Small business health insurance for your team

Small business health insurance is a private medical insurance policy that a company arranges for its employees, directors or both. It covers eligible private treatment for acute conditions that begin after cover starts, such as specialist consultations, diagnostic scans and hospital treatment, while everyone stays fully entitled to NHS care.

The business is the policyholder, so you decide who is eligible, the level of cover and how the scheme is funded. You can usually add or remove employees as your team changes, and the policy is renewed each year.

Typical cover includes specialist consultations, diagnostic tests such as MRI and CT scans, inpatient and day patient treatment, and cancer treatment within private facilities, using hospitals within the insurer's approved network. The differences between insurers often sit in the detail, such as hospital lists, outpatient limits and how claims are authorised.

You can read more about how we arrange business health insurance for companies of different sizes.

Most insurers need at least 2 employees to set up a small business health insurance policy. However, a number of insurers offer business plans that can be set up with just a single member, which can suit company directors who want cover arranged through their limited company.

The size of your scheme affects more than eligibility. Smaller schemes usually use moratorium or full medical underwriting, while larger schemes may qualify for medical history disregarded underwriting, where employees join without exclusions for previous conditions.

Each insurer sets its own minimum for this, but it is usually around 20 insured employees. As an example, Bupa states that on its small business cover it will disregard medical history where more than 15 people are covered, depending on the underwriting chosen.

If you are a sole trader without a limited company, our page on health insurance for self-employed people explains your options.

There is no fixed price, because premiums depend on your team and the cover you choose. The number of employees, their ages, where they live and work, the hospital list, outpatient limits, excess and underwriting method all affect the cost, so we compare quotes from several insurers for your business.

Whether employees can add family members, and who pays for them, also makes a difference. If you already have a scheme in place, your existing underwriting can affect the price you are offered when you switch.

There are several ways to manage the cost without losing the benefits your team values most. A higher employee excess, a more targeted hospital list, a guided consultant option or tiered cover for different groups can all help. Any potential savings depend on your circumstances, and we explain what each change means before you decide.

For more on the factors involved, read our guide to how much private medical insurance costs.

Premiums paid by a limited company are usually treated as a business expense for corporation tax purposes. However, small business health insurance is normally a taxable benefit for the employees and directors who are covered, and the company usually pays Class 1A National Insurance on the value of that benefit.

Company paid health cover is usually reported to HMRC each year as a benefit in kind, either on a P11D form or through payroll. Each person covered then pays income tax on the value of their benefit at their usual rate.

This applies to directors covered by the scheme too, including directors of a single person limited company. Many employees still see private medical cover as one of the most valuable benefits an employer can offer.

Tax rules can change and depend on your circumstances, so we always recommend checking with your accountant. We can explain how different scheme designs work, so you can have an informed conversation about the right structure for your business.

Underwriting decides how employees' past medical conditions are treated. Smaller schemes usually use moratorium or full medical underwriting, while larger schemes may qualify for medical history disregarded terms. If you are switching from an existing scheme, your current underwriting can often be carried across to the new insurer.

On a moratorium basis, anything an employee has had symptoms, advice, diagnostic tests or treatment for in the 5 years before joining is not covered for the first 2 years. It may then be covered once they have been free of symptoms, advice and treatment for 2 consecutive years.

With full medical underwriting, each employee completes a health questionnaire and any exclusions are confirmed at the start. Medical history disregarded underwriting covers pre-existing conditions with no questionnaires to complete, but it is a more costly option. Our guide to health insurance underwriting explains each method in detail.

Whichever option you choose, private medical insurance is designed for acute conditions. Ongoing management of chronic conditions is not covered, although some policies may cover the initial diagnosis and treatment of an acute flare-up. Read more in our guide to chronic conditions.

Yes. Director only private medical insurance is an option for small companies, particularly where the directors are the people the business depends on most. You can start with cover for directors and extend the scheme to employees later, either at the same level or through a tiered structure.

Tiered cover lets you offer different levels to different groups, such as enhanced outpatient cover for directors and a core level for the wider team. This can help you control costs while still offering a meaningful benefit.

Directors covered through the company are treated in the same way as employees for tax purposes, with the benefit reported to HMRC. When you are ready to extend cover, we look at how new joiners would be underwritten and whether a larger group could open up different underwriting options.

Often, yes. Many small business health insurance schemes let employees add a partner or children, usually at their own cost, although some employers choose to pay. The exact options depend on the insurer and the scheme rules you set, including when family members are allowed to join.

Many schemes use joining windows, so it helps to agree from the start when family members can be added and who pays for them. We help you set clear scheme rules so everyone knows what is available.

When an employee leaves, their cover under your scheme usually ends. Many people then choose to continue with individual health insurance. Where your scheme is underwritten on a medical history disregarded basis, insurers can accept this underwriting when the person moves to an individual policy, subject to their criteria. This can help former employees keep cover for conditions that were covered under your scheme.

Yes. You can review and switch your scheme, most commonly at renewal. The key is protecting your team's existing underwriting. If all members are insured on a medical history disregarded basis, you can choose this option again when moving to a new business policy, and other switching options are available too.

For schemes on other terms, continued personal medical exclusions or a continued moratorium may allow employees to keep their current position rather than starting again. Each insurer has its own criteria for accepting a switch.

Timing matters. Starting a few weeks before renewal gives enough time to compare like for like, agree underwriting terms and make sure your new scheme starts when the old one ends, so there is no gap in cover. If staying with your current insurer is the best option, we will tell you and support you through the renewal. Find out more about how we review or switch a policy.

There is no single best insurer for every business. The right choice depends on your team's ages and locations, the hospitals that matter to you, the benefits you want to prioritise and your budget. As an independent broker, Morehealth compares leading UK insurers to find the best fit for your business.

If you go direct, an insurer can only show you its own plans. We look at practical differences such as hospital networks, outpatient allowances, mental health and cancer cover, and how claims are authorised, then explain them in plain English.

Our advice is free to your business. We are paid by the insurer you choose, and our commission is not added to your premium. As a small, UK based team, we offer a personal service from the first conversation through to setup and each annual review.

You can call us on 0800 028 5540 or message us on WhatsApp. Our advisers are available Monday to Thursday, 9am to 6:30pm, and Friday, 9am to 5pm. Find out more about Morehealth.