Posted on Oct 28, 2015 by Rob McBroom
When it comes to moving to China, or moving to another city within China, one of the most important things to secure is health insurance. China, like many other countries in Asia, has a vastly different health care system from that found in the most western countries. While it is modernizing at a rapid pace, many facilities struggle to keep up with demand or even offer the level of care deemed acceptable by most expats.
Sure, private hospitals and VIP wings in public hospitals have started to open in increasing numbers, but the thing is, these facilities can be costly and pretty much guarantee that anyone wishing to receive care will need health insurance to offset or cover the costs.
Because of the essential need for health insurance, many companies looking to attract expats to China offer a wide variety of soft benefits, of which health insurance is the most common and often most requested.
If you are looking to offer your staff - expat or otherwise - health insurance, you will quickly find that there are a wide variety of plans out there, not to mention a near limitless number of plan options and coverage elements. It can all be a little overwhelming, especially when you then need to turn around and justify the cost to your boss. To help simplify the process we talked with Jason Armer, Pacific Prime China's Director of Corporate Accounts.
1. In China, who qualifies for group plans?
JA: In order to qualify for what's called a locally admitted (the health insurance provider has a license to sell plans in China) company or group plan, you are required to have a registered business. When you apply, insurance providers will ask for your proof of business registration. This includes three documents:
Beyond that, some insurers will also have a required number of applicants who will be added to the plan. This number varies by insurer and plan type, so it's best to check with Pacific Prime China as to who can help you find a plan that you can offer to your employees.
2. Is there any difference between Corporate and Group plans?
JA: These terms are often used interchangeably, and usually refer to the same thing in China. However, there can be differences between the two. Typically, company/corporate plans are mandatory for all employees (meaning the company requires you to join the insurance plan), sponsored by the employer in full or in part, managed centrally by the employer, and paid through one source.
A different type of group plan can be setup as part of an affiliated organization (i.e. Chamber of Commerce). Terms and premiums are generally not as favourable for these types of group plans, as they are voluntary for members to join. Therefore, there is an additional element of risk for the insurer.
3. What are the key differences between group plans and individual plans?
JA: There are a number of key differences between the two plan types including:
Group plans often have lower premiums when compared to comparable individual plans, largely because of volume-based discounts. With more people attached to the plan, insurers can spread the risk around, which allows for lower premiums.
Group plans offer more flexible underwriting terms (i.e. coverage of pre-existing or ongoing medical conditions)
Group plans generally allow for mid-term membership movement. This means that if an employee joins or leaves they can be added or removed from the plan without having to wait until the next renewal period. When this happens, plans are charged a pro-rata premium for the days covered. Individual plans, on the other hand, are generally purchased as a 1 year policy with no or partial refunds for cancellations during the policy term.
4. What are the top benefits of group plans for foreign employees?
JA: Group plans can be completely tailored to meet your company’s requests, therefore benefits can range from company-to-company and plan-to-plan. Common market trends for foreign-based employees are coverage for core benefits such as inpatient or outpatient treatment, access to private facilities in full or with a co-payment, and coverage extending throughout Greater China up to Worldwide cover. The most comprehensive levels of cover would be plans that cover core benefits in full, offer additional coverage for maternity, dental and wellness, and allow access in full to private medical facilities worldwide.
5. What are the top benefits of group plans for local employees?
JA: Local employees are often divided into general and managerial levels. It’s seldom that general Chinese staff will be placed on a high-end medical scheme, and normally these employees would be provided supplementary medical insurance which works as a top-up to the mandatory social medical scheme. Management level employees may join a high-end medical plan, but in most cases the area of cover would be restricted to mainland China, or Greater China at most. Private facilities are often excluded, and caps may be placed on core benefits – such as outpatient treatment. That said this type of plan would still offer a great enhancement to social and supplementary medical plans, allow access to better facilities and medication, and avoid long waiting lines through appointment services and direct billing.
6. What elements contribute to a strong group plan?
JA: In my experience, the strongest group plans are those that are aligned with market trends within the specific industry as employee benefits are often used as an attraction/retention tool. In addition, it should be sustainable to avoid high increases and possible vendor changes at renewal. Sustainable plans need to also find a balance between benefits and cost, and commonly today we see that most plans will include a co-payment or cost-sharing aspect for employees. Finding a reputable vendor to service and administer the plan will also be important as this is often where the most issues arise during the policy year.
7. How do I go about securing a group plan?
JA: In China, I highly recommend that using a broker or agent when looking for a health insurance plan. By working with a broker you can get a complete and transparent review of your options. Not all brokers are created equal however, so it’s key to speak with a licensed broker that works with all vendors as one insurance company or plan does not fit all. A needs analysis is also important to determine both benefit and budget requirements, and a broker can help build a bespoke plan.
For small companies there are also SME plans that brokers can offer which provide preferential premiums based on more fixed plan designs, by leveraging a total pool as opposed to an individual company.
After your plan has been agreed upon, this can be setup in around 2 weeks, and once your payment has been made your members can start to use their benefits as required.
If you are looking to secure a corporate health insurance plan for your company, please contact us today. Our experts, based in Shanghai, can help identify your plan needs and recommend a suitable plan for you and your employees.