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Group health insurance is available for startups with as few as two employees, including sole directors. Typical costs range from £25-£40 per employee a month for small teams, and premiums are corporation tax-deductible.
Group health insurance for startups is available from as few as two employees, with some insurers offering cover for sole company directors. Typical costs range from £25-£40 per employee, per month for teams of 2-5 people, dropping to around £18-£30 per employee as headcount grows towards 20.
For most early-stage startups, basic inpatient cover with a moderate excess offers a sensible starting point, with outpatient and mental health benefits added as the business grows.
Starting a business demands everything from you and your team. Long hours, tight deadlines, and the pressure of building something from nothing - it all takes a toll. When a key team member gets ill and faces months on an NHS waiting list, your startup can grind to a halt. That's why startup health insurance has become such a common part of early-stage benefits packages.
The NHS is under enormous pressure. According to NHS England data, around 7.4 million people are currently waiting for hospital treatment in England. Only 61% of patients are being seen within the 18-week target, with the median waiting time sitting at 12.9 weeks - nearly double the pre-pandemic figure.
For a startup, having a developer, marketer, or co-founder waiting three months for a consultation isn't just inconvenient. It can derail projects, delay launches, and put serious strain on a small team.
In our experience helping startups across the UK, we've seen health cover become a genuine differentiator in competitive hiring markets. Research from Startups Magazine found that 33% of UK startups report challenges attracting and retaining talent, with benefits playing an increasingly critical role.
The numbers tell the story: 46% of startup leaders now identify benefits as critical to recruitment, and many plan to expand their PMI and mental health support in the years ahead. For younger employees especially, wellbeing benefits often matter more than a slightly higher salary.
Private medical insurance covers the cost of diagnosis and treatment for acute conditions - illnesses or injuries that arise after your policy starts and are likely to respond to treatment. This typically includes:
What PMI doesn't typically cover are pre-existing conditions you had before the policy started, chronic long-term conditions like diabetes or asthma, routine health checks (unless added as an extra), GP appointments for minor illnesses (though many policies include digital GP access), or cosmetic procedures.
Understanding this distinction is important. Health insurance isn't a replacement for the NHS - it's designed to get your team faster treatment for new health problems that need specialist care.
Health insurance isn't designed to replace the NHS - it's there to get your team faster treatment for new health problems that need specialist care. Pre-existing and chronic conditions are usually excluded, so it's worth checking the policy wording carefully before you commit.
Most UK insurers offer group schemes for as few as two employees, and some providers like Vitality offer 'one-man group' policies for company directors. This makes health cover accessible even for the smallest startups.
The most common route for startups is a group policy paid for by the company. You choose a level of cover and everyone on the scheme gets the same benefits.
Group policies are typically cheaper per head than individual plans because insurers spread the risk across multiple people. A healthy 25-year-old and a 50-year-old with some health history both get the same cover, with costs averaged out.
Core benefits usually include:
You can then add extras like dental and optical, therapies (physiotherapy, osteopathy), health screening, and travel cover.
If cash is tight in your early days, you can set up a voluntary scheme where employees pay their own premiums. They still benefit from the group rate, which is typically 10-20% cheaper than buying individual cover.
This approach lets you offer health insurance as a benefit without the direct cost, with the option to start contributing later as the business grows.
For startups not ready for full PMI, health cash plans offer a lower-cost alternative. These aren't insurance - they're schemes that reimburse employees for everyday healthcare costs like dental check-ups, eye tests, and physiotherapy.
Cash plans typically cost £5-£15 per employee monthly and can include virtual GP access, though they don't cover private hospital treatment or consultations with specialists.
If you're running a limited company as the sole director, you can still get health cover through your business. Some insurers offer individual policies that can be paid through the company, making them potentially tax-efficient.
WPA, for example, offers discounts for self-employed individuals, while Vitality can set up policies for single directors.
The honest answer is: it depends. Your premiums will vary based on team size and ages, location (London costs more), level of cover chosen, whether you add optional extras, and the excess you're willing to pay.
That said, here's what startups typically pay based on industry data.
These figures assume a basic-to-mid-level policy. Adding comprehensive outpatient cover, mental health support, and therapies will push costs toward the higher end. See our cost per employee guide for more detail.
Age is the biggest factor in pricing. A worker in their 30s might cost around £30-£45 per month to cover, while an employee aged 60 or over could cost £100-£140 or more monthly.
Since group policies average costs across all members, a younger team will pay less overall than an older one.
There are several practical ways to bring down your premiums. Choosing a higher excess (the amount employees pay toward each claim) can reduce premiums by 10-20%. A £250 excess is common for startup schemes.
You can also opt for a six-week wait option, where the insurer only pays if NHS waiting times exceed six weeks. This cuts costs while still providing a safety net.
Using a guided or restricted hospital list (rather than full network access) typically reduces premiums, as does starting with core inpatient cover and adding extras as your budget allows.
Let's look at a realistic example. A London-based tech startup with five employees (ages 28, 31, 34, 37, and 42) wants mid-level cover including outpatient consultations, diagnostics, and mental health support, with a £250 excess.
Monthly cost: approximately £150-£175 total (£30-£35 per employee). Annual cost: approximately £1,800-£2,100 for the whole team.
That's roughly the cost of one additional software subscription, yet it could save weeks of lost productivity if a team member needs treatment.
If budget is tight, starting with core inpatient cover and a higher excess, then adding outpatient and mental health benefits as the business grows, is often more sustainable than committing to a premium policy you can't maintain at renewal.
Compare options
An advisor can compare group health insurance quotes from a wide range of insurers based on your team size and ages.
Understanding the tax position helps you budget accurately and see the true cost of providing health cover. For a fuller breakdown, see our guide to tax benefits of business health insurance.
Premiums paid by your company for employee health insurance are generally allowable business expenses. This means you can deduct them from revenue before calculating profit, reducing your Corporation Tax bill.
With Corporation Tax at 25% for most companies, if your company pays £3,000 annually for health insurance premiums, you could save £750 in Corporation Tax, bringing the effective cost down to £2,250. Speak to an accountant to confirm your specific tax position.
Here's the catch: health insurance provided by an employer is treated as a benefit-in-kind (BIK). Employees pay income tax on the value of their cover.
Say an employee's health insurance costs £1,000 per year. If they're a basic rate taxpayer (20%), they'll pay an extra £200 in tax. A higher rate taxpayer (40%) pays £400.
This is reported to HMRC via a P11D form, and the tax is usually collected by adjusting the employee's tax code.
The company must also pay Class 1A National Insurance Contributions on the benefit value, currently 15%. On £1,000 of cover, that's £150.
Even with the BIK tax, health insurance remains valuable. An employee paying £200 extra tax is getting access to potentially thousands of pounds worth of private healthcare, and the Corporation Tax relief helps offset the cost of the National Insurance for the company.
The UK health insurance market is dominated by a small number of major players who together hold the vast majority of the market. Each has distinct strengths for startups.
Bupa is the UK's largest private health insurer, covering over 2 million people. Their key strength is an extensive hospital network, including hospitals they own directly. Bupa is known for strong cancer care pathways and comprehensive mental health support.
Bupa's SME plans work for teams of 2-249 employees, with core cover that can be customised with optional extras. Their Blua Health app provides 24/7 GP access and health management tools.
Bupa tends to be priced at the premium end, but the brand recognition and breadth of cover make it popular with startups wanting a well-known name for their benefits package.
AXA is the second-largest UK health insurer, known for flexible cover options and strong digital services. Their 'Doctor at Hand' service (powered by Doctor Care Anywhere) provides 24/7 GP consultations.
AXA's modular approach lets you build a policy that fits your budget, choosing which elements to include. They're particularly strong on customer service and mental health support.
For startups wanting flexibility to start basic and add cover later, AXA is worth considering.
Aviva consistently comes out as one of the more competitively priced options for comprehensive cover. Their Healthier Solutions plans are straightforward and their digital GP service (Aviva Digital GP) is highly rated.
Independent comparisons often show Aviva pricing competitively against Bupa and AXA for equivalent levels of cover. For budget-conscious startups wanting solid cover without paying premium prices, Aviva is often worth comparing.
Vitality takes a different approach, combining health insurance with a wellness rewards programme. Hit your step targets, go to the gym, complete health checks, and you earn points toward discounts on gym memberships, Apple Watches, cinema tickets, and more.
For startups with health-conscious teams who'll engage with the programme, Vitality can offer genuine value. Members who reach Platinum status report average savings of over £330 annually on rewards.
Mental health cover is included as standard on many Vitality plans, and their digital-first approach appeals to younger, tech-savvy employees. The trade-off is that if employees don't engage with the rewards programme, they may not see the full value.
WPA is a smaller insurer often chosen by SMEs wanting transparent pricing and personalised service. They're known for strong customer satisfaction scores and offer discounts for self-employed individuals.
For startups wanting a more personal touch than the larger insurers provide, WPA is worth getting a quote from.
A broker can compare these options side-by-side for your specific situation, with no pressure to proceed.
With so many options, here's a framework for working out what your startup actually needs.
At minimum, look for policies that include inpatient and day-patient treatment, cancer cover (diagnosis and treatment), outpatient consultations (specialist appointments), and diagnostic tests (scans, blood tests). These core elements ensure your team can get seen quickly for anything serious.
Think about who's on your team. A younger team may prioritise mental health support and physiotherapy over comprehensive cancer cover. A team with families might value the option to add dependents. If you have employees with existing health conditions, moratorium underwriting (which excludes recent conditions for two years) might be better than full medical underwriting.
Mental health cover has become increasingly important, especially in high-pressure startup environments. Look for policies that include access to therapists and psychiatrists, cognitive behavioural therapy (CBT), and reasonable session limits, not just a handful of appointments.
Bupa and Vitality both receive strong marks for mental health provision.
Modern policies typically include digital GP access, letting employees book video consultations within hours rather than waiting days for an NHS appointment. This matters for busy startup teams who can't easily take time off during GP surgery hours.
Check what's included: 24/7 availability, prescription delivery, and referral capabilities vary between providers.
Be realistic about what you can afford consistently. It's better to offer basic cover that you can maintain than to start with a premium policy you'll have to downgrade later.
Starting with core inpatient cover and adding outpatient benefits as the business grows is a sensible approach for many startups.
Setting up health insurance for your startup is more straightforward than you might expect. You'll typically move through the same four stages, whichever provider or broker you use.
How it works
Get quotes
Contact insurers directly or work with a broker who can compare a wide range of insurers. You'll need to provide basic information about your team, including number of employees, dates of birth, and postcodes, to get indicative quotes.
Choose your underwriting approach
Decide how the insurer should handle pre-existing conditions. Moratorium underwriting is the most common choice for group schemes because it needs no medical questionnaires upfront.
Set up the scheme
Once you've chosen a provider and policy, add your employee details. Most insurers provide online portals for adding new joiners and removing leavers as your team changes.
Communicate with your team
Make sure everyone understands what's covered, how to find a consultant or hospital, how to make a claim, and how to access digital GP and mental health services.
Underwriting options
In our experience helping startups set up health cover, we see the same mistakes repeatedly.
Get it right
Assuming it's too expensive
Many founders dismiss health insurance without getting a quote. In reality, basic cover for a small team can cost less than a mid-range software subscription. Get quotes before deciding it's unaffordable.
Choosing based on price alone
The cheapest policy isn't always the best value. If it has a restricted hospital list that doesn't include convenient facilities, or mental health cover with unrealistic limits, employees may not actually use it.
Not checking the hospital list
Make sure the policy includes hospitals and consultants near where your team lives and works. A policy with excellent cover is of little use if the nearest in-network hospital is 50 miles away.
Forgetting about leavers
When employees leave, their cover under the group scheme ends. Most insurers offer continuity, allowing leavers to switch to an individual policy without new medical underwriting. Make sure employees know this option exists.
Setting and forgetting
Health insurance needs attention at renewal. Premiums typically increase annually, and it's worth shopping around rather than automatically accepting the renewal quote. A broker can help with this.
If full health insurance doesn't fit your budget right now, there are other options worth exploring.
As mentioned earlier, health cash plans reimburse employees for everyday healthcare costs at a fraction of the price of PMI. They're not a substitute for proper health insurance, but they're better than nothing and can be upgraded later.
EAPs provide confidential support for employees dealing with personal or work-related issues. They typically include counselling sessions, legal and financial advice, and wellbeing resources. An EAP can complement health insurance or serve as a lower-cost starting point for mental health support.
Platforms like Perkbox or Reward Gateway let you offer discounts on health-related services (gym memberships, wellness apps) without the cost of providing insurance directly.
Some NHS services offer priority access for working-age patients through local initiatives. While not a substitute for private medical insurance, it's worth understanding what NHS options exist in your area.
Independent guidance on health insurance and financial decisions from regulated and government-backed organisations.
Common questions
Yes. Most major insurers offer group schemes for as few as two people. Some providers like Vitality even cover sole directors. You don't need a large team to access group rates.
Typical costs range from £25-£40 per employee monthly for small teams (2-5 people) with basic-to-mid-level cover. Costs decrease per head as team size grows and vary based on ages, location, and cover level.
Yes. Premiums paid by your company are generally allowable business expenses, reducing your Corporation Tax liability. But employees will pay benefit-in-kind tax on the value of their cover.
Health insurance covers private hospital treatment, consultations with specialists, and diagnostic tests. Health cash plans reimburse everyday costs like dental check-ups and eye tests but don't cover private hospital treatment. Cash plans are cheaper but offer less comprehensive cover.
Usually not immediately. Most group schemes use moratorium underwriting, which excludes conditions from the previous five years for the first two years. After being symptom-free for two years, the exclusion may lift. Some premium policies offer immediate cover for pre-existing conditions at a higher price.
Much faster than the NHS. Most insurers aim for specialist appointments within two weeks, often within days. Diagnostic scans are typically available within a week. For surgery, waits are usually weeks rather than months.
No, there's no legal requirement. You can choose to offer it to all staff, only to senior employees, or not at all. If you're offering it as a benefit, it's worth having a clear, fair policy about who's eligible.
Employees may be able to continue cover on an individual Aviva policy if they seek a quote within 45 days of leaving. Benefits, terms, and costs may differ from the company scheme.
Most providers allow employees to add partners and children to the policy for an additional premium, typically £25-£85 per family member monthly. This is usually optional, so you can choose whether to offer family cover or keep the policy employee-only.
Speaking to a broker doesn't cost you anything extra and lets you compare a wide range of insurers quickly. Brokers can access preferential rates and handle the admin of getting multiple quotes, which saves significant time if you don't have an HR team.
When an employee needs treatment, they contact the insurer to get their claim pre-authorised. The insurer confirms what's covered and often pays the hospital directly. For smaller claims, employees may pay and claim back. Most insurers have apps that make claiming straightforward.
Standard exclusions include pre-existing conditions (at least initially), chronic long-term conditions, cosmetic procedures, routine health checks (unless added as an extra), and emergency treatment (this is handled by the NHS). Always read the policy documents carefully.
Yes. Most insurers allow you to increase cover at renewal, though any new benefits may be subject to fresh underwriting. It's easier to add cover than to remove it and later add it back.
Most policies run for 12 months with annual renewal. Some insurers offer monthly rolling contracts, though these may have slightly higher premiums.
Look beyond price. Compare what's actually covered (especially outpatient and mental health limits), the hospital network, digital services included, excess amounts, and claims handling reputation. A broker can help you make like-for-like comparisons.
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Health Insurance
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