Do employers pay for health insurance in UK?
In the U.K., both employers and employees contribute to the National Insurance Scheme, supporting government benefit programs for the unemployed, ill, retired, or those on parental or bereavement leave. Contributions vary based on factors like the employee's insurance category and earnings.
You usually pay a monthly amount for your health insurance, which is called the premium. Your insurer can then pay if you need treatment that it covers while the policy is active. It is designed to offer treatment alongside the service provided by the NHS.
How it works. You'll usually pay a monthly or annual fee and then make claims for any private healthcare you receive. Your insurance will cover some, or all of the costs of private treatments.
According to recent research taken in 2023, the average cost of a health insurance is £86 per month for a standard personal protection policy. Health insurance policies can vary dramatically based on your age and the type of cover that you need, as well as which insurance provider you choose.
Employer NI is calculated at a rate of 13.8% and is based on the value of taxable benefits provided in the previous financial year (2022/23: 15.05% between 6 April 22 to 5 November 22 and 14.53% between 6 November 22 and 5 April 23).
The typical cost of small business health insurance on a per employee basis is around £45 a month, but can range from around £23 to £100 a month or more depending on employee ages and the tier of cover. Employees in their 50s cost around 2X as much to insure as employees in their 20s.
The United Kingdom provides public healthcare to all permanent residents, about 58 million people. Healthcare coverage is free at the point of need, and is paid for by general taxation. About 18% of a citizen's income tax goes towards healthcare, which is about 4.5% of the average citizen's income.
The United Kingdom has a national health service (NHS) with access based on clinical need, and not ability to pay. All individuals, irrespective of their nationality or immigration status, are eligible to access primary, emergency and compulsory psychiatric care, free of charge.
But even if you look only at public money spent on health, the US government's spending on healthcare still outstrips UK government spending, both in terms of the proportion of its GDP (the way we normally measure the size of a country's economy) and in terms of how much it spends per head.
In the UK, a national system of healthcare, paid for by all citizens through taxes, provides a universal safety net. The US has settled for a complicated mix of private insurance and government subsidized programmes, often managed by private companies. The result is not just whether one has or does not have insurance.
Who gets free healthcare in UK?
Hospital services. Hospital treatment is free to people who are "ordinarily resident" in the UK. To be considered ordinarily resident and entitled to free hospital treatment, you must be living in the UK on a lawful and properly settled basis for the time being. You may be asked to prove this.
In January 2024, myTribe researchers obtained 800 quotes for typical private health insurance policies from 8 leading UK insurers in 10 different towns and cities to find a meaningful average monthly cost. On average, a health insurance policy in the UK costs £90.03 per month (accurate as of January 2024).
General inflation: The rising cost of everything from labour to paint, spare parts and used cars is pushing up costs for insurance companies.
Example average private health insurance cost
£82.33 per month. £987.96 per year, or £938.57 per year including a 5% discount for paying annually. Based on a 40 year old, non-smoker, living in BH8 postcode, including standard outpatient, comprehensive cancer cover, therapies option, and £100 excess.
However, the UK has a publicly funded healthcare system known as the National Health Service (NHS), which provides healthcare services to residents at no upfront cost at the point of care.
Employers' liability insurance covers the costs of compensation and legal fees, if any member of staff falls ill or is injured onsite due to employers' negligence. Compensation payments may include: Lost income. Medical bills.
| Band | Taxable income | Tax rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | over £125,140 | 45% |
However, by law, you and your staff have to pay a minimum amount into your scheme. This is set at 8% of your member of staff's earnings. You, the employer, must pay at least 3% of this, but you can choose to pay more.
Most people know these plans as traditional group health plans or “fully-insured plans.” According to KFF's health benefits report, in 2023, the average cost of employee health insurance premiums for family coverage was $23,968. The average premium for a self-only plan was $8,435 annually1.
Based on 2023 data from the U.S. Bureau of Labor Statistics (BLS), the average cost of employee benefits account for 29.4% of the average cost per private industry employee, or $12.06 per hour, per employee. The remaining 70.6%, or $28.97, goes toward wages, for a total cost of $41.03 per hour.
Why is group health insurance more expensive than individual?
The cost of group health insurance is usually much lower than individual plans because the risk is spread across a higher number of people. Simply put, this type of insurance is cheaper and more affordable than individual plans available on the market because more people buy into the plan.
Despite its advantages, the British healthcare system faces challenges such as funding issues, extensive wait times for treatments, and significant workforce shortages, impacting overall service quality and accessibility.
The British clearly prefer their system. Nearly half of Americans (49%) today have a favorable opinion of the U.S. system, compared to just 9% of British people. In contrast, 78% of British people have a positive perspective of their national health care system, and so do 35% of Americans.
IMPORTANT: Anyone in the UK can receive treatment at an NHS facility, no matter their residency status. However, tourist visitors to the UK do not typically qualify for free NHS treatment. Any care beyond emergency treatment and certain other services will likely incur a fee.
Hospital treatment is free of charge for people who are ordinarily resident in the UK. This does not depend on nationality, payment of UK taxes, National Insurance contributions, being registered with a GP, having an NHS number, or owning property in the UK.
References
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