Healthcare schemes for expats in emerging markets

Employers must ensure healthcare cover for expats in emerging markets is adequate, says Alison Coleman

The global economic downturn has not deterred organisations from sending employees overseas, increasingly into new and uncharted territories.

The number of employees on international assignments has risen by almost 90% over the past three years, according to Mercer’s 2008/2009 Benefits Survey for Expatriates and Globally Mobile Employees.

Although many have followed the well-trodden paths to established expat destinations such as the US, Australia and Western Europe, a small but growing number are being deployed in emerging markets, including Central and Eastern Europe, the Far East and Africa.

A key part of supporting employees on expat assignments is a comprehensive benefits package, in particular, healthcare benefits such as private medical insurance (PMI), life insurance, and evacuation and repatriation cover in the event of a medical emergency.

Michael Plaugmann, senior adviser on private medical insurance at Mercer, says: “Healthcare is a top priority whenever employees are sent overseas and, as a valuable attraction and retention tool, companies have to get that benefit right. However, what we have found is that although international markets are developing rapidly and new markets continue to emerge, employers are failing to update their expat benefit policies to ensure they are providing the best cover for a particular market or assignment.”

Although staff on international assignments tend to be covered by group international health schemes, leading insurance providers have recognised that expat trends are changing and are offering products tailored for specific destinations. Bupa International, for example, has launched a European Health Plan, which provides Europe-wide cover for people working in Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia.

Tim Slee, global sales director at Bupa International, says: “Eastern Europe is a growth area economically, but medical provision and health systems are not always highly regarded compared to wider European standards. As international markets develop, we envisage a need for a more modular solution, and the provision of cover that is more appropriate for the market expats are working in.”

European healthcare systems vary in cost and quality. Poland, for example, has a state healthcare system, a network of private clinics, but only a limited number of private hospitals. Expats posted there are likely to choose PMI that would allow them to travel a short distance to a western European country, such as Austria, for treatment where suitable facilities are more widespread.

A lot can depend on the exact location of the expat within a country. Although Slovakia is generally recognised as having adequate medical facilities in its major cities, outside these areas the standard of care is less reliable.

Language barriers can also present problems. Away from heavily-populated eastern European towns and cities, there will be fewer English-speaking medical staff.

The lower costs of setting up business operations in Central and Eastern Europe and Russia make these particularly attractive destinations. But with flourishing medical black markets, and with medical degrees being bought and sold in some regions, healthcare practices can be a cause for concern.

Matt Gales, regional sales consultant at Expacare, which recently launched a plan that provides cover for companies with fewer than five employees exploring trading opportunities overseas, says: “If you are sending people to work in places where standards of local healthcare and medical treatment are uncertain, you have to provide insurance cover that gives them peace of mind.”

Bespoke medical insurance policies are seen as a comprehensive solution, but some employers that only provide private medical insurance could be overlooking the potential cost benefits of integrating expat medical cover with healthcare services that are available locally. Mercer’s aforementioned research revealed that 82% of employers do not consider local social security provision when providing healthcare benefits.

Plaugmann says: “If there is access to good medical facilities in the local country, there could be a useful collaboration between those and providers of international medical insurance, without the need for the latter to be paying right down to the first dollar.”

But some see this as a risky option. Sarah Dennis, international business consultant with Jelf Group, who has just returned from Hungary, says: “It was clear that while standards in some medical facilities were outstanding, in others they were poor. With such a lack of consistency, employers can’t afford to provide anything less than a full international healthcare benefits package.”

Another significant factor in providing healthcare benefits for employers with staff working in emerging economies is likely to be local government legislation. In some Middle Eastern countries, such as Abu Dhabi, local health authorities have imposed minimum health insurance requirements for expats. Any failure by international insurers to make sure their products comply could jeopardise the working visas of the expats they are covering.

Understanding local regulations presents a huge challenge for multinational companies with thousands of workers around the world, as the impact of legislation spreads to other regions, such as Europe.

Employers may also have to rethink their healthcare cover for short- and long-term expat assignments. Traditionally, for contracts of six months or less, basic business traveller medical insurance has sufficed, while those on long-term contracts would expect full PMI and healthcare benefits provision.

But David Heppard, head of international at healthcare consultancy IHC, says employers may have to be more flexible in providing cover for expat staff. “It is not unusual to see employers combining a PMI policy with a business traveller policy, even on very short assignments,” he says. “This is indicative of a changing expat market and of the uncertainties surrounding some of their newer destinations within Eastern Europe, China and India. Employers cannot afford to risk underprovision of cover and employees must feel confident that they and their families will be fully protected in all eventualities.”

European countries’ healthcare rankings

Establishing a clear picture of the standards of healthcare provision in any given market is a challenge for all organisations with international operations. Standards can change dramatically from year to year and some markets can throw up surprises, as the annual Euro Health Consumer Index (EHCI) reveals.

Compiled by Brussels-based Health Consumer Powerhouse using public statistics and independent research, the EHCI ranks the national healthcare systems in the European Union member states, as well as Switzerland and Norway.

This year, The Netherlands topped the rankings, followed by Denmark, Austria, Luxembourg and Sweden.

In tenth position, France outperformed Estonia (11), Belgium (12), the UK (13), Hungary (14) and Ireland (15), while Central and Eastern European countries, with the notable exception of Hungary, make up the bulk of the low-end performers, including Romania (27), Bulgaria (28) Croatia (29), the former Yugoslav Republic of Macedonia (30) and Latvia (31).

However, some western countries, such as Portugal (26), Malta (23) and Cyprus (21), are also struggling to deliver adequate levels of care and, surprisingly, are languishing in the lower rankings.

Case Study: PricewaterhouseCoopers

At any one time, global business services firm PricewaterhouseCoopers has about 3,500 expat employees working in countries all over the world. Most are based in the UK, the US, Australia and Canada, but growing numbers are venturing into the emerging markets of Central and Eastern Europe, the Middle East and China.

The firm has a host-based approach to healthcare benefits, with expats using local healthcare services that can be topped up with company-provided benefits, such as private medical insurance, if needed.

UK global mobility team leader Paul Hicks says: “It is early days, but we are starting to put people into countries such as Khazakhstan, the United Arab Emirates and China. Our global mobility experts assess the local policies on healthcare provision to ensure that standards and facilities are equivalent to what the expat had previously. If not, we will provide an international scheme of medical insurance, life insurance and critical illness cover for them, their spouses and dependants.

“This is not simply a cost-based strategy. We believe that where standards of medical care and facilities are of a standard equivalent to home, integration is the right thing to do.”

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