Controlling the cost of international private medical insurance

International private medical insurance can be pricey, but as cover is essential for some employees working abroad, there are ways for employers to minimise their bill, explains Edmund Tirbutt.

Private medical insurance (PMI) is well known for its cost. Employers who send staff to work overseas for any length of time, however, should ensure that their health and medical needs are covered while they are away, which often necessitates the need for international PMI cover. Those which are looking to reduce or control the cost of taking this course of action have several options open to them.

Selecting a competitive international PMI provider represents half the battle in controlling costs, and well-known domestic insurers are not always the best answer. Specialist players such as William Russell, InterGlobal, and Goodhealth can sometimes cost 30% to 40% less on international plans. One way of securing a good deal is to use an intermediary to scour the market, which can sometimes secure preferential rates.

A further way for employers to reduce costs is to look at the type of cover they want to offer, for example, by trading down from offering an international plan to one that only covers a single country. But there can be downsides to doing so. With a few exceptions, most single country plans are offered by local insurers which are not regulated by the Financial Services Authority (FSA) and which don’t always communicate in English.

Employers should also bear in mind that single country plans are unlikely to provide evacuation or repatriation benefits or permit treatment outside the country concerned. The standard of local healthcare, therefore, is a major consideration. If a single country plan restricts cover to certain hospitals, these must also be checked out to ascertain if they are adequate for staff.

In the event that an organisation requires numerous single country plans, this may involve dealing with many different points of contact, although it can be possible to instruct a specialist intermediary to act as a single point. Sarah Dennis, international business consultant at Jelf Group, says: “If we knew employees were unlikely to travel outside certain countries, we would advise employers to look at local plans offered by local insurers, but there would have to be a good hospital infrastructure. Cover is not always as good as on international plans. There could be more exclusions and also questions about the claims-paying ability of the insurer, so it can be quite a big risk to take.”

Taking out an excess of between £100 and £3,000 can also help to reduce premiums by 5% to 50%. But Brian Mulreany, sales director at Essential Healthcare, says: “Excesses can cause confusion both with regard to what is and is not covered, and as a result of [these] having to be paid in local currencies.”

Sacrificing elements of cover is another way of controlling costs. It can be possible to save up to 25% by stripping out cover for outpatient treatment, private GP services and prescription costs, or to save 5% to 10% by lowering outpatient limits, for example. What elements can be realistically omitted depends on the country staff are sent to. It is easier to do without outpatient cover in areas where treatment is relatively accessible and cheap.

Other elements, which can create 5% to 10% savings, if they are removed from international plans include dental cover, travel insurance that overlaps with existing cover and, for all-male schemes, maternity benefits. In some cases, however, this can be a false economy. Colin Boxall, corporate director of the ADVO Group, says: “The approach can result in costs that are not so obvious to the finance director, such as higher absenteeism and loss of productivity.”

If you read nothing else, read this…

  • Using a specialist intermediary is a good way of sourcing the best deal or most suitable international private medical insurance (PMI) provider.
  • Single country plans can create attractive savings for employers but can have downsides.
  • Sacrificing some elements of cover can also help to reduce premiums, however, employers should bear in mind that cutting back on some benefits can result in indirect costs, such as increased absenteeism, and may prove a false economy in the long run.