Check the Vitality of Health Care Abroad
Reprinted with the permission of HR Magazine published by the Society for Human Resource Management (www.shrm.org), Alexandria, VA.
by Stephenie Overman
HR Magazine, March 2000
Vol. 45, No. 3
Providing good, affordable health care coverage for employees is complicated enough in your own backyard. What happens when you add different health care systems, cultures, languages, and currencies to the mix?
Employees expect to get reasonable health care while they are on assignment in another country. It's up to HR to ensure that consistent benefits are provided and that these valuable employees aren't disappointed.
"The overarching issue from the HR perspective is that whatever you do has to be attractive enough in the expatriates' minds so it does not become a reason they would not willingly go" on the assignment, says Gardiner Hempel Jr., a partner and global practice leader with Arthur Andersen in New York.
The general question about expatriate benefits is: Should the company look at each line item or look in the aggregate to keep the person "whole," as if he is still in the United States? "But when you're talking about health care, it gets personal," says Hempel. "It's non-negotiable. People say, 'You're putting my family and me at risk. You've got to provide the care.'"
Companies have several options to provide health care benefits for expatriates and their families in developed countries:
- * Put the expat in the plan in the host country;
- * Keep the expat in the home country plan; or
- * Sign on to a special health plan.
For the most part, companies do not choose to have expats go into local plans because many countries have national health insurance plans, says Bill Barron, senior manager with PricewaterhouseCoopers in Florham Park, N.J.
"You may not be able to get into the French health care system without paying social security there," he says. The United States has "totalization" agreements with about a dozen countries. The agreements free individuals who remain employees of a U.S. company and who continue to contribute to the U.S. Social Security system from having to make contributions in the assigned country. Expats can save on social security abroad, but the trade-off is that they can't be part of the health care system in those countries.
Hempel agrees that putting the expat into the host country plan is not the best idea. If a company sends an employee to the United Kingdom and puts the individual on the U.K. payroll, "As a local employee, the person is not eligible for the home country plan. The person is eligible for U.K. coverage but may not want it," Hempel says.
If the expat is not receiving adequate or appropriate coverage through the local country plan, "The company may arrange for private coverage," says Hempel. "That can be quite expensive. The company can provide 'gap coverage' but you pay a price for that, and the person will want the company to make up the difference. The expat will say, 'Give me a package or give me more money so I can go cover myself.'"
Generally the best course of action both practically and psychologically, he says, is to keep expats on the U.S. payroll for all pension and medical benefits. "It's the easiest way to continue in the home country plan. Then they have the same coverage."
U.S. health care systems have developed ways to handle this option. It used to be that many health care insurers could not cope with global coverage, Hempel adds. "If the bill were for 100 pounds in the U.K., they couldn't deal with it. Or if it was in francs, they wouldn't reimburse. I think that problem is gone. They have translators and sufficient service providers in each location."
With a home country plan the challenge becomes how to access coverage, Hempel says. "If you're sitting in the U.K., where do you go? If you're in an HMO you have to designate a doctor. But you can't access that doctor. Nobody in the U.K. is a member of an HMO."
In that case, the company may tell the expat to opt for the higher cost coverage of an indemnity plan. "Or, if it's for a routine type [of medical problem] they can stay in the HMO and take care of it when they go home. A lot of companies try to deal with exceptions as they arise," Hempel says.
Barron advises clients to get their expats out of HMOs. "Most will transfer into an indemnity plan or an out- of-network HMO," he says. Once they have done that, it's just a matter of submitting expenses as they would back in the United States.
The problem that option presents to expats is a cash flow issue, says Barron. "If they have to lay out $2,000 for a large medical expense, I have seen companies front the money and then get repaid when the insurance comes through."
The handful of expatriates who work for PQ Corp., a chemical manufacturing company based in Valley Forge, Pa., "get local health care, and they pay for that [medical bill] directly if there is a charge. Then they send in proof of payment to us," says Jeanne Poole, global HR manager. "The bill is submitted to the plan in the United States. If they have any type of elective surgery, they come home and get it done."
In a crisis, Poole says, her company would use some type of international medical service that provides emergency treatment and evacuation.
If an employee or family member has a health condition that is too delicate, that employee may not be the right person to become an expat, Hempel adds. "If it's of such importance, maybe the person isn't the right candidate. It's not conducive to a successful assignment."
Susanne Lanza, director of managed care policy for the Health Insurance Association of America in Washington, D.C., says that many factors must be taken into consideration when putting together an expatriate health care plan.
"Is it going to be an assignment for six months, and the expat is not bringing dependents? Or is it for several years with dependents, which is much more complicated? There's the issue of what country you're in. Is there a national health insurance plan? What is available locally? Are there service waiting periods?"
Many employers try to create separate plans for expatriates, Lanza says. "If you go to France, you and your family are covered in France. If you were sent from France to Egypt, the plan would go with you. It makes more sense. It's something of an investment for an employer, but if the company has a considerable number of people it's worth it."
In that case the company should "look for a plan that can create a class of people who work in countries other than their own," she says.
Giles Archibald, head of international consulting at William M. Mercer in New York, says the advantage to these plans is that they "are accustomed to reimbursing across language barriers and monies." They also can provide a list of recommended hospitals and a hotline for expats.
"It can work for any number. Some companies have a minimum number of lives [insured]—usually five or 10," he says.
The drawback to a special health plan, according to Archibald, is that it usually is "a little more expensive. It's the expense that is the issue."
Covering expats in either the home country or host country "usually ends with a hybrid that is more work on the part of HR to make sure they are being equitable," says Ginny Hollis, vice president of sales and marketing at CIGNA International Employee Benefits in Brandywine, Del.
The company has offered expatriate benefits since 1977, and Hollis says she has seen major growth in the area of special plans in the past 10 years.
CIGNA can set up "a complete global program that takes care of everybody and gives primary coverage privately. It goes with [expats] from country to country," Hollis says. The employee's contribution is tied to a percentage of the reimbursement, rather than to the U.S. dollar. "It's more equitable that way from country to country."
To save money, Hollis recommends using what she calls a "blind PPO"—an open access preferred provider option. In that case, "We recommend they use [the plan's] providers, but we don't force them to. The company may require them to when they are home. It's not an HMO, but discounts are there if they choose to use them"
'As Good if Not Better' Care
The medical care offered in other developed countries "is as good if not better" than in the United States, according to Hempel. "When I was in Asia, I heard that maternal care in Hong Kong and Japan was far superior" to that in the United States.
But cultural differences have to be considered. For example, from a Western mentality, physical exams focus on the heart, he says. "In Japan they check your stomach. If the stomach is healthy, the whole being is healthy. In my mind, that was an inadequate physical. I opted to get a physical in Hong Kong. The out-of-pocket cost was my own expense."
The major concern for expats is what to do in the event of a disaster. There are companies that provide emergency services, he notes. "I don't think I've heard a war story where somebody was left without care. It's like being on vacation—how do you get to your doctor? It's a risk that everyone runs."
The constructive approach is to help each expat take a self inventory and make sure that he has a plan, Hempel says. "In Latin America, a man was very ill. He called the head of our local office, who began to work the system for this person's benefit. The theme is: manage your own career, manage your own life."
Poole says PQ Corp. expats have experienced no problems and "have picked up some natural healing tips in the Netherlands. They have a much more balanced approach to healing" than the United States.
Pricewaterhouse- Coopers conducted a survey of expatriates in India, according to Barron, and they "didn't have any real concerns about routine check-ups. They said they could find a good doctor by word of mouth."
The Future of Health
Hollis currently sees more diversity among expats. "It used to be persons between 35 and 45 years old. Now we're seeing more younger and older people going before or after they have children."
Another trend Hollis notes is the increased use of the Internet by expats to research health care options. "Three years ago, 78 percent of expats were using the Internet, and it's probably closer to 90 percent now."
They use the Internet to manage their health care, says Hollis. Expats "come to us now for routine inquiries about claims or benefit plans, to say, 'Is this a covered expense?' But we want to make it so they can access a lot of data themselves. We want to use everything that makes time and distance easier."
Hollis believes the future will see more managed care plans in other countries—without the stigma of the term "managed care."
CIGNA and Aetna Inc. have invested hundreds of millions of dollars in health care companies outside the United States. An Aetna joint venture created Brazil's largest health insurer, and the company has a large stake in health insurers in Argentina, Chile, Colombia and the Philippines. United Healthcare has entered several joint ventures around the globe with American International Group Inc., the New York based global insurance provider.
Whatever the future holds, "You will find the expat group gets treated specially," Hollis believes. "They are critical to the expansion of a company. This is not the place a company generally chooses to cut corners."
An expatriate can cost a company $1 million to $1.2 million over a three-year assignment, she says. "Benefits cost $6,000 or $7,000 a year. That's nothing if you can give them peace of mind."
Stephenie Overman is a freelance writer based in Chatham, N.J., specializing in employee relations and health care issues.