A business takes out one group scheme covering its employees, priced on the group rather than each person, and almost always arranged through a broker.

How it actually works

Business private health insurance means a group scheme rather than a stack of individual policies. The employer takes out one policy that covers a defined group of employees, and sometimes their families, so the staff get private diagnosis and treatment while the company holds and pays for the cover. It is a voluntary benefit, not something a business is required to provide.

The price is built from the group as a whole. Insurers look at the age profile of the workforce, where it is based, the level of cover and excess chosen, and, once a scheme is running, its own claims history. Headcount matters, but the age mix usually matters more, which is why two firms of the same size can be quoted very differently.

How you buy it is different from an individual policy too. Small-business group cover is almost always placed through a broker, because the schemes, the underwriting bases and the insurers vary in ways that are not sold well online. The broker rates the group across insurers, sets it up, and handles the repricing at each renewal.

There is a tax dimension that individual cover does not have. The premium is an allowable business expense that reduces the company's corporation tax, but for each covered employee it is a taxable benefit in kind reported on a P11D. So the cover is an allowable expense for the company and taxed on the individual at the same time, which is worth understanding before you set a scheme up.

Questions to put to the insurer or broker

  • What is the smallest group you will write a scheme for?
  • On what basis would my group be underwritten?
  • How does the corporation-tax deduction net against the benefit-in-kind tax for my staff?

Related questions

Cover, tax and advice are three separate questions

This explains how business and group cover is structured, not what a scheme would cost you — that turns on your workforce, the cover level and the insurer. The tax treatment described is general and depends on your circumstances, so confirm it with an accountant, and use an FCA-authorised broker to arrange the scheme itself. Private medical insurance still excludes conditions an employee already has, and the chronic conditions every insurer excludes, whoever pays the premium.

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