What is business health insurance?

The plain English definition

Business health insurance, also called group private medical insurance or group PMI, is a policy taken out by a company that pays for private healthcare for its employees. The employer pays a monthly or annual premium. When a covered employee needs treatment for an eligible condition, the insurer pays for it, up to the limits of the policy.

The point of the cover is twofold. First, it gives staff faster access to consultants, scans and surgery than they would typically get on the NHS, which reduces sickness absence. Second, it is a visible benefit that helps with hiring and retention.

How it works for employers

You set up a scheme with an insurer, decide who is in scope (for example all permanent staff, or just senior managers), and choose a level of cover. Employees are typically issued a membership card and a phone number. When they need treatment, they call the insurer first, who confirms the condition is covered and then helps them book the right consultant.

Premiums are usually paid monthly by the business and are treated as a tax-deductible business expense. The cover counts as a benefit in kind for the employee, which is reported via P11D or payrolled. For more detail see our guide on whether health insurance is a taxable benefit.

What it typically covers

• Private consultations with a specialist after a GP referral.
• Diagnostic tests, including MRI, CT and ultrasound scans.
• In-patient and day-patient treatment, including surgery and hospital stays.
• Out-patient treatment such as follow-up appointments and minor procedures.
• Cancer cover, often including chemotherapy, radiotherapy and targeted drugs.
• Mental health cover, including assessment and a set number of therapy sessions.
• Therapies such as physiotherapy, osteopathy and chiropractic.
• Virtual GP services and 24/7 health support phone lines.

What it does not cover

• Most pre-existing conditions, unless your scheme uses medical history disregarded underwriting.
• Chronic conditions that need long-term management, after the initial diagnosis and stabilisation.
• Routine pregnancy and childbirth.
• Cosmetic surgery and elective procedures.
• Emergency treatment, which remains the NHS's job.

Costs at a glance

For most UK SMEs, comprehensive cover sits in the region of £40 to £120 per employee per month. The figure depends on team age, location, the level of cover chosen and any underwriting choices. Larger schemes usually get better per-head pricing.

You can shape cost by raising the excess, narrowing the hospital list, or removing optional modules such as dental and optical cashback. For a deeper look, read our guide on business health insurance cost.

See an indicative range for your business →

Switching insurers

You can switch insurer at renewal. Most insurers offer continued personal medical exclusions, which means employees keep the cover they had under the previous policy without re-underwriting. This makes switching less painful than people often expect.

Frequently asked questions

• Do I have to offer it to everyone? No. You can choose to cover specific groups, such as directors or all permanent staff, and offer different levels of cover by group.
• Can my partner and children be covered? Yes, most insurers let employees add family members at their own cost.
• Is it the same as a healthcare cash plan? No. A cash plan reimburses small everyday costs. PMI pays for bigger treatment events. See our health insurance vs cash plan guide.