If you’re setting up your own business, you’ll no longer have to answer to an employer or put up with many of the annoyances of being a permanent employee. But, what about the ‘perks’ you might have enjoyed in your previous life as a member of staff?
For people who have been lucky enough to receive group medical insurance from their employer, this is probably the most significant benefit to do without. So, what is the best way to take out health insurance if you run your own business?
In this guide, we look at what private medical insurance is, what it covers, and whether or not you can or should pay for the premiums via your business, or personally.
What is private health insurance?
Although the NHS provides universal healthcare to all individuals, with no extra costs at the point of entry, you may face long waiting times for treatments, and little choice over where you receive any medical care. The NHS may also not be able to provide treatment at all in some cases – for certain conditions.
If you have private healthcare, depending on the terms of your individual policy, your access to treatments will typically be far quicker, with far more options available to you.
Alongside covering the policyholder for the cost of inpatient and outpatient care at private hospitals, there are a wide variety of extra services you may be eligible for, depending on the level of insurance you take out, including:
Accommodation.
Complimentary therapies.
Nursing care.
Overseas emergency treatment.
GP and dental services.
Psychiatric treatment.
Discounts on things such as gym memberships.
How should I pay for health insurance – personally, or via the business?
This is a very common question for small business owners to ask.
Sole traders unlikely to be able to claim against business costs
The key thing to bear in mind is that the premiums are treated as a ‘benefit in kind’. The benefit is for you – as the individual – not the business itself, so you won’t be able to claim tax relief if you’re a sole trader (self employed).
You might be able to make a claim if you can demonstrate that any medical costs were required as a direct result of an accident or ongoing issue linked to your work, but this may be an uphill struggle.
Your limited company can pay, but you will be taxed on the benefit provided
However, you can claim for these costs if you run a limited company, although you won’t receive any Corporation Tax relief.
At the end of the tax year, the beneficiary must pay income tax and Employees’ NICs on the benefit, and the limited company will have to pay Employers’ NICs.
However, this doesn’t mean you shouldn’t claim the costs from your company. Some health insurers offer better deals to business clients, and if you’re not a high earner, it may be more tax-efficient to pay for the premiums via your company.
Whatever your business structure, you should chat with your accountant if you have any questions about this.
Things to look out for when comparing providers
When you request health insurance quotes, you should make sure that you’re comparing like-with-like, as this type of insurance is fairly complex, and the options available for policyholders are very broad.
The premiums depend on your age, health history, and lifestyle, as well as the type of coverage you want to take out and the factors listed below.
Make sure you find out the following facts from a prospective insurer:
How much does the policy cost (monthly/annual)
Are there any discounts if you pay upfront?
What illnesses and treatments does the policy cover?
What is the range of hospitals I can choose from (local, nationwide, etc.)
What is specifically excluded from the cover?
What are the excesses on the policy?
Are there discounts for group or family cover?
Are there corporate discounts (if you’re taking out cover via your own company)?
Are there limits on how often you make a claim, or the size of each claim?
What is the qualifying period (i.e. how long after starting the policy can you make your first claim)?
Are there any extra benefits, e.g. cashback, discounts on other products?
Speak to an expert
At ByteStart, we have worked with specialist small business IFA, Broadbench, for many years.
Broadbench has helped hundreds of our visitors find the right health insurance policy.
If you want to find out more without any sales pressure, the Broadbench team will be happy to answer any questions about medical insurance insurance. Simply visit their site to find out more.
