Foto: Martin Siebert
In these days of economic contraction, attracting and retaining key employees is vital to any the success of any business.
U.S. executives overwhelmingly see employee benefits as important for competing effectively, particularly as a means to attract and retain talent, according to a survey by McKinsey Quarterly, published by global management consulting firm McKinsey & Company.
Czech social health and medical insurance is mandatory for all employees but is it sufficient for executive-, management- and staff-level expatriates and their families?
In the U.S., employees place a high importance on universal health insurance; it is a recognized and highly coveted benefit.
Perk or performance motivator
Overall, the cost of a sound expatriate health insurance plan can be weighed against the longer-term well-being of employees and their families. The employer’s attitude toward workers factors into attracting and retaining key staff.
Superior expatriate insurance plans include wellness visits that can screen for potential long-term aliments. It illustrates a proactive approach by looking after employees and providing care and preventative maintenance of health and well-being. Wellness plans include inoculations for children and family check-ups.
| EMPLOYEES SEE HEALTH INSURANCE AS THE CRUCIAL PERK |
Certainly, employee health benefits are useful, but how do they rank in importance compared to other typical employee contributions such as a car, phone, computer, vacation time?
An informal survey of expats revealed how important health insurance is in general when compared with other commonly offered benefits. The majority of those asked were in upper- and executive-management positions. The resounding answer, particularly from Americans, was that health care more is important than all the other factors. Several listed vacation time as “as important,” followed by a car.
Indicative responses:
My opinion is that health insurance is the most important perk and more important than other perks outlined.
Car: Health care insurance is more important
Phone: Health care insurance is more important
Laptop: Health care insurance is more important
Vacation: Vacation time is as important
Typical comments:
* As an expat with permanent residency—a 10 year visa—my insurance has been transferred from the company to the same pool as Czech citizens. This insurance can be used anywhere in the European Union. My current employer pays the premiums to this pool. When I had only long-term residency—one year visas—even though the insurance was to the same provider, the policy applied only within the Czech Republic. I think though your target audience is more concerned with expats who will be on long-term residency visas for one to two years. Where I currently work, we have other forms of benefits, such as Beneflex, which is a credit system by which we can get concert and sport tickets, subscriptions to health clubs, reduced-price vacations, airline tickets and health care not covered by insurance such as more expensive glasses and designer frames paid for through the benefit point system. Still, health insurance paid for by my employer is the one benefit that if removed would cause me to look for work elsewhere.
* I’ve had insurance from various companies and then membership to the international clinics, neither of these I felt were very practical.
* With the insurance, I felt the doctors were supplying me with stuff I really didn’t need as I’d walk out of their office with six to 10 boxes of stuff ranging from [herbal] teas to sprays.
* With the clinics I felt that the staff were not particularly competent, and on a couple of occasions I’ve had to go back a second time for different medicines.
* I’ve finally settled on policlinic on Národní [street in Prague] which is a mix between a general practitioner and a private clinic.
* Overall insurance is important as it can be frustrating trying to make doctor visits in the Czech language, but there are serious flaws with the private clinics out there and how they select staff or how I felt they took insurance as a sign to print money.
* It is really a question of age. When [one is still] young it is not so important, but later on it becomes more important.
* It is also a question of location. In Prague, the normal local health care and local insurance is fine. In India [the situation is] very different and [finding proper coverage is] extremely important.
* All [the other perks are] less important in my book. [Health coverage is] more important than all four of the other given choices.
* [Health coverage is] “as important” as vacation time. The others [choices] don’t matter unless they are critical to the job performance. They are not perks to me. |
Hopefully, the employee will recognize the same care, commitment and long-term vision toward the employer.
Confidence
In the event that an expatriate and or their family may need treatment outside of the Czech medical system will they be covered under their current plan?
Czech medical insurance is fine for domestic medical needs, but what if the expatriate or their family travels home, for example, to the United States, where medical costs are exponentially higher? Without proper coverage, this can pose a tremendous risk and potential financial burden.
For any expatriate, this factor should be a major consideration when weighing similar job opportunities at home. An employer can mitigate the risk by offering an expatriate health insurance plan with the same benefits as the employee and his family would eligible for at home. For the foreign employer, this translates into a competitive price advantage compared with a similar policy in the U.S.
As expatriates are only allowed in the U.S. for up to 180 days, the cost of expatriate coverage is typically lower; given the decreased likelihood of medical necessity in the U.S. as opposed to getting treatment abroad, where medical expenses are lower.
Security
Is there any assurance that once the employee returns home they will have coverage for themselves and their families?
Typically, when changing jobs a new employee (and that person’s dependents) can expect a waiting period for the employer’s group insurance coverage of three months. Given a family of four, this can run into thousands of dollars monthly if the insured is paying for coverage on an individual basis rather than a group plan.
In the U.S., when leaving work, the employee has the ability to retain medical insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, usually referred to by the acronym COBRA. This law requires that if an employee or other “qualified beneficiary” loses employer-provided health coverage due to termination of employment or another specified triggering event, the group health plan must offer continued health coverage to the qualified beneficiary. The qualified beneficiary may be required to pay the full cost for the coverage.
Under this plan, the employee pays the insurance premium individually but under the group rate provided by the former employer. Taking out a new insurance policy independently is usually much more expensive and it may exclude people with pre-existing conditions. Before accepting a position abroad, an expatriate must be sure to clear up any uncertainty concerning the ability to maintain the current level of insurance coverage.
If the position does not work out with some policies, the employee can apply for six months of insurance in the U.S. through expatriate coverage and apply for bridge insurance for up to one year after returning home. Some better expatriate insurance policies offer extended bridge coverage for returning expatriates.
Employers can factor coverage into the compensation package as security for taking the position. If the employee leaves voluntarily, that employee would be responsible for paying the insurance premium directly, similar to the arrangement under COBRA. In case of termination, the employer (for a limited time frame) can extend insurance benefits. This model gives the expatriate a level of security before accepting the position.
Convenience
Given expatriate polices cover medical expenses globally. If the employee and family decide to vacation home in the U.S., they are covered for medical check-ups, and in- and out-patient treatment. It should be noted, however, that typically an out of pocket deductible will apply.
Although the health care system in the Czech Republic is very good, for foreigners there are barriers to overcome such as finding a doctor or specialist, finding a doctor with sufficient language skills to deal with a patient who does not speak Czech, dealing with the local approach to treatment and the overall condition of local medical facilities. For most people, communicating with your primary care physician in familiar surroundings is very reassuring.
In the U.S., the insured is typically responsible for paying a co-pay for medication and some services, and a for paying a deductible.
The deductible, which is the amount that an insured person has to pay before the insurer will pay the rest, varies according to the individual policy, but typically it ranges from $0 to $5,000 (Kč 91, 730/€3,530).
Employers can chose different levels of deductible and coverage based on the level of the employee. For example, executives may have a zero deducible and a staff member may have a higher deductible.
As expatriate insurance covers medical care globally, it also saves employees from purchasing separate travel medical insurance policies if they are leaving the country on nonbusiness-related travel for themselves and their dependents.
There are many factors that contribute to an employee’s decision to join and remain with a company. Particularly for expatriates, a comprehensive health insurance program is a sound component of a solid employee benefit program.
Cost
Generally, the cost of international health insurance will vary based on the individual policy coverage and limits, deductible, the region covered (including or excluding North America) and also whether the policy is a group or individual one.
It is important to understand that some plans may only cover accident and sudden illness when traveling abroad. There are certain limitations on the amount of time one can travel to their home country, typically up to 180 days. After this time the insured is technically no longer an expatriate by definition.
As part of my research, I made a Google search and picked the first result on the list and filled in a general application for myself and my spouse from an independent insurance broker. The prices varied widely from about $500 to $5,000 per year. However, even at the higher end of the scale, the cost was in line with what one could expect to pay in the U.S. for individual health insurance yearly.
Even at the higher end of the cost spectrum as an employee, solid employee benefit of Kč 7,500 per month seems in line with certain salary expectations or the cost of similar contributions of a computer, phone, and personal use of a car or extra days of vacation.
Retaining employees
Retaining employees is always a benefit but in the event that an employee leaves there are both direct and indirect costs of replacing them. The typical cost of a staffing agency or executive recruiter ranges typically from one to three months salary. Replacing even an entry-level staff member can amount to substantial direct costs not including the manpower devoted to the recruitment process, advertising, negotiations, training, and bringing the person up to speed in a new position. When tabulated, the soft costs associated with such a search and replacement of a new employee can be substantial. For simplicity sake, we can perhaps estimate these combined costs to be one month’s salary for any given employee.
Given these factors it is easy to assume that the cost of hiring a new employee is typically one to four months salary. As the average wage in the Czech Republic is approximately Kč 23,350 per month according to the Czech Statistical Office (ČSÚ), it is easy to recognize the importance of retaining staff.
In summary, employee benefits are a key factor in any company, as international health insurance ranks highest among those questioned. By providing more extensive coverage, an employer can contribute to retaining employees.
Considering health insurance is a requirement in the Czech Republic, it stands to reason that employees would respect the added value of an international health care policy. For the additional cost of coverage it may be an employee benefit that leads to more satisfied, confident and content employees that will think twice before leaving a secure and stable work environment.
Brian S. Piper is president and owner of business development consultancy IBDA INC., he has lived in Prague since 1992 and relocated back to the U.S. in 2003 as an entrepreneur and in 2006 as an employee for a medical cost-containment company. He is an independent adviser to the insurance sector and other industries and can be reached through www.ibda-inc.com.