Is Your Company's Medical Plan Good Enough?

by Cesar Bacani, 29 November 2011

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Ralph Tam remembers visiting a hospital in Cambodia several years ago. “The operating theatre was literally inside a [cargo intermodal] container,” he recalls. “There was no air conditioning and it was very hot.” Things may have improved today, but such makeshift hospital facilities are standard in frontier markets.

That’s a concern if you’re a CFO who is assigned to, say, Laos for a year or so. Will your company’s medical insurance cover medical evacuation to Singapore if you or your dependents require medical attention?

You have to make sure it does, says Tam (pictured), who is Managing Director Asia Pacific of international private medical insurance (IPMI) provider Now Health International. Founded just last year, the company claims to be the only IPMI provider based in Hong Kong – its peers are typically headquartered in Europe or the US.

International medical insurance is a niche product. Most companies in Asia take out private medical coverage from local providers, even for their executives. But as enterprises expand outside their home countries, the question of international medical cover is cropping up, an issue that multinationals typically deal with by engaging IPMI providers like Now Health International.

What can you expect from an IPMI corporate plan? There are several features:

Customization
High benefit limits
Portability
Guaranteed renewal
Conversion to individual policy

The $2,000 premium

“We are not an insurance company,” says Tam. “We are a specialist medical insurance provider. In the UK or Hong Kong market, we’ll be termed as a general managing agent or underwriting agent. We develop the product, we price the product, we distribute the product and we service the product, but we are not an insurance company.”

An IPMI provider depends on an underwriter for insurance and financial capacity. In Tam’s case, the organization his company works with is the AXA Group. Corporates can buy IPMI group plans directly from AXA and other insurance groups such as CIGNA, but Tam thinks that IPMI providers can be more flexible in devising customized plans for organizations. They can also take on some of the routine work in administration and other areas that HR departments would otherwise need to do.

Every organization is different and so the international medical insurance plans that they devise for themselves will be different. For example, an international bank in Hong Kong decided to grant IPMI coverage to everyone in the organization. Within the overall plan, however, there were differences in coverage (e.g., in-patient versus outpatient), benefit levels and cross-border applicability.

Other companies may give IPMI coverage only to senior executives (CEO, CFO, COO) and international assignees, with the rest of the work force covered by a local plan. That may be the case in an expensive market like Hong Kong, which Tam says has among the highest health care system costs in the world (the US is the most expensive).

IPMI premiums are necessarily higher than local medical coverage, but Tam says they are not prohibitive. For a group of ten 45-year-old executives, the annual premium per person is “a bit less than US$2,000,” he estimates. If a 60-year-old executive then joins that pool, the premium for that older person will be US$3,600 per year.

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