Private medical insurance comes in two main forms: cover provided by your employer, and cover you buy yourself. They work differently, cost differently, and are taxed differently. This guide explains company versus personal private medical insurance, the pros and cons of each, and what happens when you leave a company scheme.
Company private medical insurance
Company, or group, private medical insurance is provided by an employer as a workplace benefit, covering employees and sometimes their families. Because it covers a group, it is often cheaper per person than individual cover, and employers may pay for it entirely or subsidise it. For many people, an employer scheme is the most affordable way to have private cover, and it is a common and valued workplace benefit, particularly at larger companies.
It is a taxable benefit
One thing to understand about company cover is that it is usually treated as a taxable benefit in kind. This means that, while your employer pays for the cover, you typically pay income tax on its value, reported through the payroll or a P11D form. The tax is on the value of the benefit, not the full cost of any treatment, so it is generally far less than buying cover yourself, but it is a cost worth being aware of.
Advantages of company cover
Beyond the lower cost, company schemes have other advantages. They are convenient, arranged for you by your employer. Some group schemes use medical history disregarded underwriting, where pre-existing conditions are covered without individual underwriting, which can benefit people who might struggle to get cover individually. And they often allow you to add family members at a competitive rate. For employees, these features make company cover an attractive benefit.
Drawbacks of company cover
Company cover also has limitations. You do not control the level of cover, since the employer chooses it, so it may be more or less generous than you would pick. It is tied to your job, so it usually ends if you leave, and you pay tax on the benefit. The cover is the employer's policy, not yours, which means less flexibility and the risk of losing it at a time not of your choosing.
Personal private medical insurance
Personal PMI is cover you buy and pay for yourself. You choose the insurer, the level of cover, the excess and the hospital list, and the policy is yours regardless of your job. The trade-off is that you pay the full cost, and you are individually underwritten, so your medical history is assessed. Personal cover offers control and portability, which can be valuable, especially if you want cover that does not depend on your employment.
What happens when you leave a job
A key issue with company cover is what happens when you leave. Because the cover ends with the job, you may want to take out personal cover to replace it. The important point is how your medical history is treated: any conditions that arose while on the company scheme could be treated as pre-existing on a new personal policy. Some insurers offer continued personal medical exclusions, matching your previous terms, which avoids losing cover for existing conditions.
Continuing cover into retirement
People who have had company cover for years often want to continue it when they retire and the workplace scheme ends. Moving to a personal policy is possible, but it means paying the full cost yourself, and premiums rise with age, so cover in later life can be expensive, as our guide to PMI for the over-60s explains. Planning for this transition, and checking how your medical history would carry over, helps avoid an unwelcome gap.
Which is better?
Neither is simply better; they suit different situations. If your employer offers company cover, it is usually the most cost-effective way to be covered, despite the tax, and worth taking. Personal cover suits those without an employer scheme, the self-employed, or anyone who wants control and portability. Some people use company cover while employed and switch to personal cover later, as our guide to family cover also discusses for households.
How the tax actually works
Because company cover is a benefit in kind, you pay income tax on its value, not on the cost of any treatment. In practice, the value of the cover is added to your taxable income, so you pay tax on it at your marginal rate. This makes company cover far cheaper than buying equivalent cover yourself, since you are taxed only on the benefit's value rather than paying the full premium, but it is a real cost to factor in.
Adding family to a company scheme
Many company schemes let you add your partner and children, sometimes at a preferential group rate, though you usually pay for the family element yourself and it may add to your taxable benefit. This can be a cost-effective way to cover your whole family, as our guide to family health insurance explains. Check what your employer's scheme allows and what adding family members would cost before assuming it is the cheapest route.
The self-employed and personal cover
If you are self-employed, you have no employer scheme to fall back on, so personal cover is usually the route to private healthcare. The cost is yours alone, but you gain full control over the cover and it is not tied to any job. For the self-employed, who also lack employer sick pay, thinking about health cover and broader protection together can be worthwhile, since both your health and your income depend on you.
Why portability matters
A major advantage of personal cover is portability: it stays with you regardless of job changes, whereas company cover ends when you leave. If you value continuity of cover, particularly as you build up a medical history that a new insurer might treat as pre-existing, a personal policy avoids the risk of losing cover at an inconvenient time. For some, the security of cover that does not depend on their employment is worth paying for.
The simplest approach is usually to take company cover when it is offered, since it is generally the best value despite the tax, while understanding that it is tied to your job and planning for how you would replace it if you moved on or retired.
In short
Company private medical insurance is provided by an employer, often cheaper per person and sometimes with pre-existing conditions covered, but it is a taxable benefit, the employer chooses the cover, and it ends when you leave. Personal cover is bought yourself, giving control and portability but at full cost and with individual underwriting. When leaving a company scheme, check how your medical history would transfer to avoid losing cover for existing conditions.
Where to get help and next steps
Read private medical insurance explained for the basics, weigh the value in is private health insurance worth it, and plan ahead with PMI for the over-60s. This is general information, not financial advice.