Five reasons SMEs should provide employee health cover
Blog Article | By Simplyhealth | Published on 20/11/2025
Small and medium-sized businesses (SMEs) can often face unique challenges in managing their workforce effectively while balancing budgets and supporting business growth. One strategic investment that can significantly benefit SMEs is offering employee health cover.1 Beyond being a valuable perk, business health cover plays a vital role in attracting talent, boosting productivity and fostering loyalty.
In this blog, we’ll explore five reasons why every SME should consider offering employee health cover and how it can make a lasting difference to their success.
Reason 1: Attract and retain talent
In today’s increasingly competitive job market2, small business healthcare cover can be the differentiator that helps SMEs attract talented candidates who might otherwise gravitate toward larger companies with established benefit packages. Prospective employees today are looking for benefits that provide security and support their wellbeing.
81% of employees consider an employer’s benefits package an important factor when deciding whether to accept a job.3 Moreover, a recent study by Aviva found that 79% of employees are more likely to choose or remain with an employer who actively supports them during illness recovery.4
For SMEs, providing employee health cover can give them an edge in attracting talent when salaries are limited. Business health cover can send a powerful message: the company genuinely values its people and is committed to their long-term wellbeing.
When employees know their employer prioritises their health, it fosters trust, loyalty and a stronger sense of belonging - key ingredients for job satisfaction and a positive workplace culture.
Retention is equally important, particularly for SMEs where every team member plays a crucial role. Employees are more likely to stay with a company that supports their physical and mental health, helping them feel valued and secure. This loyalty directly reduces turnover and the associated costs of recruitment, onboarding and training.5
Reason 2: Reduce absenteeism and improve productivity
Small business healthcare can also play a vital role in reducing absenteeism. NHS waiting times and treatment backlogs are at record levels6. Our recent Health and Wellbeing at Work Report found that absence levels have increased across all sectors, and UK employees took an average of 9.4 sick days over the past year, nearly two full working weeks and a notable rise from 7.8 days in 2023. This rise in absence not only affects individual wellbeing but also impacts overall business productivity and continuity.
SMEs can play a vital role in tackling these challenges by offering employee health cover that provides timely access to medical care, such as mental health support and preventative services. When employees can speak with a doctor, specialist, or therapist quickly, they are less likely to experience prolonged illness or worsening symptoms that lead to extended time off work. Early diagnosis and treatment means faster recovery, reduced absenteeism and fewer disruptions to business operations.7
Beyond reducing sickness absence, small company health plans also contribute to improved productivity and morale. Access to wellbeing resources such as mental health support, physiotherapy, or open-ended digital therapy can help employees stay healthy and resilient, enabling them to perform at their best and sustain long-term productivity.
Employers have a crucial role in supporting employee health and driving a preventive approach, helping individuals stay in work while managing health conditions, benefiting both their workforce and the wider economy.
Paul Schreier, CEO, Simplyhealth
Reason 3: Boost morale and employee engagement
Employee health cover can also contribute to a more positive and engaged workplace culture. Workplace wellbeing initiatives, including health cover, have been shown to correlate with higher levels of morale and engagement. Engaged employees are often more productive, collaborative and loyal.
Small company health plans contribute to this by showing employees that their wellbeing is valued. The CIPD Health and Wellbeing at Work Survey 2023 found that around a third of respondents reported that their health and wellbeing activity has resulted in better employee morale and engagement and a healthier, more inclusive culture.
Of course, engagement depends on many factors, including leadership, workload and communication, but health benefits add a tangible layer of support. They show employees that their employer recognises the challenges of modern working life and is taking practical steps to help.
Reason 4: Build long-term resilience and loyalty
A business health plan does more than provide access to healthcare. It can help to create a culture of care that strengthens both individual and organisational resilience over time. When employees feel supported in maintaining their physical and mental wellbeing, they are better equipped to manage pressure, adapt to change and sustain performance through challenging periods.
Recent findings from our Health and Wellbeing at Work report show that while minor illness remains the most common cause of short-term absence, mental ill health is now one of the leading causes of both short and long-term absence. In fact, it’s the top cause of long-term sick leave, often resulting in absences of four weeks or more.
Key statistics:
1.8 million people are currently on an NHS mental health waiting list.8
71% of employees report being present at work but not performing their best due to their mental health.9
Many business health plan providers recognise this challenge and include mental health services such as counselling, telephone and virtual helplines and access to qualified therapists.* These confidential services give employees a safe space to discuss both personal and work-related issues that may be affecting their wellbeing and performance.
By offering preventive healthcare, including regular health checks and early intervention services, businesses can take a proactive approach to employee wellbeing. This helps people identify and manage potential health issues before they escalate, reducing absence and improving long-term resilience.10
Over time, this investment in wellbeing can lead to a healthier, more motivated, and adaptable workforce, helping organisations improve productivity, retain talent and build a workplace culture rooted in trust and care.
*Coverage will depend on the plan and provider. Always check the policy details for full details on what is and isn’t included.
Reason 5: Enhance your reputation as a responsible employer
Providing employee health cover signals a company’s commitment to the health and wellbeing of its staff, helping to enhance its reputation both internally and externally. For example, according to the CIPD Health and Wellbeing at Work Survey 2023, offering health cover helps employees feel valued and supported, boosting morale and engagement. Externally, such benefits can position a business as responsible, employee-focused and competitive in the job market.
In today’s digital age, platforms like Glassdoor and Indeed make it easy for prospective candidates to research companies to learn more about their culture, work-life balance and employee support. In fact, 83% of job seekers are likely to review company ratings before applying, making employer reputation a key factor in their decision-making (Glassdoor, 2023).
By offering health cover, businesses demonstrate that they invest in their workforce’s wellbeing, reinforcing their image as a caring and responsible employer, strengthening overall brand reputation.
How Simplyhealth can help your SME
Through our business health plans, your workforce can access a range of services to help support their health and wellbeing.
These services are provided by third party suppliers.
Our experience with Simplyhealth has been outstanding. They’ve been more than just a provider; they’re a true partner in supporting our people. The platform is intuitive, the customer service is excellent, and the impact on our staff has been clear.
Joanne Stainby, Head of HR, Battersea Dogs and Cats Home, Oct 2025
Conclusion
Offering employee health cover is a smart investment for SMEs. From attracting and retaining top talent to reducing absenteeism, boosting morale and improving productivity. Health benefits play a crucial role in creating a positive and resilient workforce.
For SMEs navigating the challenges of growth and competition, offering health cover is a practical way to help retain their most valuable asset - their people.
Discover Simplyhealth’s employee health cover options for SMEs
Learn how our tailored health plans can keep your employees happy and healthy.
Frequently asked questions
What is employee health cover for SMEs?
Employee health cover for SMEs (small and medium enterprises) is a policy or plan taken out by an employer to provide their staff with access to healthcare services as part of a workplace benefit package. There are different types of employee health cover to choose from, but broadly speaking, they are designed to support employees with their health and wellbeing needs and help them to be diagnosed and treated faster than they might be via the NHS.
For example, our Simply Health Plan enables employees to claim money back on everyday healthcare costs such as eye tests, physiotherapy, dental care and more. Our business plans also include access to a range of clinically assured health and wellbeing services.
Why should small businesses offer employee health cover?
Offering employee health cover can help small businesses attract and retain talent, improve productivity and foster a positive workplace culture. It can support employee wellbeing by providing timely access to medical care and mental health services, reducing absenteeism and building resilience. Ultimately, investing in health benefits helps create a healthier, more engaged and loyal workforce, which benefits both employees and the business.
How much does employee health cover cost for small businesses?
The cost of employee health cover for a small business will vary greatly depending on many factors, including the type of cover, provider, number of employees, ages, location, industry type and underwriting method. For example, let’s take private medical insurance (PMI) – this is designed to cover the cost of private healthcare and medical treatment for acute conditions that start after the policy begins. To give you a general idea, insight shows that in today’s current market, PMI for a typical small business will cost in the range of £220 - £260 a month for a small business with 5 employees, depending on the level of cover.11
Prices are indicative only and are subject to change.
At Simplyhealth, we offer a number of affordable healthcare solutions designed for small businesses, starting from just £3.33 per employee, per month*, where businesses can get the combined coverage of 24/7 access to digital healthcare and access to discounted and self-pay health and wellbeing services for your whole workforce.
You can complete our fast online form for a free, no-obligation business health quote today that’s tailored to your company’s needs get a business health cover quote
*Pricing is based on 125-249 employees, is indicative only and subject to change.
Can small businesses afford health cover for employees?
The affordability of employee health cover for small businesses will very much depend on their individual circumstances. The price will vary greatly depending on many factors like the type of cover, provider, number of employees, ages, location, industry type and underwriting method. For some small businesses, this is a manageable cost that can improve staff wellbeing and retention. For others, it may be a more significant expense depending on their budget and priorities. Ultimately, it’s important for employers to compare different options, assess what their teams value most and find a balance between cost and benefit.
What does SME health cover typically include?
SME (small and medium enterprise) health cover offers a range of medical benefits to support employees’ health and wellbeing, with what’s included varying by product and provider. For example, private medical insurance (PMI) typically covers private healthcare for acute conditions, including diagnostic tests, specialist consultations, hospital stays and elective procedures (excluding most cosmetic treatments). Health cash plans, meanwhile, help with everyday health costs such as dental care, eye tests, prescription glasses, physiotherapy and may include cash benefits for hospital stays, plus access to GP or mental health support.
The exact benefits vary between providers and plans, allowing employers to tailor coverage to their budget and workforce needs.
To find out more about what our business health solutions include, you can visit our Business Health Plans page.
Is employee health cover tax-deductible for SMEs?
Employee health insurance is generally tax-deductible for SMEs when paid through a limited company. HMRC treats it as a legitimate business expense, meaning the cost of providing private health cover can usually be deducted from the company’s taxable profits.
However, because company-paid health cover is classed as a benefit in kind (BIK), it has some tax implications. The employer must report the benefit to HMRC (using a P11D form or through payrolled benefits) and pay Class 1A National Insurance contributions on the value of the premium. For employees, the cover is considered a taxable perk, so they’ll pay income tax on the value of the benefit.
How does employee health cover help with staff retention?
In today’s competitive job market,2 offering health cover is a key way to improve staff retention by showing employees that their wellbeing is valued and supported. Insights show that 79% of employees are more likely to choose or remain with an employer who actively supports them during illness recovery.4
Access to healthcare benefits can reduce employee stress relating to medical costs, improve overall health and increase job satisfaction and loyalty.
What’s the difference between private health insurance and employee health cash plans?
Private medical insurance typically covers private healthcare for acute conditions, including diagnostic tests, specialist consultations, hospital stays and elective procedures (excluding most cosmetic treatments). Health cash plans, meanwhile, offer money back on everyday healthcare bills, like trips to the optician, dentist or physiotherapist, up to annual limits.
Think of PMI as your safety net for big, unpredictable health issues. A health cash plan is more like a budgeting tool for routine and preventative care.
To take a closer look at PMI vs health cash plans, you can read our article here.
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References
Simplyhealth via Opinium surveys of 500 HR decision makers in the UK, and 2000 employees (21st May – June 2024)
www.independent.co.uk/news/health/private-healthcare-nhs-profits-spire-circle-b2634289.html
www.retailtrust.org.uk/helping-your-business/customer-resources/health-of-retail-report-2025
https://wpieconomics.com/wp-content/uploads/2025/07/Health-and-Work.pdf
www.nimblefins.co.uk/business-insurance/average-cost-small-business-health-insurance