What Is Business Health Insurance? A Guide for UK Employers

Last checked: 29 October 2026

Business health insurance, also called company private medical insurance (PMI) or group health insurance, is a policy that an employer buys to give its staff access to private medical treatment. It usually pays for the diagnosis and treatment of acute conditions that start after an employee joins the scheme. It sits alongside the NHS rather than replacing it.

Who is it for?

Schemes are most common in firms with a team of three or more staff, where one policy covers everyone the employer chooses to include. Smaller firms, including those with one or two people, can still ask for a quote, and the broker explains what is available for a business of that size.

How does a company health insurance scheme work?

The employer takes out one policy for the employees it chooses to include. Some schemes let staff add a partner or children. When a covered employee needs treatment, they usually see a GP, are referred to a specialist and check with the insurer that the claim is covered before treatment starts.

The price depends on the number of people covered, their ages, where they live, the level of cover and the group's claims history.

What does it usually cover?

Cover varies by policy, but a typical scheme includes:

• In-patient and day-patient treatment: hospital stays, surgery and treatment where a bed is needed, for acute conditions.
• Diagnosis: tests and scans to find out what is wrong, often subject to limits.
• Out-patient cover: specialist consultations and diagnostic tests that do not need a hospital bed. Entry-level schemes often cap this with an annual money limit, and fuller out-patient cover is usually an option at extra cost.
• Mental health cover: some policies include it, others offer it as an extra, often with a limit on sessions or cost.
• Digital GP: many schemes include phone or video GP appointments.

An acute condition is a disease, illness or injury that is likely to respond quickly to treatment and lead to a full recovery.

What does it usually not cover?

• Chronic conditions: long-term conditions that cannot be cured, such as diabetes or asthma, are generally not covered for ongoing management. The Association of British Insurers (ABI) notes that some conditions, for example chronic conditions, will probably never be covered.
• Pre-existing conditions: conditions an employee had before joining are often excluded, at least for a period, depending on the underwriting type.
• Emergency care: accident and emergency treatment is normally left to the NHS. Private medical insurance is mainly for planned treatment.
• Other common exclusions include routine pregnancy and childbirth, and cosmetic treatment. Each policy lists its own exclusions.

What are the underwriting types?

Underwriting is how the insurer decides what it covers for each person, mainly around past health.

• Moratorium: on policies that offer it, employees usually do not fill in a health questionnaire. Instead, conditions they had symptoms, treatment or tests for in a set number of years before joining are not covered at first. According to the ABI, such a condition can become eligible once the person has gone a continuous period, usually two years, without symptoms or treatment for it after the policy starts.
• Full medical underwriting: each employee declares their medical history at the start. The insurer then states which conditions are excluded, and some may be excluded permanently.
• Medical history disregarded: the insurer ignores past medical history, so pre-existing conditions can be covered. This option is often available to larger groups, and the minimum group size varies by insurer.

How can the cover be shaped?

Employers can adjust a scheme to balance cover and cost, mainly through:

• Excess: the amount a member pays towards a claim before the insurer pays the rest. A higher excess usually means a lower premium.
• Hospital lists: insurers group private hospitals into lists. A narrower list of hospitals usually costs less than a list that includes, for example, central London hospitals.

Other choices include the out-patient limit and whether mental health cover is included.

How is business health insurance taxed?

According to HMRC guidance on GOV.UK, medical insurance that an employer provides for an employee is usually a taxable benefit in kind:

• Where the employer arranges and pays for the insurance, it is reported to HMRC on form P11D, and the employee pays income tax on its value.
• The employer pays Class 1A National Insurance on the value of the benefit.
• Some things are exempt, for example treatment or insurance for injuries or diseases that result from the employee's work, one health screening or medical check a year, and up to £500 of treatment to help an employee return to work after at least 28 days off sick.

The rules depend on how the cover is arranged and paid for. The full HMRC rules are on GOV.UK under "Expenses and benefits: medical or dental treatment and insurance". This page states facts only and is not tax guidance for any particular business.

Why do employers offer it?

Common reasons employers give are:

• giving staff a route to private diagnosis and treatment alongside the NHS;
• helping employees get back to work sooner after an acute illness or injury;
• including it in the benefits package used to attract and keep staff;
• giving staff access to extras such as a digital GP and mental health support.

Getting a quote

Prices 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 2026-10-29):

• GOV.UK, Expenses and benefits: medical or dental treatment and insurance: https://www.gov.uk/expenses-and-benefits-medical-treatment
• GOV.UK, Expenses and benefits: medical or dental treatment and insurance, What's exempt: https://www.gov.uk/expenses-and-benefits-medical-treatment/whats-exempt
• Association of British Insurers, Moratorium (glossary): https://www.abi.org.uk/data-and-resources/tools-and-resources/glossary/moratorium/
• Association of British Insurers, PMI health guide: https://www.abi.org.uk/globalassets/files/publications/public/health/2017/08/abi_bro3887_pmi_health_guide_v4.pdf