Is local or international health insurance better for your staff?

Whether to provide local or international health insurance for staff is a common dilemma.

On one hand, you want to provide health coverage that will put your employees’ minds at rest and make them feel valued; on the other hand, international private medical insurance comes at a cost.

This is an issue especially in Dubai, where all employers have been responsible for providing health coverage for their entire workforce since June 2016, triggering a steep rise in premiums.

Back in 2014, 84% of employers who took part in MetLife’s UAE Employee Benefit Trends Study rated optimising benefits plan design while reducing costs as an important goal for their HR team, while 60% said managing benefits with their current level of HR resources was very challenging. In all likelihood, these figures would be even higher if the survey were carried out today.

Employers are right to be concerned about offering an attractive benefits package, while keeping control of their budget. Just over half of employees who admitted they were considering leaving their job said a better benefits package would encourage them to stay. That means that slashing the levels of coverage you offer could be a dangerous false economy.

Just over half of employees who admitted they were considering leaving their job said a better benefits package would encourage them to stay.

So what should you take into consideration when deciding between local and international health coverage for your staff? Let’s look at what each has to offer. 

International health insurance advantages

Starting with international, these are five key advantages:

1. Fewer restrictions: Compared to some local policies, international health insurance is less restricted in terms of what it covers and sub benefits. If an employee develops a serious health condition during the period of coverage, you can automatically expect it to be covered in a majority of cases.

2. Higher annual aggregate and payouts: With both local and international medical insurance, there will be a maximum limit to the treatment covered under the policy, but this is is likely to be considerably higher with an international policy. Therefore, giving you the ability to access more healthcare as per the choice of insurer.

3. A larger network of care facilities: Most local health insurance only covers care at a fairly limited network of providers within the country or region. These networks may also omit top tier hospitals and clinics. With an international insurance policy, you have access to prime hospitals and clinics. Beneficiaries can seek treatment in any country, as long as it’s not specifically excluded from their coverage. For example, some policies exclude the US, as fees for medical care there are so expensive, while others specify certain regions of coverage.

For multinational employers, another major benefit is that employees can stick with the same policy if they relocate to another country. This portability of plan is most relevant to expats and gives them the comfort of their insurer of choice already having their medical records, as well as the advantage of already having completed any waiting periods if applicable.

4. Free second opinions: International health cover generally allows beneficiaries to seek a second medical opinion. People with local health insurance would usually have to pay for a second opinion out of their own pocket.

5. Better service: In addition to better medical provision, a large international insurance provider will give more efficient customer service and access to tools that will help you manage your company’s usage, such as online portals and apps. This investment in technology gives access to care and information, logs claims and even gives directions to the closest hospital at the touch of a button – a much sought-after feature to the ultra-modern consumer of today. 

Local health insurance advantages

Now let’s move to local insurance and identify three key areas of benefit there.

1. Lower cost: Local health insurance provides less extensive geographic coverage and has reduced levels of benefits and service. Local insurance also has a lower level of aggregate cover than international insurance, allowing them to offer lower premiums.

2. Greater flexibility: You may find that local companies will offer more flexibility to design coverage to match the needs of your staff.

3. Good value: Depending on where you are based, the company’s medical policy and concentration of employees, a local insurance may offer good value in terms of benefits and access to a Direct Settlement Network.

You may find that local companies will offer more flexibility to design coverage to match the needs of your staff.

Making the right decision

So taking all this into account, how do you go about working out the best mix of local and international health coverage for your workforce?

First it’s important to establish whether there are local regulations that determine the level of health coverage you can offer to different categories of workers. For example, in Dubai people whose salary is AED 4,000 or less can be covered under the Essential Benefits Plan for AED 500-700 per year. This provides cover for medical care in Dubai and emergency treatment across the UAE. There are also rules governing the types of treatments and procedures that must be covered for all employees. These apply to both local and international policies.

Next, verify whether your company policy allows you to offer a tiered benefits structure or whether you need to deliver the same level of health coverage across the board. In the latter case, you should consider carefully whether offering local insurance would be adequate to maintain your company’s reputation as a caring employer, whilst also meeting the needs of the employees. Offering tiered benefits has various advantages such as keeping a check on costs, providing a more customised plan as per the segment, and can also be made to tie in with a company’s progressive benefits package. We usually advise clients to offer international health insurance to all staff in senior roles and any whose work involves frequent foreign travel as a minimum.

It’s also worth considering the demographic make-up of your workforce. If a large proportion is made up of expats, offering international insurance as standard might make sense.

You might also want to investigate the levels of coverage your competitors are offering their employees, so you can make sure your benefits package can be used as a retention tool as well.

What employees want

In MetLife’s UAE study, 83% of employees said they were very likely to seek treatment abroad, though only 59% had insurance that would cover it. So while international health insurance that covers repatriation and evacuation is clearly a popular option, at the time the survey was carried out only just over half the workforce were benefiting from it.

In MetLife’s UAE study, 83% of employees said they were very likely to seek treatment abroad, though only 59% had insurance that would cover it.

However, while it’s natural for expats to think about flying home for treatment if they become seriously ill or have a major accident, the upheaval of international travel could have a detrimental effect on their condition, and if good-quality treatment is available locally, this may often be the better option.

For those of you based in Dubai, it’s worth pointing out to your expat employees that the level of health provision here is generally good. The UAE came 18th in HSBC’s 2016 Expat Explorer survey for expats’ experience of healthcare. Many medical staff are also expats themselves and English is widely spoken.

That said, Emirati employees may also place a high value on being able to use the premium facilities only accessible to people with international coverage.

You might consider running an internal survey to find out what really matters to your employees when it comes to looking after their health.

Controlling your costs

While international health insurance is usually the option most people would prefer, if your budget doesn’t allow you to offer it to everyone, at least try to provide it for your top executives. In MetLife’s study, 62% of employers at multinational companies and 45% at non-multinationals said they offered special benefits packages for executives.

When negotiating a package for a new mid-level employee, the option of full international health coverage, including repatriation and evacuation, is a good bargaining tool. You could also offer a voluntary contribution system, where employees can pay a top-up fee or rider to boost specific aspects of their insurance coverage, depending on regulatory stipulations within your geography around this. Options might include the ability to access a wider network of clinics and hospitals, as well as increased maternity benefits or dental cover.

For junior staff, local insurance will probably be acceptable though offering international cover, if financially viable, could set your company apart from the competition. At least consider providing short-term international insurance to cover any times that your employees would need to travel out of the country for work.

A good way to keep expenditure on international medical insurance under control is to speak to your insurance adviser about group policies. Different providers have different minimum numbers for group insurance, but with some this can be as low as three to five main members. The premium pricing of these plans are usually done on a community rated basis which gives the group the advantage of benefitting from being part of a larger risk pool.

Deciding on the right balance of insurance coverage for your staff can be a complex task, especially with frequently changing legislation to contend with. So don’t hesitate to take advantage of the expertise your insurance adviser can offer.