A Choice Between International and Local Private Medical Insurance

Employers with an international workforce recognise that their expatriate employees have particular needs, including access to suitable housing, work permits and visas as well as support in adapting to a new culture. One of the top demands of all expatriates, however, is to have easy access to top quality healthcare. 

By Tony Valin, InterGlobal

 
 
Sending an employee on an expatriate posting is an expensive commitment for employers and with many of them facing difficult economic times, some may be tempted to reduce costs by limiting employment packages. One possible option could be to choose lower cost local market health insurance over specialist and international private medical insurance. However, employers should be aware that differences in the scope of coverage and conditions could make this a false economy in the long term. 
 
The fast-growing Asian economies continue to attract thousands of expatriates, often seconded by international companies hoping to develop markets, offer specialist knowledge or aiming to learn about local market conditions and economies. 
 
Employers with an international workforce recognise that their expatriate employees have particular needs, including access to suitable housing, work permits and visas as well as support in adapting to a new culture. One of the top demands of all expatriates, however, is to have easy access to top quality healthcare. 
 
For people living in their home country, accessing health care is usually relatively straightforward. People know how their national medical system works; they will be familiar with accessing primary care and will know whether they pay for care at point of access or whether it is free. They will also know whether treatment is state funded or whether they need their own medical insurance. 
 
Moving to a new jurisdiction however can make access to healthcare far more complex. Systems will be unfamiliar, access to quality facilities may be limited or even non-existent in some  remote areas and in some countries, proof of the ability to pay may be required before even the most basic of acute emergency care is provided. 
 
It is no wonder then that expatriates and frequent international travellers value international private medical insurance highly. It is guaranteed that they will be able to access emergency and routine healthcare for themselves and their families wherever they are in the world. It usually also ensures that they will have emergency medical repatriation back to their home country if they suffer a serious injury or illness. In these difficult economic times, however, when every cost is under review, it is likely that some employers will now be considering whether there are alternatives to international private medical insurance and the possibility of looking into alternative means of providing coverage. 
 
A possible option is to buy a domestic private medical insurance policy for the country where the expat employee is going to be based. It will be preferable and cost effective to buy a local plan than use a full international private medical insurance policy. For example, all foreign residents in Japan with a valid visa, allowing them to stay for a year or more, can join the Japan National Health Insurance scheme (kokumin kenkou hoken/kokuho). 
 
There are however significant differences between international private medical insurance plans, which are designed with the expatriate in mind and are portable between different jurisdictions, and domestic health insurance plans designed to suit the needs of permanent residents of a country.
 
The attraction for employers to consider a local plan is inevitably cost. The perceived wisdom is that it is probably less expensive to buy a local private medical insurance plan for an employee on an expatriate contract in Jakarta, than it is to buy a full international private medical insurance plan covering the Asia-Pacific region. 
 
There is some truth in this argument as the upfront cost is likely to be less. For most expatriates, however, the disadvantages easily outweigh the cost benefits. The main problems centre on access to the right quality of hospitals, emergency evacuation and responding to and coping with the issue of pre-existing or chronic medical conditions. 
 
Local private medical insurance plans are designed to do exactly what they say; to provide access to local healthcare. That is fine provided the local healthcare is of a high quality. Using the example of Indonesia again, our expatriate might prefer to fly to Singapore to access the very best regional healthcare rather than receive treatment locally. How likely is it that a domestic private medical insurance scheme would allow a member to fly to a different country to access healthcare, whereas otherwise seen as a normal benefit in an international private medical insurance plan? 
 
Expatriates will also face the difficulty of being stuck. A domestic plan will not get them back to their home country when they need long-term or specialist care. For a Japanese expatriate to be stuck at a hospital in Hanoi, when their family would prefer to have them home in Tokyo, repatriation is impossible on a domestic plan, but again possible on most international plans. 
 
Leaving aside the difficulties of accessing the right type of care, the expatriate lifestyle means that many expatriates move from country to country as their employer needs their skills in different locations. A marine engineer could move from the ports of India to the Japanese shipyards and then on to Hong Kong or Singapore. A domestic plan would instantly become redundant as the expatriate moves from country to country and the domestic plan could even delay their ability to move if new arrangements cannot be quickly set up in their new host country. An international private medical insurance plan however will cover all the countries within an expatriate’s geographic range of coverage and no newer arrangements are needed as work takes them from one country to another.
 
Finally there is the issue of pre-existing conditions. If an expatriate in Mumbai suffers a heart condition, the domestic plan will most likely cover the cost of their treatment. That expatriate however will then have a serious pre-existing condition on their medical records, which will make it difficult for them to change the insurer if and when they wish to leave India. There are also a number of jurisdictions where ‘local’ private medical insurance plans really are only suited for the local population. This would provide too limited coverage for an expatriate with China being a good example. 
 
China is not a cheap location for expatriates to receive medical treatment and the country has some of the most expensive hospitals in the world. Its medical system is also geared to the needs of the local population and many expatriates would struggle to access healthcare outside of the Western-style private clinics in the major cities. 
 
Domestic health insurance plans are typically sold by the large local insurance companies and generally offer health insurance cover in China only, providing relatively limited benefits for an inexpensive premium. These plans are geared to the needs of the local population and will almost certainly be inadequate for expatriates seeking Western-style care.
 
Another albeit very limited alternative to private medical insurance is to rely on reciprocal healthcare agreements between different countries. Reciprocal arrangements for healthcare are complicated and vary from country to country, these are reasonably common across Europe, but are far more limited in Asia. Australia has, however, signed a number of reciprocal healthcare agreements, including ones with Finland, Italy, Malta, Netherlands, New Zealand, Sweden and the United Kingdom. Australian residents visiting these countries are generally entitled to healthcare under the host  country’s public healthcare system. The fundamental point to remember about reciprocal arrangements is that the person who is looking to benefit from the arrangement will still need to be paying compulsory taxation in their home country. If or when an expatriate member of staff is to be paid and taxed in the country to which they are posted, no reciprocal care is likely to be available.
 
Where reciprocal arrangements exist, the rights to automatic medical care vary and may be costly. Expatriates may receive no more than basic emergency treatment and may find that any additional treatments are not available. There is certainly no access to emergency medical repatriation to the expatriate’s home country. 
 
The upshot is that while reciprocal arrangements may sound superficially attractive, in practice they are limited in their scope and may well present employers with more difficulties than benefits. 
 
There are alternatives for international private medical insurance for expatriate employees, but their scope of coverage is limited and employers proposing an alternative would have to make themselves clear in explaining these limitations to their staff. Some reciprocal arrangements provide access to limited emergency treatment and a local insurance plan may respond as well as an international plan in the short term. The drawbacks however are serious and could leave an expatriate employee stranded with limited coverage in a foreign country. A self-funded air ambulance might be the only realistic option to return home. 
 
Expatriate staff are vital for international companies, and it is only by providing a full international private medical insurance plan that employers can be confident of their expatriate employees being properly protected for medical emergencies and routine healthcare treatment.
 
 
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