In 2026, group private medical insurance averages around £57 per employee per month, health cash plans run £5–£15, group income protection costs roughly 0.5% of payroll, group life around 0.3%, and an EAP can cost as little as £5–£15 per employee per year. Auto-enrolment pension contributions sit on top as the legal baseline.
- ✓Group PMI averages ~£57 per employee per month in 2026; cash plans start around £5.
- ✓Group income protection ~0.5% of payroll; group life ~0.3% — both cheaper than most expect.
- ✓A £50/head monthly budget funds a genuinely competitive benefits stack for a small firm.
The 2026 cost table
Benefits pricing is scattered across insurer sites and broker decks, so here's the aggregated 2026 picture in one place. Figures are indicative market ranges for small and mid-sized employers — your quotes will vary with workforce age, industry and cover level.
| Benefit | Typical 2026 cost per employee |
|---|---|
| Pension (auto-enrolment minimum) | 3% of qualifying earnings (employer share) |
| Private medical insurance (group) | £35–£110/month, average ~£57 |
| Health cash plan | £5–£15/month |
| Group income protection | ~0.5% of payroll |
| Group life insurance (death in service) | ~0.3% of payroll |
| Employee assistance programme (EAP) | £5–£15/year |
What drives the ranges
The pension is the only legal requirement: auto-enrolment obliges employers to contribute at least 3% of qualifying earnings for eligible staff. Everything else is discretionary, and priced on risk. Group PMI spans £35–£110 per employee per month depending on age profile, cover tier, excess and hospital list — group schemes typically come in 10–30% cheaper per head than equivalent individual policies. Cash plans are cheap because they pay fixed small sums (dental, optical, physio) rather than covering big treatment bills. Income protection and life cover are percentage-of-payroll products, so they scale automatically with salaries, and EAPs are cheap enough that price is rarely the barrier — awareness and usage are.
Remember the tax mechanics: most of these are generally deductible business expenses for corporation tax, but PMI and cash plans are benefits in kind for employees — Class 1A NIC at 15% for the employer, and P11D reporting until the April 2027 payrolling change.
Three budget archetypes
Here's how firms typically allocate at three monthly budget levels, on top of the auto-enrolment pension. These are illustrative structures, not recommendations:
- ~£25 per head: the foundation. A health cash plan (~£10), group life (~£10 equivalent for typical salaries) and an EAP (~£1). Every employee gets something visible and usable; nobody gets big-ticket medical cover.
- ~£50 per head: the competitive stack. Entry-level group PMI with an excess and guided referrals (~£40) plus an EAP. This is the level at which a small firm's package starts to bear comparison with corporate employers.
- ~£100 per head: the full stack. Mid-tier PMI (~£57), group income protection, group life and an EAP — roughly what our full benefits stack guide costs out in detail.
Want real per-head numbers for your team?
Getting real numbers for your team
Indicative tables are for budgeting; decisions need quotes. For a group PMI quote you'll need a simple census — ages, postcodes, and the cover level you want — and most insurers turn quotes around in days. We compare group schemes from Bupa, AXA Health, Aviva, Vitality, WPA and The Exeter, and the spread between the cheapest and dearest quote for the same team is often 20% or more, which is exactly why comparing first matters.
Two final budgeting notes. First, quoted PMI premiums already include insurance premium tax at 12%, so there's no surprise on top. Second, cost the whole stack per head per month before you commit to any single line — a firm that anchors on 'PMI or nothing' often ends up with nothing, when a cash plan, EAP and life cover would have delivered a genuinely felt package for a third of the PMI budget.
Frequently asked questions
How much do employee benefits cost per head in 2026?
As a 2026 rule of thumb: auto-enrolment pension at 3% of qualifying earnings is the baseline, group PMI averages around £57 per employee per month, cash plans £5–£15, group income protection roughly 0.5% of payroll, group life around 0.3%, and an EAP £5–£15 per employee per year.
What's the cheapest employee benefit to add per head in 2026?
An employee assistance programme — often £5–£15 per employee per year for confidential counselling and support lines. Health cash plans are the cheapest visible health benefit at £5–£15 a month. Both are common first steps before a firm commits to full private medical insurance.
Is £50 per head a realistic monthly benefits budget?
Yes — around £50 per employee per month (on top of pension) funds entry-level group PMI plus an EAP for most younger teams, or a rich cash plan stack for older ones. It's roughly the level where a small firm's benefits start to compete with corporate packages.
Why does group PMI cost per head vary from £35 to £110?
Age profile is the biggest factor, followed by cover tier, excess, outpatient limits and hospital list. Industry and location matter too. That's why the ~£57 average is only a budgeting anchor — the same benefits design can price very differently on two different teams.
Do employees pay tax on benefits like PMI and cash plans?
Generally yes — employer-paid PMI and cash plans are benefits in kind, so employees pay income tax on the value and employers pay Class 1A NIC at 15%. Pensions, EAPs and (usually) group life sit outside BIK. Reporting runs via P11D until payrolling becomes mandatory in April 2027.