Private Medical Insurance for a Small Business: How It Works

Last checked: 9 November 2026

Private medical insurance for a small business is a single group policy that the business takes out for the staff it chooses to include. It pays for private diagnosis and treatment of eligible acute conditions, alongside the NHS. Small-group schemes work in much the same way as schemes for large employers: the business picks the cover, the underwriting type and who is included, and the policy usually runs for a year at a time. Schemes are most common in firms with three or more staff, and firms of any size, including those with one or two people, can ask for a quote.

For an overview of how a company scheme works in general, see employer group health insurance.

Can a company with fewer than 50 employees set up a scheme?

Yes. Group health insurance is not only for large employers. Insurers offer schemes for small and medium-sized businesses, including schemes that cover only a few staff. Each insurer sets its own rules on the minimum number of people a group scheme needs, so the options open to a very small team can differ from those for a larger one.

What changes with size is mostly how the scheme is priced and underwritten. A small group has no long claims record of its own, so the price is based mainly on the members' details and the cover chosen. Some underwriting options, such as medical history disregarded, are usually kept for larger groups.

How is a small-group scheme set up?

Setting up a scheme usually follows these steps:

1. Decide who is covered. The business chooses which staff join, for example all employees, or staff who have passed probation. Directors can usually be included in the same scheme.
2. Choose the cover. Policies are built around core cover for in-patient and day-patient treatment, with options such as out-patient cover, mental health cover and therapies.
3. Choose the excess and hospital list. A higher excess or a narrower list of hospitals usually lowers the premium.
4. Choose the underwriting type. This sets how each member's past health is treated.
5. Give the member details. Insurers usually ask for each member's age and postcode, as both affect the price.

The policy then starts on an agreed date, and members receive details of how to make a claim. Under the ABI's general description of private medical insurance, treatment usually starts with a GP referral, and the member checks with the insurer that the treatment is covered before it begins.

What underwriting choices are there?

Underwriting is how the insurer decides what it covers for each member, based on their medical history. At a high level, small groups usually choose between:

• Moratorium: the insurer does not cover conditions a member had symptoms of, treatment, tests, medication or medical consultations for in a set number of years before joining. According to the Association of British Insurers, such a condition may become eligible later, usually after a continuous period of two years after the policy starts with no symptoms, treatment, medication, tests or medical consultations for it. The insurer may ask for medical notes when a claim is made.
• Full medical underwriting: each member gives details of their medical history at the start, and the insurer states any conditions it excludes.
• Medical history disregarded (MHD): the insurer sets aside members' past medical history. The Association of Medical Insurance Intermediaries describes it as usually applied to larger group schemes, and the minimum group size varies by insurer.

A business moving an existing scheme to a new insurer may be able to keep its current underwriting terms. The types are set out in more detail in business health insurance underwriting.

Who pays for the cover?

Most schemes are paid for by the employer, but there are other ways to arrange them. The tax treatment depends on how the cover is arranged and paid for. According to HMRC guidance on GOV.UK:

Some insurers also offer voluntary schemes, where the employer sets up the scheme and staff choose whether to join and pay for the cover themselves. Some schemes let staff add a partner or children, often at their own cost.

The tax rules for company-paid cover are set out in is company health insurance a taxable benefit. This page states facts only and is not tax guidance for any particular business.

How are staff added later?

A small business often grows during the policy year. New employees who meet the scheme's eligibility rules can usually be added when they join, and the premium changes to include them. They join on the scheme's underwriting type: on a moratorium scheme, the look-back and qualifying periods for a new member usually run from the date that member joins. On a fully underwritten scheme, the new member gives their medical history.

When an employee leaves the business, their cover under the company scheme normally ends. Some insurers let a leaver move to a personal policy with the same insurer, depending on the insurer's terms and time limits.

What happens at renewal?

A group policy usually runs for 12 months. Before the renewal date the insurer sets the premium for the next year, which can reflect changes in members' ages, the number of people covered, medical costs and, as the group grows, its claims history. Renewal is also the usual point to change cover levels, the excess or the hospital list.

What does a small-business scheme usually not cover?

Like other private medical insurance, small-group schemes are built around acute conditions. The ABI lists items that are normally not included, such as accident and emergency admissions, long-term treatment of chronic conditions, cosmetic treatment and, depending on the underwriting, conditions members had before joining. Each policy lists its own exclusions.

Getting a quote

Prices, underwriting options and cover differ between insurers and depend on your business and staff. Quotes are not given on this website. The form asks a few short questions, such as how many employees you have and whether you already have a policy, plus your contact details. A business health insurance broker then calls you to talk through the options. If you send your details outside office hours, the call may come the next working day.

Sources (checked 2026-11-09):

• Association of British Insurers, Are you buying private medical insurance? (PMI guide): https://www.abi.org.uk/globalassets/files/publications/public/health/2017/08/abi_bro3887_pmi_health_guide_v4.pdf
• Association of Medical Insurance Intermediaries, Health insurance glossary (moratorium, full medical underwriting, medical history disregarded, excess): https://amii.org.uk/health-insurance-glossary/
• GOV.UK, Expenses and benefits: medical or dental treatment and insurance, What to report and pay: https://www.gov.uk/expenses-and-benefits-medical-treatment/what-to-report-and-pay