Why Businesses Offer Group Medical Insurance
More UK employers are recognising that providing employee health insurance is more than just a perk — it’s a strategic investment.
Key reasons include:
- Reducing absence → Employees can access faster treatment and return to work sooner.
- Attracting and retaining talent → PMI is a highly valued benefit in competitive job markets.
- Boosting productivity → Healthy staff are more engaged and efficient.
- Supporting wellbeing → Many plans include mental health, wellness apps, and virtual GP services.
According to the Chartered Institute of Personnel and Development (CIPD), health benefits are consistently ranked among the most attractive employee perks in the UK.
Key Factors Employers Should Consider
When evaluating group medical insurance, employers need to balance cost with cover and employee needs.
1. Budget and Cost Management
- Premiums depend on company size, workforce demographics, and chosen benefits.
- Businesses should decide whether they’ll cover premiums fully or share costs with employees.
- Using a health insurance broker can help negotiate better group rates and structure policies cost-effectively.
2. Level of Cover
Employers must decide how comprehensive the policy should be.
- Basic plans → Cover in-patient treatment and surgeries.
- Comprehensive plans → Add out-patient services, mental health, therapies, and cancer cover.
- Customisable options → Tailor benefits to workforce needs (e.g., maternity add-ons, physiotherapy).
3. Hospital Access
Policies often come with hospital lists. Employers can choose:
- National lists → Staff access private hospitals nationwide.
- Local lists → Lower premiums with a restricted number of hospitals.
4. Employee Demographics
A younger workforce might value mental health services and wellness support, while an older workforce may prioritise cancer care or orthopaedic treatment. Understanding employee needs ensures the policy has real value.
5. Compliance and Tax Considerations
Employer-provided PMI is considered a taxable benefit in the UK. Businesses must:
- Report the benefit on employees’ P11D forms.
- Pay Class 1A National Insurance on the value.
(Source: HMRC health insurance guidance)
6. Communication and Engagement
Even the best plan fails if employees don’t use it. Employers should:
- Provide clear information on what’s covered.
- Offer onboarding sessions.
- Ensure staff know how to access services quickly.
The Role of Brokers in Group Medical Insurance
Working with a health insurance broker is often the simplest way to secure the right policy. Brokers help employers by:
- Comparing insurers like Bupa, AXA Health, Aviva, WPA, and Vitality.
- Negotiating corporate discounts.
- Explaining exclusions in plain English.
- Supporting renewals and claims admin.
For SMEs, where HR teams are often small, brokers provide invaluable support in managing the ongoing relationship with insurers.
Case Example: SME in Birmingham
A 35-person digital agency in Birmingham wanted to introduce employee health insurance to reduce sick leave. Initially, they considered a direct quote from one major insurer — £12,000 per year. After consulting a broker, they:
- Reviewed cover levels.
- Adjusted hospital access to local Birmingham clinics.
- Added virtual GP services for flexibility.
- Secured the policy for £9,200 per year — a saving of £2,800.
The result? Increased employee satisfaction, reduced sick days, and a clear ROI.
FAQs About Group Medical Insurance
1. Is group medical insurance mandatory in the UK?
No, unlike pensions, it’s not a legal requirement. It’s offered voluntarily by employers.
2. Can employees add family members to the plan?
Yes, most insurers allow staff to extend cover to spouses and children, usually at an extra cost.
3. How much does it cost employers?
It varies, but SMEs typically spend £300–£1,000 per employee annually, depending on cover.
4. Do all employees need to be included?
Not always. Some insurers allow cover for specific groups (e.g., management teams).
Conclusion
Choosing the right group medical insurance plan requires balancing affordability with meaningful benefits for staff. Employers should consider budget, cover levels, compliance obligations, and employee demographics before making a decision. Partnering with a health insurance broker helps businesses navigate these complexities, negotiate better deals, and ensure their investment genuinely supports staff wellbeing and productivity.
