Private Medical Insurance for Employers: How Does It Work?

Private medical insurance (PMI) is an essential when it comes to building a comprehensive benefits package. But how exactly does it work? Read on to learn more.

Benefits 101
Private Medical Insurance

⋅ min read

With more and more employees ranking their benefits as more important than their salary, it’s important to make sure your company has all of its bases covered. One of those base employee benefits includes a comprehensive private medical insurance policy.

Private medical insurance, also known as PMI, is one of the ‘big four’ insurance benefits you can provide for your employees. In this article, we’ll walk you through what it is, how it works, and why your company should consider offering it as part of your employee benefits package.

Read on to learn more about private medical insurance!

What is private medical insurance

Private Medical Insurance (PMI), also known as private healthcare or private health insurance, varies slightly from country to country; in general terms, it is an insurance policy specifically designed to cover the costs associated with medical care in private facilities. 

One of the key advantages of private medical insurance is that it grants policyholders the freedom to choose their level of medical care. Coverage usually encompasses a wide range of medical services, like surgical procedures and tests.

Private medical insurance often extends its services to include access to certain treatments that may not be readily available through public healthcare services. This flexibility and comprehensive coverage make private medical insurance a great option for those seeking personalised and timely healthcare, and is one of the reasons potential employees look for PMI in their benefits packages.

How does private medical insurance work?

The premiums for private medical insurance are often paid by the employer, though some employers offer optional coverage, allowing employees to access policies at a lower cost than if they were to opt for an individual PMI policy.

With policies paid for by the employer, employees often have the autonomy to choose their contribution amount towards treatment costs, commonly referred to as the 'excess'. Keep in mind that the scope of coverage can vary significantly from country to country–in some regions, private medical insurance may only cover acute conditions that emerge after the policy kicks in, while chronic conditions like arthritis may not be covered long-term, even if pre-existing conditions are included. With that said, many countries worldwide incorporate coverage for chronic conditions and primary care within private medical plans. 

To make sure your team can make the most of their coverage, it’s important to consider local nuances when choosing a health insurance plan for your company.

Need help figuring out what private medical insurance as an employee benefit might look like in your country? Check out our country guides to get started! 

What does private medical insurance cover?

What private medical insurance covers is highly dependent on the type of policy chosen. PMI is available in different ranges with various levels of coverage. Generally, the more basic the care offered, the lower the costs for the employer. While policies may differ, there are common things one can reasonably expect to be covered. This includes:

  • Hospital accommodation costs
  • Diagnostic tests (ie. CT and MRI scans)
  • Surgery costs
  • Costs to visit a consultant or specialist
  • Nursing care

Though not always included in basic plans, more comprehensive plans might also include coverage for:

  • Outpatient consultations
  • Mental healthcare
  • Physiotherapy and chiropody
  • Maternity care
  • Chronic condition management
  • Primary care 

This customisable approach allows employees to tailor their coverage to meet specific healthcare needs and preferences.

Why should employers offer private medical insurance?

Private medical insurance offers employees the security of knowing that they’re well taken care of, fostering a sense of care and well-being in the workplace. This creates a positive work environment and also plays an important role in employee retention, as many employees highly value healthcare benefits in their compensation package, making them less likely to consider leaving a workplace that prioritises their health and well-being. 

Offering private health insurance also improves access to healthcare for employees, meaning increased productivity; with quick and in-depth medical care, employees are less  likely to take time off work due to health issues. 

These factors mean that including private medical insurance in your benefits package can greatly increase your employer branding, positioning your company as one that cares for its employees' holistic needs and remaining competitive within the job market.

What is the average cost of PMI for employers in the UK?

The cost of private medical insurance can vary significantly for employers, usually ranging from £200 to £1,500 per year per employee. That might seem like a big range, but keep in mind all the different factors that contribute to the cost, including:

Employee age: younger employees typically cost less to insure as their risks for health complications are lower.

Company size: Larger companies can sometimes negotiate for lower rates due to how many employees they’re covering.

Company location: Medical service pricing can be different depending on where you live, as well as the number of medical facilities available.

Employer claims history: How many claims and employer has made can affect the perceived risk in the eyes of insurance providers, raising the price.

In the evolving landscape of employee benefits, private medical insurance remains a priority for talent and employers worldwide. Including PMI in your employee benefits package translates to increased employee retention and provides a great opportunity for employer branding by showcasing a commitment to employee care. 

In short, private medical insurance is not just an employee benefit; it's an investment in a healthier, happier, and more engaged team.

Want to know how your benefits package stacks up against the competition? Check out our benefits benchmarking tool to learn more.

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