Employee Health Cover for a Small Business

Offering health cover to staff is a recruitment and retention decision as much as a health one, and the practical details differ from personal cover. This is general information rather than financial or tax advice.

What group cover typically includes

Diagnosis and treatment of acute conditions that arise after the policy starts. Chronic conditions requiring ongoing management are usually excluded once diagnosed, which is the most misunderstood part of these policies.

Emergency care remains with public services in countries that have them.

Underwriting for a group

Medical history disregarded terms are sometimes offered above a minimum number of employees, which means pre-existing conditions are covered without individual underwriting. Below that, moratorium underwriting is usual and excludes recent conditions.

Ask which applies, since it changes the value of the benefit considerably.

Tax treatment

In many countries the premium is a deductible business expense and is also a taxable benefit for the employee, reported and taxed accordingly. Employer national insurance or equivalent may be due.

Check the position with an accountant before announcing it, since employees discovering an unexpected tax charge undermines the goodwill.

What staff actually value

Fast access to diagnostics and outpatient appointments, mental health support and physiotherapy are generally rated more highly than inpatient cover, because they are used more often.

Ask people rather than assuming. An employee assistance programme costs far less and is used by more staff.

Controlling cost

An excess, a restricted hospital list, outpatient limits and a six-week option all reduce premiums substantially. Premiums rise with the age profile of the workforce and after claims.

Alternatives and additions

An employee assistance programme, a cash plan covering dental and optical, or subsidised gym membership all cost far less and are used by more people than inpatient cover.

Occupational health support helps most when someone is actually off sick, which is when a business feels the cost.

Communicating it

A benefit nobody understands is a benefit nobody values. Explain what is covered, what is not, and how to use it, and repeat it annually.

Legal obligations come first

Health cover is a benefit rather than a substitute for an employer's legal duties on health and safety, risk assessment, sick pay and reasonable adjustments.

Those obligations apply regardless of what insurance is in place, and getting them right matters more.

Reviewing it

Compare at renewal rather than accepting the quoted increase, since premiums rise with the age profile of the workforce and with claims history.

Practical

Check how joiners and leavers are handled, whether family members can be added at their own cost, and what happens on renewal.

Read the policy wording rather than the brochure.