How to reduce private medical premiums without cutting cover

UK insurers paid out £2.6 billion on workplace health schemes in 2024. That's a 16% jump in twelve months, on schemes covering 4.8 million people. Claims are climbing across the market, and your renewal also reflects what your own people have claimed.

That 16% rise feeds into renewal costs across the market, and it’s a big part of why private medical premiums are climbing 18% a year.

So the PMI review happens, and you're walked through the options. Cap the outpatient limit. Add an excess. Cut the expensive hospitals out of the network. Trim the mental health bolt-on.

Every one of those choices makes the benefit worse for the people using it. Absorbing the increase keeps the cover intact, but it only delays the same conversation by a year. That's why so many businesses end up having that conversation every autumn, with slightly less cover each time.

There's a fifth option: reducing claims. It works on the price mechanism itself, so the policy stays whole. It's slower, and it compounds, which none of the others do.

What makes a private medical premium go up at renewal?

A private medical insurance (PMI) premium is set by plan design, medical underwriting, group size, age rating, the insurer's own book performance, and your scheme's claims history. Of those six inputs, claims history is the only one you can move without cutting cover.

Plan design is yours to change, but changing it means cutting cover. Underwriting terms and group size are largely fixed by the shape of your business and the deal you signed. Age rating is pricing based on the ages of your people, so that's demographics. Book performance is how the insurer's whole customer base has claimed, which is out of your hands too.

Smaller schemes are priced partly on the insurer's pooled rates, and your own claims history counts for more as the scheme grows. This is important because your loss ratio (what your people claimed against what you paid in) feeds directly into what you're quoted next year.

Two schemes of identical size, in the same sector, with the same age profile, get different renewals. The biggest difference is what got claimed.

Claim type matters too. A year of physiotherapy is predictable and cheap to model. A cancer claim or a long mental health pathway creates uncertainty about future cost, and uncertainty tends to get priced in. That's why two schemes with the same total claims spend don't necessarily see the same increase.

Which levers actually bring the premium down?

Five levers are commonly offered at renewal, and four of them reduce what your people are covered for. The fifth reduces claims, which is the only input that changes the price without changing the policy.

Here's what each one does.

Capping outpatient cover

‍Outpatient treatment is where a large share of claims sit, so capping it works on price for exactly that reason. It's also a cut to the part of the policy your people reach for most.

‍Adding or raising the excess

‍Your people pay the first slice. The premium drops, and they may think twice before claiming for anything small.‍

Excluding hospital networks

‍The expensive major city hospitals come out of the list. Cheaper, but your people may travel further when they're unwell, with less choice of specialists and fewer hospitals offering certain treatments.‍

Trimming bolt-ons

Mental health cover is often first to go, which lands badly given that mental ill health is the leading cause of long-term absence in the CIPD's Health and Wellbeing at Work report.‍

Reducing claims

‍Nothing comes off the policy. Fewer people need to use it, so there's less to price in the next year.

It's also the lever that keeps working year after year. Reactive cover is expensive cover. By the time someone claims, a small problem has often become a bigger one. Prevention gets support to people earlier, so they stay well instead of waiting until cover is the only option left.

The effect reaches well beyond the premium. 80% of people using Heka change a ‘health behaviour’ within six months, and 4 in 5 report improved mental health. Healthier people take fewer sick days and need to claim less, so next year's renewal starts from a better place.

Four of those five are subtraction. Only one leaves next year's renewal in a better place than this year’s, and it's the only one your people won't feel as a downgrade.

We've written more on rethinking private medical insurance if you want more information on this topic.

‍What does capping outpatient cover take away from your people?

Outpatient care covers the everyday conditions people actually claim for, and musculoskeletal problems sit near the top of that claims list. Capping outpatient cover removes support from the most common health issues in a workforce.

Musculoskeletal problems accounted for 14.6% of sickness absence occurrences in 2025, behind only minor illnesses. Work-related musculoskeletal disorders alone cost 7.1 million working days in 2024/25.

Back pain. A knee that won't settle. A shoulder that's been niggling since March. These are the claims outpatient cover handles, and they're the ones that turn into something bigger when nobody deals with them early.

Cap outpatient cover, and you've made the cheap intervention harder to reach while leaving the expensive one fully covered. The person with the bad back waits. Six months later, the chances of paying for a bigger claim are higher.

Our health insurances and protections page sets out how the cover types fit together.

Why is private medical insurance hard to take away once you offer it?

Once private medical insurance is part of your package, people come to expect it, which makes it one of the hardest benefits to remove. Most businesses keep PMI in spite of the cost increases, so each renewal shapes the benefit for years to come.

Few businesses want to be the one sending the email to say the health cover is going.

So the benefit stays. The premium keeps climbing. Each year the most common response to spiralling premiums is to shave a bit more off the cover, and five years of that leaves you paying more for a policy that covers noticeably less than the one you started with.

Meanwhile the NHS route keeps getting slower. Just 62% of patients on the elective waiting list were treated within 18 weeks as of October 2025, against a constitutional target of 92%. Demand for private cover keeps growing.

That's why each renewal decision matters beyond this year. The choice you make now sets up the next five.

How does reducing claims change next year's PMI premium?

Claims are the one input into your renewal that responds to what you do between renewals. Fewer claims mean a lower loss ratio, and a lower loss ratio means a smaller increase, with no change to the cover itself.

The chain is short:

1. Personalised support drives usage.
2. Usage drives prevention.
3. Prevention reduces claims.

And reducing claims is the only way to reduce premiums without cutting cover.

Average benefits usage industry-wide is just 13%, so a prevention programme nobody uses changes nothing about your claims experience. You've bought the intention without the mechanism, and this is where most benefits strategies stall.

Heka customers see premiums fall 8% year after year, driving prices back below 2020 and pre-pandemic levels. Same cover, lower cost, and no insurer change.

For a 500-person company, that adds up to a £2.3M saving over five years. Without Heka, premium per head hits £3,099 by 2030, up from £1,598 today. You can see how prevention plays out for real businesses in our customer case studies.

The mechanism is usage. 98.5% of bookings on Heka are for preventative health, and the most booked categories are mental health, nutrition, movement, and general health and lifestyle. Those categories target the exact conditions behind the most common private medical claims.

What does prevention look like in practice?

Prevention works when the support is specific to the person and available before they need to claim. A generic programme offered to everyone in the same way is exactly why usage sits so low across the industry.

A new parent and someone eighteen months from retirement need different things. So does the employee with a recurring back problem and the one whose smart watch says they haven't slept properly in weeks.

Heka reads two signals: 

• Who someone is, meaning role, life stage, and health goals. 
• What they do, meaning bookings, searches, and wishlists. The right support gets surfaced at the moment it's useful, which is how the platform works.

The same data flows back to your business as anonymised patterns, so you can see where your people need support. No individual is ever identified.

46% of Heka usage prevents sick days. People act early, on something they chose themselves, before the problem needs a consultant.

When does prevention not help?

Prevention won't rescue the renewal already sitting on your desk. Claims from the past twelve months are banked, and this year's price reflects them. If a large claim landed in month three, you can't change the quote in front of you.

Prevention changes the renewal after that one, and the one after that. So the choice is between a lever that works now and shrinks the benefit, and a lever that works next year and keeps it whole.

Plenty of businesses need both in year one. A small excess increase is a sensible stopgap while the prevention work starts.

Give prevention a three-year runway, and each renewal starts from a better place than the last.

What should change before your next PMI renewal?

The work that shapes your next renewal happens between renewals. Workplace health claims hit £2.6 billion in 2024, up 16% in a year, and that rise is pushing premiums up across the market. Your own claims history shapes how much of it reaches you, and that's the part prevention changes.

Four of the five levers on the table (capping outpatient cover, raising the excess, excluding hospitals, and trimming bolt-ons) make the benefit smaller. The fifth, prevention, makes the claims smaller.

The right support, in front of the right person, at the right moment. That's how you stop small problems becoming claims.

Work out what prevention is worth against your own premium with the PMI savings calculator, or book a demo and we'll walk through your claims profile with you.

Frequently asked questions about PMI

Does raising the excess on a private medical scheme actually save money?

Raising the excess reduces the premium in year one, because the employee covers the first portion of any claim. The savings are real and immediate. The risk is behavioural. A higher excess discourages people from claiming early for small things, and the small problems they don't treat become large claims later. Over time, that can push the cost trend back up.

What is the difference between medically underwritten and medical history disregarded cover?

Medically underwritten policies let the insurer exclude pre-existing conditions based on each person's medical history, which makes them cheaper. Medical history disregarded policies that cover pre-existing conditions from day one and usually cost more, sometimes significantly. Larger schemes are more likely to secure medical history disregarded terms.

Is private medical insurance a taxable benefit in the UK?

Yes. Private medical insurance is a taxable benefit in kind, so employees pay tax on the premium value at their marginal rate of 20%, 40%, or 45%. When the premium rises, so does the tax bill attached to it. If nobody explains this, a premium increase can arrive as an unwelcome surprise on a payslip.

Should we offer a health cash plan instead of private medical insurance?

They do different jobs. Health cash plans reimburse everyday costs like dental checkups, optical care, and physiotherapy, usually up to modest annual limits. Private medical insurance covers acute conditions needing specialist treatment or surgery. Swapping one for the other leaves a gap on serious health events that'll keep someone out of work for months.

How long does prevention take to show up in a premium?

It takes more than one renewal, because insurers price on your recent claims experience. Usage builds first, claims behaviour shifts after that, and the improvement in your loss ratio reaches the quote later still. That's why it's worth treating prevention as a three-year commitment. Judge it on a single renewal and you're measuring the wrong window.

How many employees actually use their health benefits?

Average benefits usage industry-wide is just 13%, which means most benefits budgets support a small minority of staff. Usage rises sharply when support is matched to the individual instead of offered as a single package to everyone. Low usage is why most prevention programmes don't change a claims profile.

‍