Co-payments and deductibles are widely accepted domestically, but they can be problematic when exported overseas. International health professionals aren’t accustomed accepting a combination of cash from patients and payment guarantees from insurance companies. They may view the requisite international phone calls and currency exchange as unnecessarily burdensome, and may be reluctant to treat individuals if the insurance plan requires member out-of-pocket administration. Employees may face the difficult decision of paying for services upfront or seeking treatment with another health professional. On a recent visit to four countries in the Persian Gulf, the author heard multiple firsthand anecdotes from very vocal employees lobbying against plan designs with co-payments and deductibles. Employers have the opportunity to overcome some barriers to medical care delivery by selecting a plan without point of service member cost sharing.

Table 1 compares a typical domestic type plan against a model that provides greater consideration to the needs of expatriate employees and international health care practitioners. The recommended international model eliminates deductibles to simplify the expatriate experience, but does not provide expatriates with a free ride. In exchange for the eliminating the deductible, the out-of-pocket maximum increases by the same amount as the deductible, $200/$400 in this example. Although Table 1 provides a basic model that demonstrates deductible and out-of-pocket manipulations only, the same tactic can be applied to other elements of member cost sharing, such as co-payment and coinsurance. The objective is to enhance the expatriate’s health care delivery experience by shifting member cost sharing away from the point of service to administrative transactions that are transparent to the provider.

Does Network Size Matter?

Health practitioner network size is one common benchmark for selecting a domestic benefits carrier. Benefits managers can safely assume that domestic plan network professionals meet minimum licensing and credentialing standards as plans strive to comply with regulation, quality accreditation, and industry standards. The same minimum quality standards do not necessarily apply in other parts of the world. A large list of unscreened practitioners is not nearly as valuable as a network that has been subjected to rigorous physician-reviewed quality standards. Elizabeth Hermann, IOR Global Services’ Director of Training notes the importance health practitioner quality, particularly in an emergency, “Some of the foremost expatriate concerns are around health care and coping with medical emergencies. Many families curtail their overseas assignments because they and their families are adversely affected by health care professionals that are substandard.”

The Cost of Overseas Care

Benefit managers who have witnessed a continuing trend of double digit annual rate increases may assume that the cost of health care is more expensive in the US compared to overseas locations. While this may be true in some cases, it is inaccurate to make that assumption across the board. In Japan, for example, immunizations are much more expensive due to the lack of local manufacturing. All vaccines must be imported, thus raising the delivery cost.

Highly compensated expatriates in a medical need scenario are not necessarily the most cost-conscious consumers. In an unfamiliar environment facing a real or perceived urgency, they will likely seek care through health professionals and facilities that alleviate their concerns and approach the standard of care they are accustomed to receiving in their home country. They will often seek care from prominent, prestigious health professionals and facilities, with commensurate fees.

The cost of care may also be impacted by the availability of local specialists. In remote locations, specialty or even primary care may not be readily available. Transportation and evacuation costs must be considered when evaluating the overall cost of care.

Expatriate members may also experience increased administration costs due to local infrastructure limitations. In Qatar, there is no international telephone service provider, such as AT&T, to facilitate overseas calling. Further, toll-free telephone calls to US numbers are not accessible from many overseas locations. Calls to the US to resolve claims issues, for example, may exceed $3 per minute. A low cost alternative, if accepted by the insurance carrier, is to send scanned claims as an email attachment.

The cost of international health care is indeed high, but the expense can be alleviated by selecting a specialized international benefits carrier. Their expertise can achieve efficiencies and savings that nearly always result in lower overall premium cost than carriers that offer benefits based on the US domestic model.

Best Practices: International Claim Experience Reporting and Analysis Methodology

When examining expatriate claim experience, employers should avoid generating reports based on the current population of the group’s domestic plan, as it may result in faulty analysis. For example, consider a scenario in which an employee leaves international assignment due to health issues in March, incurring $20,000 in claims. If a claims experience report is generated in July using the current domestic population data, the claim data would be artificially low by $20,000. Even if this expatriate were included in the population, the home office staff may not recognize that the host country operationsmay enroll the expatriates into the local group medical plan or pay for an individual medical policy due to assignment necessity, legal issues or service issues.In such a case, the claims paid by an alternate plan would not be captured in the reporting that considers only the group’s primary coverage.

Reporting may not capture claims data for carved out programs prescription drug and EAP, as well as amounts above the stop loss threshold, claims covered by the previous medical carrier, and claims put on corporate expense accounts. Maurice “Beau” Gable, a broker with International Insurance & Investments observes “The hiddenexpensesof internationalhealth care are typically greater than what the home office has anticipated.When comparing an international medical plan to the current US domestic plan, benefit managers should consider the non-budgeted items that impact the total cost such as reimbursement charges, staff time for claims assistance,expatriate time resolving administrative issues, increased costs resulting from treatment delays, and expensed items. If thefinance department determines the true total of how much they spend per year for theinternational claims and interest, they wouldchange plans overnight. The cost can be further inflated if expatriates use credit cards to pay for health services, as many credit card companies now charge 1% for foreign purchases. International health care expenses are like an iceberg. The hidden expenses of corporate staff time, local staff time, expatriate time, medical claims cost shifting, postponed treatments, taxes & fines, health related returns, reimbursements and localcoverage costs might actually be larger than the cost of the budgeted premium equivalent.”

Navigating International Risks

Self-insurance is an option that many large employers entertain as a cost saving strategy. By adopting the risk, self-insurers potentially can save thousands of dollars. In the international arena, self-insurance isn’t as attractive of an option. In the US, it is relatively easy to void, trace, reissue, and reconcile lost checks. Tracing lost checks internationally is frequently not feasible. This puts the international self-insurer at risk of not only paying the claim, but also coordinating with international banks and postal systems in a reconciliation effort that is often much larger than anticipated.

International employers and expatriate employees are typically subject to numerous rules and regulations of the host country. Covering international assignees on an insurance plan that is designed for US domestic employees is likely to be an inadequate strategy from a benefits delivery and legal compliance perspective. Some insurers have established relationships with local insurers in countries which may have restrictions or prohibitions on foreign insurance carriers, which enables them to comply with host country laws and obtain network discounts while providing members with comprehensive, worldwide coverage and extensive access to local health care provider networks. Direct provider payment agreements may be in place, reducing the likelihood that members will have to pay out-of-pocket and submit a claim for reimbursement.

Prescription medications require special handling and attention. Importing a long term supply may compromise efficacy. Mail ordering may result in customs challenges and some FDA-approved prescription drugs are illegal in certain countries. It is important to select a benefits carrier experienced in assisting members with overseas pharmacy fulfillment.

Cultural Considerations

Culture plays a role in health care delivery and payment. For example, a US domestic plan typically would not cover acupuncture, but coverage for these services would be expected in China. Similarly, a claim from a doula, or non-medical midwife, would likely be rejected on a US domestic claims model, but payment would be appropriate if care was delivered in Singapore, where doulas are common. Even obtaining routine care is more difficult and complex while on assignment abroad. “In a foreign country, a simple bout of influenza seems more serious than it does in the home country. Expatriates greatly value the assurance that they will be supported in matters of life and death by a caring and responsible health insurance company that will enable them to consult quality health care suppliers with minimum hassle.” Ms. Hermann observed.

When selecting an international health benefits carrier, it is important to choose a carrier has built its infrastructure specifically to handle issues related to international health delivery and recognizes the importance of cultural issues in facilitating and financing health care delivery. Greg Kirkwood, Vice President, Business Development with RELO Direct, Inc., notes “Applying domestic health care plans to international assignmentsjust doesn't work for today's global work teams, expatriates and their families, andthird country nationals. Employerswantto attract and retain their top candidates to accept foreign assignments andmust now provide comprehensive health and welfare benefits, including evacuation services if necessary, to get acceptance.”

An understanding of the health system in the host country is necessary to effectively manage delivery of care. In the US, is safe to assume that publicly funded institutions are less expensive than the private sector. In Switzerland and several other locations, expatriates can expect to pay more at a public hospital than a private hospital. Health systems vary widely throughout the world. It is important that the member have the resources and guidance of an insurer with an international presence so that he or she can receive the most appropriate care locally available.

Conclusion: Select an International Plan Designed for Expatriates

Seasoned expatriates are increasingly sophisticated and have elevated expectations regarding health benefits while on assignment. Mr. Kirkwood observes, “top foreign assignment candidates are aware of and are demanding true international health and welfare benefits before acceptingassignments abroad. Expatriates talk in a global community so employers must constantly stay competitive by offering true international benefits.” Noel Kreicker, President of IOR Global Services adds “Industry norms are closely monitored by overseas populations. If a company provides a sub-standard benefits package, the result is a negative image overseas accompanied by a barrage of complaints to HR.”

Author’s Biography

Allen Koski, CIGNA International’s Director of International Sales for the Mid-Atlantic Region, has been actively involved in developing and supporting international health care, dental, disability and travel medical plans that multinational employers provide to international assignees, traveling executives and key local nationals employees. He has more than 15 years of experience in international health care with a focus on expatriate services and multinational pooling. He has created benefit strategies to eliminate service issues that face corporate benefit staffs and has had extensive global travel, most recently to the Persian Gulf Region.

Allen has been a featured speaker on International Employee Benefits Practices at John Hopkins International Medical and Travel Medicine Conference, The Personnel Co-op’s Best H.R. Practices for Int’l Development Organizations, World at Work, National Foreign Trade Council, Independent Power Producers HR National Conference, Certified Employee Benefits (CEBS) Chapters, and participated at other conferences.

Allen earned a Bachelor of Arts degree from Drew University and has attained his Certified Employee Benefit Specialist (CEBS) designation and CEBS Fellowship.