The UK job market has been incredibly competitive this year. Despite unemployment being one of its lowest rates in over 5 decades, most UK firms still struggle to find top talent. Not only is it difficult to find the right people but retaining them in today’s fickle market conditions is another challenge. Especially with many workers heading back into the office in recent months, people are looking for additional incentives and benefits from their employers.
Competitive salaries and enticing perks like free office lunches are a great place to start. However, for many, this is no longer enough. With a private healthcare scheme, employers can go beyond the traditional benefits package, stand out from the crowd, and make a significant difference in the overall health and wellbeing of their teams.
In this article, the UK’s leading company formation agent, 1st Formations, will delve into the top advantages of offering private health insurance in the workplace. They’ll also explain the potential business costs of this and highlight some of the top providers for small businesses.
Enhanced employee recruitment and retention
One of the biggest pros of offering your employees health insurance as part of their benefits package is strengthening your recruitment process and improving your staff retention rate.
A 2023 study by Zest, an employee benefits technology company, found that private medical care is the most in-demand work perk. Over a third of workers ranked healthcare as the most important benefit, followed by pension contributions, retail discounts, and a company car.
This data shows that health benefits are widely sought-after, particularly amid the cost-of-living crisis and intensified waiting times with the NHS. With private cover, however, your staff can get quicker and subsidised treatments without the worry of waiting several months for a hospital appointment or not being able to afford the medication they need.
On top of that, private healthcare can make your company a more desirable place to work. When you’re recruiting, this valuable benefit can make you stand out and attract more applicants. Your existing employees will appreciate this important perk, too, and it can significantly encourage long-term loyalty.
Finally, health insurance is representative of your company values, which can help you attract not only new hires but also clients and investors.
Private healthcare is not essential or common, especially among small companies. But by adding it to your employee’s benefits package, you can gain a competitive advantage and stand out from your competitors.
Polling company, Savanta, found that only 25% of UK SMEs currently offer private medical insurance. On top of that, only 20% said they plan to introduce it to their companies within the next year.
With intentions relatively low, there’s a considerable gap to be filled. Naturally, budgets are tight when running a small business, but there are various ways to adjust your premium to suit your budget, including the level of cover and the types of additional benefits you opt for. We’ll discuss this in more detail later in the post.
Absenteeism in the workplace is habitual absence. It refers to an employee who frequently fails to show up for work with or without an authorised reason. In contrast, presenteeism is when people come to work when unwell, both of which can be incredibly disruptive.
A recent CIPD Simplyhealth study reported the highest levels of workplace absences in the UK in over a decade. Nearly two-thirds of respondents admitted to absenteeism in their organisation, meaning that nowadays, employees miss an average of 7.8 days a year – two hole days more than pre-pandemic. This figure equates to 3.4% of working time lost.
For start-ups and SMEs, these numbers are crucial and can considerably stall growth. It means that companies with fewer than 50 people lose roughly 5 days per employee each year, or 6.5 days in medium-sized organisations with up to 249 people.
In terms of causes, the study also identified minor illnesses (like colds/flu and migraines), musculoskeletal injuries (like neck strain and back pain), and mental health (like anxiety, and depression) as the top 3 culprits of short-term absence. These are closely followed by COVID-19, which continues to have a significant impact on workers’ health.
The above study has concluded similar disruptions caused by presenteeism. The vast majority (76%) of office-based staff said they have been aware of presenteeism in their organisation within the past 12 months. Similarly, nearly 80% of those working from home have also noted the issue.
This year, only 41% of UK firms have actively taken steps to discourage presenteeism, down from 53% in 2022, implying that its importance is declining. However, it’s important to continue to promote good health in the workplace and encourage your employees to look after themselves.
Allowing people to come to work whilst unwell could have wider harmful effects on your company. Firstly, it can prolong illnesses and impact their output and energy for longer.
Secondly, they can spread infections to others, jeopardise their health, and reduce their productivity as well as their own. Lastly, having sick workers could mean that your business isn’t getting the attention it needs to thrive.
Private healthcare is a possible solution to a generally healthier workforce and a growing company. By offering your staff health insurance and quicker access to medical services, you can help reduce unexpected absences, optimise your working environment, and keep your workers healthy and motivated.
Private medical care can unlock an array of additional services for your employees that can help them feel happier, healthier, and more productive. Many schemes include an array of rewards that promote healthier habits, such as gym memberships, mental health support, and access to health and fitness apps at a reduced cost.
While keeping sickness down is important, these additional services are just as important in promoting your employee’s wellbeing and engagement at work. For example, physical exercise helps:
- Improve your fitness levels
- Boost your energy
- Improve your mental health
- Reduce stress
- Improve your sleep quality
All of these factors have immense effects on productivity and engagement. Ultimately, if your employees feel good, they’ll feel more motivated to perform and do their best.
Overall, private healthcare is an excellent workplace benefit with a multitude of benefits for both employees and employers. However, there are some potential downsides to consider before taking out a group policy.
Firstly, the costs could be high – or higher than you can afford. Some of the main factors that affect your premium are the average age of your team, your office location, and your industry. Also, costs can go up every year, either with inflation or as your company’s circumstances change.
Secondly, the perk could be difficult to manage. You need someone to run the admin of signing people up, liaising with the insurance provider, and being the company’s point of contact. If you have a particularly small team, you may not have the resources for this, or it could cause a strain on someone’s workload.
Lastly, you may not find the flexibility that you need. Some providers can tailor your package to your situation, and some offer fixed packages, so depending on affordability, your options may be limited.
The business costs of private healthcare
The financial implications of a private healthcare plan depend on several factors:
- Company size – how many people do you want to cover?
- Average employee age – Business policies are based on the average age of your team. Younger employees are typically cheaper to cover and those over 60 could cost you over 2.5 times more.
- Level of cover – Do you want to opt for a basic or comprehensive package? You can choose to include services like 24/7 GP access, dental and optical care, outpatient and cancer cover, and lots more. Premium packages are roughly 35% more expensive than basic.
- Your industry and employees’ occupations – Some jobs are riskier than others, and therefore more expensive to insure. For example, a construction worker is generally at a greater risk of injury compared to an office worker, so their premium is likely to be higher.
- Location – Your healthcare costs will depend on where you are based. Areas like central London tend to be more expensive to insure, unlike more remote areas.
- Excess – How much excess will employees pay for treatments? The lower the excess, the higher the premiums.
To get an idea of how much health insurance might cost, research and personal finance data site, NimbleFins, provides the following estimated monthly health insurance premiums for small UK businesses:
- Up to 5 employees: £169 – £211
- 6-20 employees: £674 – £842
- 21-50 employees: £1,686 – £2,105
- 51-100 employees: up to £3,840
These figures assume an average group age of 41 and do not take industry or location into account.
Best private health insurance providers for small businesses
Suitable for company sizes of 2-200, Bupa has a specific healthcare package for small businesses with a Defaqto rating of 5 stars. It includes benefits such as cancer cover, 24/7 access to a qualified nurse, and extensive mental health services.
Find more information on the Bupa website.
Vitality offers small and medium businesses health cover for 1 to 249 employees. Their award-winning private healthcare scheme includes video GP appointments, mental health support, and rewards for healthy living.
Find out more on the Vitality website.
3. AXA Health
Get business healthcare cover for 1-249 team members with online GP services, physiotherapy support, and discounted gym memberships included as standard.
More information is available on the AXA website.
There are several incredible advantages of private healthcare in the workplace for both employees and employers. It promotes healthier habits, reflects positively on your company, and promotes a resilient, happy workforce.
1st Formations is a top-rated company formation agent in the UK. Not only have helped form over 1 million companies to date, but also guided them through their post-incorporation journey with a range of comprehensive secretarial, compliance, and address services. Visit their website or contact their team to find out more.