Building a PMI plan for expatriates that complements state provision

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• Making use of state healthcare and local provision where possible for expatriate staff can help to reduce the cost of providing international medical insurance, but it can add complexity.

• Depending on where staff travel and the duration of their time abroad, another option is to cover their healthcare costs under a business travel insurance policy.

• Some employers prefer to offer expatriates cash to arrange their own local cover, rather than take out an international policy.

Case study: Incisive Media finds a balance on healthcare overseas

With offices in locations such as Hong Kong, New York and Singapore, it is not surprising that overseas assignments are high on the agenda of the benefits team at business-to-business publisher, Incisive Media.

Although it is essential to look after employees’ health and wellbeing wherever they are, international medical insurance is expensive, so it is also a matter of balance. Emma Cutbill, benefits manager at Incisive Media, says: “It does depend on the contract but, where an employee is taking up an overseas post, they would be transferred onto a local contract of employment and receive the same benefits package as other employees in that country. This helps to keep the cost down but also ensures they have benefits relevant to their location.”

For example, in Hong Kong and New York, where no state healthcare is available, medical insurance is included in the employee benefits package. This is fully covered in Hong Kong but, in line with other US employees, staff in New York pay 25% of the cost of the insurance.

As well as permanent overseas positions, shorter secondments are also common, particularly for employees involved in conferences for just a few months. “For these shorter trips, we can include them on our travel insurance, so they are covered in an emergency,” says Cutbill.

Employers are exploring local healthcare options for expatriate staff to try to keep insurance costs down, says Sam Barrett

Rising healthcare costs are a headache for employers deploying staff overseas. Combining state healthcare and local provision can help to cut costs, but can also add a layer of complexity when creating private medical insurance (PMI) packages.

Andrew Apps, director of ALC Health, says: “International PMI used to be a standard part of the package for an overseas posting, but employers are more careful about the costs now. We are seeing more employers looking at what is available locally and building medical insurance around it.”

Comprehensive international cover can be expensive. Chris Beardshall, global account executive at PMI Health Group, estimates a cost of about £2,000 for global cover for a 30-year-old, excluding the United States (US), and a 50% increase to include the US is not uncommon. As premiums rise with age, employers could easily face five-figure sums to insure more senior employees on a worldwide basis.

Thankfully, the availability of state healthcare in some countries enables employers to provide cost-effective healthcare as a benefit to overseas employees.

Employers with staff posted in the EU have the European health insurance card (EHIC) to consider. This is a reciprocal arrangement that allows access to state healthcare throughout the EU at a reduced or zero cost. For example, in France an EHIC enables employers to claim back about 70% of treatment costs, although they would have to pay a non-refundable sum of about €21 (£18) for a doctor’s appointment.

But Simon Ball, principal in global benefits at Aon Hewitt, says the EHIC has its limitations. “Very few organisations would rely on this,” he says. “Coverage is not consistent: in some countries it covers everything, in others it is emergencies only.”

Business travel insurance is another low-cost option. Policies typically offer cover for up to six months, with prices dependent on where an employee will be travelling. For example, Beardshall says the minimum premium on Chubb’s business travel policy is £250. Premiums are based on the number of trips a year, duration and destination.

For example, an employer for which employees make 50 trips to Australia per year, with an average duration of no more than four weeks per trip, would cost the employer £4,000 per annum. Annual travel totalling 50 days in the EU and 50 days outside the EU would cost £650, while 15 to 20 short business trips a year, with the majority within the EU, would cost £700. “This is fine for short-term assignments, but it will only offer emergency treatment and may also exclude pre-existing conditions,” says Beardshall.

Limited options for broader coverage

Those looking for broader coverage still may find themselves with limited options. Ball says: “More and more countries are bringing in mandatory insurance requirements for residents, for example in France and the Netherlands, but these can only be accessed by people who are employed and paying tax in that country. If an employee is still on the UK payroll, it is not an option.”

Local insurance is one solution for expatriates who remain on the UK payroll. Mark Coleman, director, international sales at Cigna Global Health Benefits, says: “Some employers prefer to offer expatriates cash to arrange their own local cover.”

A local plan will be perfectly tailored to a country’s healthcare system, but it can cause problems for expatriates. Patrick Woodhead, specialist consultant at Lorica Employee Benefits, says: “It will not include cover such as evacuation and repatriation. Also, pre-existing conditions might be excluded.”

Modular products are offered by insurers such as Aviva, Allianz and Aetna. “This makes it much easier to tailor the product,” says Beardshall. “For example, if employers are happy the employee will be able to access some healthcare locally, they could provide a low level of cover to pick up extra costs.”

Some insurers have developed top-up policies, including ALC Health’s Prima Europa, which cover day-to-day healthcare such as physiotherapy, optical and dental benefits, up to a total of £13,000 a year. But comprehensive international PMI may still appeal. As Kevin Melton, sales and marketing director at Axa PPP International, says, employers are often prepared to pay for this because of the reassurance and simplicity it provides.

State healthcare provision worldwide

With healthcare costs escalating, governments around the world are finding ways to make their healthcare sustainable. Here are some examples:

Residents pay into a state settlement programme that ensures part of their healthcare is covered by the state. They pay for any treatment that is provided and then a percentage – usually about 70% – is refunded to them. Top-up insurance is available to cover the difference.

The Netherlands
Since 2006, it has been mandatory for residents to take out a basic level of health insurance, known as the Basisversekering. This provides cover for general medical care, such as GP visits, prescriptions and medical treatment. Residents can top up this cover if they wish.

United States (US)
The US healthcare system is widely regarded as the most expensive in the world. While the vast majority of US residents take out medical insurance, emergency treatment must be provided regardless of ability to pay and there is some charity support for those unable to meet healthcare costs.

Healthcare is provided by Medicare, a state-funded system financed by a 1.5% (2.5% for high earners) levy on all taxpayers. It has reciprocal arrangements with the UK and will provide limited subsidised treatment for medical emergencies, but not for pre-existing conditions or medication that is not administered in a hospital.

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