' pre-existing conditions from day one, subject to the policy's normal terms. It's usually offered to larger groups, though some insurers make it available to smaller ones. It's the most generous type of underwriting and costs more as a result.
Can employees add their families?
Usually yes. Most schemes let employees add a partner and children, either paid by the employer or by the employee (often through payroll), typically at group rates.
What happens to an employee's cover when they leave?
Cover normally ends when they leave the scheme, but many insurers offer a leaver's option that lets them move onto an individual policy on continuing terms, without starting their underwriting again.
Insurers worth comparing
Further reading
- Employer Health Insurance vs Buying Your Own: What's the Difference?
- Insurance Premium Tax Explained: Why Your Policy Costs More Than the Premium
- Mental Health Cover in Private Health Insurance: What's Included in 2026