Business & Corporate Health Insurance

Why Offer Health Insurance to Employees?

1. Attract and Retain Top Talent

In competitive job markets (Auckland, Wellington, Christchurch), health insurance is a highly valued benefit. 67% of job seekers consider health benefits when evaluating offers.

2. Reduce Sick Days and Improve Productivity

Employees with health insurance access faster medical care, reducing time off work. Private specialist appointments happen within 2-4 weeks vs 3-6 months publicly.

3. Cost-Effective Benefit

Group plans cost 10-25% less than individual policies. For $150-$250/month per employee, you provide a benefit worth thousands annually.

4. Tax Benefits

Health insurance premiums are fully tax-deductible as business expenses. Employees receive tax-free benefits (subject to fringe benefit tax rules).

Group Health Insurance vs Individual Plans

Types of Group Health Plans

Fully Insured Group Plans

Best for: 5-50 employees

• Fixed monthly premiums per employee
• Insurer handles all claims
• Predictable budgeting
• All employees get same coverage

Average cost: $120-$250/employee/month

Flexible Benefit Plans

Best for: 20+ employees

• Employees choose coverage levels
• Core coverage + optional extras
• Employer contribution + employee top-up
• More customizable

Average cost: $100-$300/employee/month depending on choices

Self-Insured/Self-Funded Plans

Best for: 100+ employees

• Employer pays claims directly
• Stop-loss insurance for large claims
• Lower costs for healthy workforces
• More financial risk

Average cost: Variable, typically 15-25% less than fully insured

What's Covered in Corporate Plans?

Standard Corporate Coverage:

• Hospital accommodation (private room)
• Surgical procedures
• Specialist consultations
• Diagnostic tests (MRI, CT, ultrasound)
• Cancer treatment
• Pre and post-operative care

Optional Add-Ons:

• GP visits ($500-$1,000/year)
• Dental coverage (checkups, basic procedures)
• Optical (glasses, contact lenses)
• Physiotherapy and chiropractic
• Mental health counseling
• Preventative health assessments

Top Providers for Business Health Insurance

Southern Cross Health Insurance

Market leader in corporate health insurance. Offers comprehensive group plans for businesses of all sizes. Excellent claims processing and provider network.

Minimum employees: 5

Best for: Businesses wanting market-leading coverage

nib Health Insurance

Fast-growing corporate provider. 15-20% cheaper than Southern Cross with excellent coverage. Strong wellness and preventative care programs.

Minimum employees: 5

Best for: Businesses seeking value and wellness programs

AIA Vitality

Wellness-focused group insurance. Rewards employees for healthy behaviors with premium discounts up to 50%. Great for health-conscious workplaces.

Minimum employees: 10

Best for: Tech companies, startups, wellness-focused businesses

Accuro Health Insurance

Flexible modular plans ideal for diverse workforces. Employees choose their coverage level. Good family coverage options.

Minimum employees: 5

Best for: Businesses with varied employee demographics

Cost of Business Health Insurance

By Company Size:

• 5-10 employees: $150-$220/employee/month
• 10-25 employees: $130-$200/employee/month
• 25-50 employees: $120-$180/employee/month
• 50-100 employees: $110-$170/employee/month
• 100+ employees: $100-$160/employee/month

Larger groups = better rates due to economies of scale and risk pooling.

Implementation Process

1. Needs Assessment (1-2 weeks)

• Survey employees on desired benefits
• Determine budget
• Decide employer vs employee contribution split

2. Request Quotes (1 week)

• Contact 3-4 insurers for proposals
• Compare coverage, costs, admin requirements
• Check provider networks and hospital access

3. Employee Enrollment (2-4 weeks)

• Communicate benefits to staff
• Collect enrollment forms
• Medical underwriting (if required)

4. Implementation (1 week)

• Set up payroll deductions
• Distribute membership cards
• Conduct benefits education sessions

Employer Contribution Strategies

100% Employer-Paid

Pros: Maximum employee benefit, strongest recruitment tool

Cons: Highest cost to business

Typical for: Professional services, tech companies, senior executives

50/50 Split

Pros: Shared cost, employees value benefit more when contributing

Cons: Lower take-up rate if employee portion is high

Typical for: Most NZ businesses, common market practice

Employer Pays Core, Employee Pays Extras

Pros: Affordable for business, flexible for employees

Cons: More administration, varied coverage levels

Typical for: Larger businesses with diverse workforces

Tax Implications

For Employers:

• Premiums are tax-deductible business expenses
• Subject to Fringe Benefit Tax (FBT) in most cases
• FBT rate: 49.25% on premium value
• Can be offset by PAYE and other taxes

For Employees:

• Employer-paid premiums are tax-free benefit to employee
• No additional income tax on health insurance benefit
• Employee-paid portions are post-tax (not deductible)

Consult your accountant for specific tax treatment based on your business structure.

FAQs - Business Health Insurance

How many employees do I need for group coverage?

Most insurers require a minimum of 5 employees. Some (like AIA Vitality) require 10+. Larger groups (50+) get best rates and simplified underwriting.

Do all employees need to enroll?

No, but higher participation (70%+) gets better rates. Some insurers require minimum 75% participation for guaranteed acceptance/simplified underwriting.

What happens when an employee leaves?

Coverage ends on last day of employment (or end of month). Employee can convert to individual policy (at higher cost) within 60 days without medical underwriting.

Can I offer health insurance to some employees but not others?

Yes, but must be based on objective criteria (e.g., full-time vs part-time, management vs staff). Cannot discriminate based on health status, age, or gender.