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PMI for small businesses

Overview

Why invest in private health insurance?

There are many advantages to working for yourself. Record numbers of people are setting up on their own. Most are self-employed individuals, frequently working from home. Others set up partnerships or limited companies to allow several people to work together.

When you work for yourself, all the benefits that a major employer provides vanish. This includes private health insurance for you and your family.

When self-employed, there is no-one to cover for you or do your work when you are ill or getting treatment. The last thing you need is to be hanging around all day in the hope that the doctor or hospital will see you quickly.

Self-employed people want to be able to choose when and where they get medical care, and to get back to work as quickly as possible. If you're not fully fit it affects both work and income, so getting treated quickly is vital.

The solution

A few insurers allow people leaving a company to continue cover on an individual basis, but you get little choice of cover and price. Many insurers accept individual self-employed people on individual private health insurance plans. An increasing number offer specific private medical care insurance covers for the individual self-employed. Many insurers offer "group/corporate plans" for as few as two or three people.

Cover can include family members. It is usually treated as a legitimate business expense. You do not have to cover every employee, cover can be limited to named people or just directors.

Several policies have extra benefits to keep you healthy. These may include health screening, eye tests and a range of helplines.

Take a look at the types of private medical care insurance cover available for small businesses and the self employed. Under each type of cover, you will find listings of products which are aimed at the self employed and small business.

Self employed vs small business vs corporate cover

A surprisingly large number of insurers now offer specific covers for the small business sector. There are differentiated as follows.

Self employed cover

This is for self employed individuals. The policy is in an individual name. It can usually be extended to include partner and children.

Small business cover

This is for people in small and medium sized businesses.

  • Policies are in the company name.
  • They are very flexible.
  • Cover is for named individuals, and often for their partners and children too.
  • Less often, the cover is by title of the person e.g. director, managing director.
  • Premiums are based on the individuals insured.
  • You do not have to cover every employee, cover can be limited to named people or just directors.
  • On most policies, you have to select cover and options that apply to all people insured. On a small number of policies, insurers will allow you to vary some covers, but not all, between the people insured.
  • Several policies have extra benefits to keep you health. These may include health screening, medicals, eye tests and discounts on membership of health clubs.

Corporate Cover

These are private medical care insurance  plans where companies want to cover 50 or more people. Although insurers have standard corporate products, these can often be amended on cover and price to suit the needs of the business. For corporate cover, we suggest that you use the services of an insurance broker who can negotiate with insurers on your behalf and has access to those insurers who will not deal direct with businesses on corporate cover.

Where such businesses are arranging cover, there can be tax implications for the company and employees, as an employee benefit it is vital that any insurance covering private health, dovetails with covers arranged on pensions, life, accident and travel policies; to avoid duplications or gaps in cover.

Types of cover

The main attraction of private medical insurance is the degree of patient choice it offers. There is a wide variety of covers to choose from. If you have private medical insurance you can choose where, when and how you are treated. Some insurers limit the choice to specified hospitals.

Private medical insurance cover used to be either for individuals, or corporate cover bought by large companies as group health insurance. In recent years, insurers have realized the importance of the individual self employed and small business sector. They have developed products for individuals and businesses. Many have reduced the minimum number of people insured on business policies as group health insurance, to as low as 3 or even 1 or 2.

Increasingly, private medical insurance is also offering preventative medicine, GP and nurse helplines, health screening, fitness and health advice, and even discounts at health clubs and gyms.

You can often add other insurances to your private medical insurance. These include health cash, critical illness, life, income protection, travel and dental.

Our aim is to help guide you through this maze.

These are the main private medical insurance categories:

  • Packages - where you have a fixed range of cover, with limited choice.
  • Choice of Cover - where you can choose to build a policy from a wide range of options.
  • Limited Cover - where cover is for a small number of illnesses/events.
  • Shared Risk - where you can drastically reduce the price by sharing the risk with the insurer.
  • Special Cover Plans - ideas and innovations that cover selected risks, or are just unusual, such as:
    • Hospital treatment plans
    • Medical savings plans
  • Channel Isles and Isle of Man plans - for the specific requirements of Channel Islands and Isle of Man residents.

Channel Islands and Isle of Man

The need 

If you are lucky enough to live and work on one of the Channel Islands or Isle of Man you have the same needs for medical treatment as those living on the UK mainland. Many standard Private Medical Insurance products will offer you much of what you need. But there are two extra factors for those living in Guernsey, and Jersey and Isle of Man.

  • For some medical treatment, you will need to travel to or be taken to, the UK mainland, by air or sea.
  • Each of the Channel Islands and Isle of Man all have their own unique laws and taxation systems.

The solution

A few insurance providers have designed special policies for those businesses based in the Channel Islands and Isle of Man. They are adaptations of UK policies, to take into account the extra travelling and taxation systems. There are separate policies for Guernsey, Jersey and Isle of Man.

Choice of cover

Who needs a "choice of cover" plan?

We all have different wants and needs. What suits one person may be unsuitable for another. A single man may feel that pregnancy and maternity cover is irrelevant. A family may want to include the costs of parent accommodation if a child is ill. The number of variables is infinite. Each person or family has different budgetary needs for which a package can be designed.

Companies too are different. A start up which can afford only basic cover, or a high tech company needing to attract and keep personnel, are different from the lawyer or the deep sea diver. What is unimportant to an office business, may be vital  to one where everyone is involved in driving or heavy manual work.

What is a "choice of cover" plan?

Technology now allows insurers to offer more choice. There is usually, but not always, a core cover which everyone must have. Typically this will be most costs of in-patient and day-patient treatment. Helplines will usually be automatic too.

Each insurer and each product has its own range of choices, and there are many different ways of describing the main areas covered. Among those available are:

  • medical costs, as in-patient, out-patient and day-patient
  • hospital charges including accommodation costs
  • consultants and specialists fees
  • radiotherapy and chemotherapy
  • physiotherapy
  • psychiatric treatment
  • diagnostic tests
  • scans

Other benefits include:

  • nursing at home
  • private ambulance
  • recuperative care
  • complementary therapies
  • alternative medicines
  • chiropody
  • parent accommodation
  • dental surgery
  • pregnancy consultations and tests
  • overseas evacuation/repatriation
  • GP minor surgery
  • GP fees
  • health information and other helplines
  • GP advice line
  • permanent disablement
  • health screening
  • no claims discount
  • discounts at health clubs

Other insurances are:

  • health cash
  • dental cash
  • dental
  • critical illness
  • personal accident
  • travel

Some policies offer full cover with no limits. Others will put limits on amounts paid per policy year, amounts paid per claim, limits on fees and procedures expressed in £s in total, per day or per week, or in number of days or weeks for which cover applies. There may be limitations on which hospitals can be used.

Limited cover

Who is a limited cover scheme for?

Some businesses cannot afford a full cover private medical insurance, but want the basic costs of private health care covered. Others feel that the NHS will offer adequate treatment for anything major that goes wrong, so only want to protect themselves for certain long term diseases. Another group is those who do not see why they should pay for a policy with screening, health cash, helplines and lots of extras that they are unlikely to use.

What kinds of limited cover scheme are there?

There is no standard policy, so each insurer differs on what they cover, what extras they include/exclude, and whether or not the limited cover also has high excesses (the amount the customer pays for any treatment) as well.

Policies may include a no claim discount and option to limit cover to conditions only where the wait for NHS treatment is 6 weeks or more.

A small number of companies offer limited cover schemes, but they are not that much different from some basic package covers. What one insurer regards as a standard package, another may see as a  limited cover product.

Package products

The need for package products

Providing a pre-set package of benefits and limits keeps costs down for insurers and makes it easier for businesses to buy a product. Insurers use their knowledge to decide what is best for the average person and business. A particular package may or may not be the best solution for you.

The approach

A packaged policy means that you have no choice on what covers or benefits you can include or exclude. There may be limited choices such as how high the excess is (the amount you pay). Several insurers offer a range of packages to suit different budgets.

What's in a package?

There is no such thing as a standard package. Each provider has their own ideas, and often has a range to choose from. As well as private medical costs, policies often include automatically, or offer as an option, related health and other insurances.

The main items likely to be covered include:

  • medical costs as in-patient, out-patient and day-patient
  • hospital charges including accommodation costs
  • consultants and specialists fees
  • radiotherapy and chemotherapy
  • physiotherapy
  • psychiatric treatment
  • diagnostic tests
  • scans

Other benefits include:

  • nursing at home
  • private ambulance
  • recuperative care
  • complementary therapies
  • alternative medicines
  • chiropody
  • parent accommodation
  • dental surgery
  • pregnancy consultations and tests
  • overseas evacuation/repatriation
  • GP minor surgery
  • GP fees
  • health information and other helplines
  • GP advice line
  • health screening
  • no claims discount
  • discounts at health clubs

Other insurances are:

  • health cash
  • dental cash
  • dental
  • critical illness
  • personal accident
  • travel

Some policies offer full cover with no limits. Others will put limits on amounts paid per policy year, amounts paid per claim, limits on fees and procedures expressed in £s in total, per day or per week, or in number of days or weeks for which cover applies. There may be limitations on which hospitals can be used.

Shared risk

The need for shared risk plans

Many businesses feel they neither need nor can afford a private medical insurance covering virtually everything. They are wary of choosing a limited risk, wanting to protect some treatments that a limited cover policy does not, or not cover treatments which a limited risk cover does. It is all about personal choice.

The approach

Most private medical insurance policies have an excess, the amount of the claim that you pay yourself. The first solution is to see if your insurer will reduce the costs if the excess is increased. The amounts on offer vary, but can be up to £1,000.

An alternative is to select a High Excess policy which only offers a high excess. Typically the excesses on offer are £2,500, £5,000, and £10,000. Some policies limit the total amount you could be asked to pay in one year.

There are no business High Excess policies, but some package or choice of cover policies will offer excesses anywhere between £50 and £5,000.

Businesses should think very seriously before accepting a high excess. The excess may apply to each person insured. Can your business self fund the excess if one or more people need treatment in the same year? With self employed people or small businesses relying on one or two key individuals, it is probable that business earnings will drop during their absence. These high excesses are really aimed at the corporate market, companies insuring over 100 individuals.

Another alternative is a Shared Responsibility cover. You pay a percentage of the treatment costs yourself. Typically this can be between 25% and 75% of costs. The more you pay, the lower the premium. Usually there is a £ limit on how much you can be expected to pay in one year.

At present there is only one insurer offering the shared risk concept on business insurance.

Special cover

The growth of "special cover" plans

There is an increasing number of special private medical insurance policies designed to meet specific needs. Some providers feel that standard covers are not the solution for every business so they have come up with innovative ways of solving the problem.

Some solutions are unique to one provider, while others are being developed by several providers. With these unusual solutions, we suggest you take care, as some are new and untested. If necessary, get expert advice.

Additional information is provided on specialist products, as follows:

  • Hospital treatment plans
  • Medical savings plans

Hospital treatment plans

Where do hospital treatment plans fit in?

If you pay for your own healthcare without insurance, you benefit financially from arranging cheaper treatment in the UK or overseas. If you buy insurance, the insurer benefits from any costs savings. Costs savings are often related to which hospital or consultant is used, and insurers may not allow the customer to choose this. If you find the NHS can give as good or better treatment than privately, the only beneficiary of this is the insurer.

The approach

An insurance which pays out for almost any treatment needed. The customer decides when and where treatment is carried out, and whether it is private or NHS. The customer gets a fixed sum.

Medical savings plans

Where do medical savings plans fit in?

On a conventional Private Medical Insurance you may pay premiums for several years and if you do not make a claim you get nothing back. If you self fund then you have no guarantee that funds will be available when you need private treatment.

The approach

Medical savings plans are a form of private medical insurance that have been developed in the USA and are now being introduced here. When these are purely savings plans they are a financial tool which this site does not cover. However, a new breed of part savings plans, part private medical insurance is developing. These allow individuals to build up their own health fund for paying medical bills. They also have insurance to limit how much the business pays.

These products are not really suitable for small businesses.

Do we recommend policies?

We do not recommend any particular product or provider. We do not make judgement as to whether or not a policy, or any feature in it, is "good" or "bad". Neither do we suggest which policy is best suited to you. Always check out the full policy wording before buying, and carefully read any documents that the insurers provide.

Our Product Profiles are independent. They are not written, or edited by, any insurer or other provider. We do not give them ratings or stars.

We have broken down the hundreds of policies on offer into specific categories to help you find your way through the health insurance maze.

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