A Guide to Small Business Health Insurance

Are you starting a small business? Do you already have one? In any case, you may find yourself concerned about the welfare of your employees and yourself while working at your company.

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Are you starting a small business? Do you already have one? In any case, you may find yourself concerned about the welfare of your employees and yourself while working at your company.

Small business health insurance can cover the health needs of all your staff and refer them for private treatment. Business owners may consider implementing policies in their company. After all, a happier and healthier workplace can
lead to a thriving business.

Should you find yourself considering small business health insurance, we have a guide that walks you through everything you need to know about the policies.

Let’s start with a definition of small business health insurance.

What is Small Business Health Insurance?

Small business health insurance is private medical insurance for all employees, executives, and stakeholders in a company considered ‘small.’ 

The definition of small usually means businesses that don’t exceed 250 employees.

The policies geared towards small businesses offer a range of health coverage within the organization, such as treatments and diagnosis. Many include consultations and benefits such as portals to seek health advice, virtual GPs, and
other unique benefits insurers offer.

More small businesses adopt these dedicated health insurance policies to see their employees’ welfare and as a definite perk for incentivizing their hard work. Where many would not afford individual private medical insurance, these
company plans can assist with medical needs.

Arguably, small business health insurance is mutually beneficial for both employers and employees. However, when businesses start, the cost of premiums may outweigh the company budget.

Many business owners will ask, do we need a private health insurance plan as a lean business?

Do I Need Small Business Health Insurance?

We compare plans from the leading health insurance providers

Small business health insurance can bring many benefits to the working environment. The peace of mind that your employees and yourself have medical protection can boost the workplace.

However, the costs at the current stage of your business growth may not be feasible. Furthermore, you may only have a few employees where you may feel like taking out a policy is a big step.

But with the rising number of small businesses bringing health insurance plans into their organization, one may ask if it’s a necessary step to facilitating company growth.

Is Private Health Insurance Necessary for My Small Business?

Getting small business health insurance is by no means essential for your business. However, many smaller companies look at the policies to run their operations more effectively.

Small business health insurance policies can help with:

  • Increasing productivity – Should any of your employees fall ill and struggle to get the treatments they need, they may be away from work. Private health insurance can refer them to specialists much quicker.
    That means that your employees will see increased productivity with any medical issues resolved in a fraction of the time it would take without health insurance.

  • Building a more attractive workplace – You can attract some of the finest minds and best employees in the business. Knowing they get private cover for sudden-onset medical conditions is a great incentive to
    work for your company.

  • Employee welfare – Not only are your employees always taken care of, but it also looks good on the business. You’ll be able to build trusted relationships with both your employees and clients.

We expand further on whether you’d consider a health insurance plan for your small business by highlighting the benefits of the policies.

The Benefits of Health Insurance for a Small Business

So what further benefits can small business health insurance offer?

  • Fast treatment for employees – Your employees won’t have to join NHS waiting lists to get treated for medical conditions. They can get consultation and treatment almost immediately, swiftly getting them
    back to work.

  • 24/7 health helplines – Employees can seek medical advice even outside office hours if they don’t feel comfortable divulging details at work.

  • Online GP services – Get seen by a GP about conditions on an online portal, meaning employees may not need to be away for long for an appointment.

  • Flexible schedules – Give your employees the freedom to plan their healthcare appointments

  • Possible cover for families – Some small business health insurance policies will even provide plans for the employee’s families.

  • Personalized care – Personalized healthcare is one of the most attractive prospects for a workplace. You can bring that into your small business to ensure the health and happiness of all your personnel.

Now that we’ve covered what attracts small businesses to take out health insurance policies, you may wonder what gets covered with the plans.

What Does Small Business Health Insurance Cover?

Like most health insurance policies, small business medical plans have three tiers of cover directed towards employees. They will cover acute conditions when they sign on to your company and, subsequently, the insurance policy.

The three tiers of cover include:


The basic tier of a small business health insurance policy will cover inpatient care only. That means should an employee need medical attention, the insurer will cover the costs of treatments that require overnight
stays in the hospital.


A mid-range or medium small business healthcare plan will cover inpatient care with limited outpatient treatments.

All overnight stays in hospitals will get covered by insurers, and some outpatient care will have coverage. The limitations to outpatient care may include some therapies or caps on how much you can claim on outpatient treatment.


Comprehensive insurance includes the full suite of inpatient and outpatient care. Often, these policies will consist of further benefits like mental health care, physiotherapies, and other supplementary treatments.

Comprehensive plans usually are the most sought-after policies as they offer the most attractive prospects to the workplace. But even the most complete coverage will have certain health aspects that don’t get covered in the policies.

What Doesn’t Get Covered by Small Business Health Insurance?

In most cases, it’s crucial to point out that pre-existing conditions in employees will not get coverage by small business health insurance. Should employees sign on with a chronic or pre-existing condition,
it’s pretty unlikely any treatments will get covered except in extraordinary circumstances.

There are a few other things that small business health insurance doesn’t generally cover. These include:

  • Emergency care

  • Pregnancies (although complications may have coverage)

  • Fertility treatments

  • Kidney dialysis

  • Rehabilitation from alcohol or substance abuse

  • Non-essential cosmetic surgeries

Some insurers will offer flexibility on conditions that generally don’t get covered. However, the premiums would likely be higher for anything considered not standard in policies. Should you be seeking more customized coverage, speak
with your broker or insurer about your coverage concerns.

Now that we understand coverage, you’d be ready to get an idea of how much small business health insurance will cost your company.

How Much Does Small Business Health Insurance Cost?

Every insurer is different and can have additional costs based on various group factors and levels of coverage. However, most small businesses can expect to pay around 
£250 a person per year for basic coverage, rising to about £1000 per person for comprehensive coverage.

For a business of 5 employees with basic coverage, you could be looking at around £1250 per year for your company. A small enterprise of 200 with comprehensive cover could see 
£200’000 a year costs.

The costs of premiums can change based on the following factors, however. They include:

  • Group size – The more employees you have in your company, means lower premiums per person. However, small business health insurance policies have a cap of around 250 persons.

  • Average age – Insurers will determine the average age of your employees. Wherever the average age for staff is younger, that would mean cheaper premiums.

  • Coverage level – The level of coverage for your small business has a significant impact on premiums. If you choose the basic cover, the costs will be less. Should you opt for more comprehensive coverage,
    the prices will be higher. If you add extras like dental care and mental health insurance, they will be even more expensive.

  • Type of employment – The industry you operate in also affects the cost of premiums. Should you have a workplace posing higher health risks to your employees, the higher the price per person.

  • Office location – If the office of your business is in the city, treatment would be more expensive. Therefore, premium costs will be more.

  • Excesses – Should your business agree to cover a certain amount of treatment costs for your employees upfront, premiums won’t be as expensive.

Even though small business health insurance would be arguably less expensive than taking out individual health insurance policies, the cost to the company may concern. Many would inquire whether it’s possible to get better rates for
organizational health coverage.

Can I Make Small Business Health Insurance Cheaper?

Many insurers will vary on how they address their small business insurance policies. However, the small business and corporate insurance market are competitive. Some providers will offer some reasonable rates on company-wide coverage.

It’s essential to speak to your insurer about what plan would suit your company’s needs. Remember, cost should not be the determining factor in committing to a policy. Your employees’ health and safety should come first.

However, there are ways to reduce the costs of small business health insurance premiums. Those include:

  • Reduced hospital access – The most comprehensive policies will offer treatments at a wide range of private medical facilities. However, limiting the number that your employees can use will reduce the cost
    of premiums.

  • Excesses – You’ll see premiums drop if your company will front the cost of some of the treatments. The more the business is willing to pay for your employees’ treatments, the less your premiums.

  • Limited outpatient cover – Placing limits or caps on the amount of outpatient cover for your employees can help reduce premium costs.

  • Corporate discounts – Some insurers will offer premium discounts to attract small businesses to their policies.

Small businesses come in different sizes in terms of employees and can scale above and beyond expectations. Those considering taking out small business health insurance may wonder if there are any restrictions to purchasing a policy.

Are There Any Conditions to Qualify for Small Business Health Insurance?

By insurers’ standards, most will consider a small business an entity with under 250 employees. That’s usually the only prerequisite to qualify for small business health insurance.

Under 250 employees, you’ll be able to take out a small business health insurance policy. Going over that amount will put your company into the corporate health insurance category.

If small business health insurance is available for a sole trader, the question remains. There are options in the form of director’s health insurance that operates like small business health insurance, but for an individual. It means
your health insurance will get paid for by your limited company rather than your health insurance.

Speak with your insurer about any conditions or requirements to qualify for small business health insurance. While it’s rare that there will be barriers to entry, there may be some things you need to know about obtaining the right

A Summary of Small Business Health Insurance

Considering small business health insurance can be a lot to weigh up with many factors driving the decision. Let’s summarize this guide to get an overview of the policies.

  • Small business health insurance is private medical insurance for employees and stakeholders with under 250 employees in the company.

  • Taking out small business health insurance policies isn’t necessary but can have an incredibly positive impact on your company.

  • Benefits include better workplace productivity, employee welfare, and an attractive work environment.

  • Small businesses have three tiers of employee coverage, basic, mid-range, or comprehensive.

  • There are some conditions that small business health insurance won’t cover.

  • The cost per employee ranges by number of staff and level of coverage

  • There are options to reduce your premiums.

  • Companies under 250 employees qualify for small business health insurance. Even small traders

Should you have any questions, queries, or concerns about small business health insurance, speak to your insurer or broker. They will elaborate on anything in this guide and tailor a custom policy to your needs.