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How does Small Business Health Insurance Work

  • Oct 25, 2023
  • Health Insurance

A women paying for a product from a small business

Small businesses can enhance their employee benefits by providing health insurance. Given the growing pressure on the public healthcare system and the increased demand for comprehensive physical and mental healthcare, getting private medical insurance for your small business can help your employees better look after their health and wellbeing.

In this article, we explore how health insurance can benefit your business and your employees to help you make informed decisions about your health insurance.

What is small business health insurance?

Even though the market doesn’t offer a dedicated health insurance product for small businesses, the phrase “small business health insurance” is often used to refer to the health insurance taken out by small companies to offer their owners and staff access to private healthcare and other health benefits. Small business health insurance is usually taken out by companies with fewer than 100 employees, but larger companies usually have access to the same health insurance products, depending on the provider’s pricing and administration terms. Small business health insurance can bring multiple benefits to businesses and employees, which will be discussed below.

How does small business health insurance work?

Small business health insurance is taken out by small companies to provide their employees with faster access to diagnosis and treatment, more comfortable facilities, and more control over their healthcare through the private healthcare system. When employees need medical care for an acute, short-term condition which first arises after the start date of the policy, they submit a claim to the insurance company which will partly or fully pay the hospital bills. Usually, the employee is kept on the business health insurance plan until the termination of their work contract.

What are the benefits of small business health insurance

Like any business health insurance, small business health insurance offers multiple benefits to both your business bottom line and your employees’ wellbeing and motivation. The main benefits are listed in the table below.

Small business health insurane benefit What this means for employees What this means for employers
Quicker access to healthcare Employees can bypass the NHS waiting lists by getting treatment in private hospitals where the waiting times are usually shorter. This leads to reduced absence because employees return to work sooner, contributing to greater productivity in the workplace.
Financial security

Private medical bills can be expensive. Small business health insurance alleviates financial stress for employees.

Employees are more likely to be loyal to an employer that offers private medical insurance cover, lowering staff turnover and reducing training costs and resulting in a more stable and experienced team.
Preventative care Having access to private healthcare as well as other health benefits (such as access to virtual GP) facilitates early detection of health issues and therefore increasing the chances for successful treatment. Giving your employees access to preventative care enhances employee well-being and productivity which leads to fewer business disruptions due to serious illness.
More choice and flexibility Private health insurance gives employees more control over their healthcare which could include choice of hospitals and consultants, appointment times and remote medical advice. Providers of business health insurance usually offer customisable plans that suit employees’ needs and business requirements.
Peace of mind Having private health insurance can give employees peace of mind that when needed, they can access private healthcare and their medical expenses are taken care of. Small business health insurance helps towards a positive company culture and stronger employee loyalty.
Increased job satisfaction When the employer provides private medical insurance, the employees feel more supported and secure in their job. Employee satisfaction can provide several benefits for employers including improved staff retention, increased productivity, and enhanced business reputation.


How many employees do you need to qualify for small business health insurance?

Some providers may require a minimum number of members to qualify for their business health insurance, such as two members. As mentioned earlier, there isn’t in fact a specific product called “small business health insurance”, but the phrase is often used in the industry when a business with small number of employees takes out health insurance. If the number of employees exceeds 100, the insurance is generally referred to as corporate health insurance. However, each business health insurance provider has their own terms for providing and administering their products which means the threshold can vary.

How much does small business health insurance cost?

The cost of business health insurance can vary depending on several factors, including number of employees covered, provider, level of cover, extra health benefits added to the policy, industry type and underwriting method. To give you a general idea, the cost of health insurance for small businesses can fluctuate from a few hundred to several thousand pounds per month.

Find out about Freedom Health Insurance small business plans

Freedom Health Insurance offers small business health insurance tailored to your company’s business requirements. To find out more, get in touch with our team today.

Disclaimer: Freedom Health Insurance can’t offer advice on which cover could be best for your business. To receive independent advice and compare different providers, you should seek the services of a health insurance broker.