Canadian Expatriate Healthcare

Last month saw another US provider launch a product aimed at meeting the needs of Canadians working abroad. It has great features and supporting network but like many others it is a plan adapted from a US model and doesn’t immediately appear to accommodate the ways in which Canadian mobile employees are provided with health care benefits while working abroad.

Canadian employers use one or more methods to reimburse medical expenses for mobile Canadians and their families. The selected approach will be dependent on the numbers, the host location and the nature of employment. The choices include simple cash reimbursement, running claims through a Canadian plan, a separate plan supervised by the Canadian insurer, the provincial plan and/or a local plan in the work location. None of these are perfect exposing the employer (and employee) to additional tax, inability to scale and effectively manage risk. International plans resolve these but are typically designed for US employers who need first dollar coverage and for Canadians often include unneeded services.

Canadians try to continue to be treated by their family physician or specialist during home leave or business trips, often paid for by provincial plans or even the domestic plan. International plans have high margins, often in excess of 20% and more when expected claims are paid by provincial plans. Explaining perhaps why US carriers view Canada’s estimated $500m international health insurance market as lucrative.

Why then if these plans are so inefficient do Canadian companies continue to purchase them? There are several reasons; a one-size-fits-all plan albeit a more costly one, allows everyone to sleep easier and besides it’s not worth the effort to collate the data and argue for lower premiums for such relatively low numbers. When brokers are involved there is no advantage for them in negotiating reductions in premiums but mostly it’s knowledge and experience. Many Canadian HR people have experience only of their own plan.

Here are four key steps in securing an expatriate plan that fits your culture:

1. Independent Advice – your adviser should have experience with plans involving significant numbers of employees (even if your plans are relatively small) with other employers or inside insurance companies. An adviser who wants to be paid by commission should be an immediate red flag. They work only as necessary (monthly detailed reports may satisfy the inquisitive but have no value and add cost). Few Canadian advisers have experience of larger plans and US advisers no experience of Canada. Many Canadian consulting firms are not independent, offering clients their own plan usually underwritten by a major insurer.
2. Carrier Selection – chose an insurance company flexible enough to grow with your organization, that can offer levels of service consistent with your talent management program. In addition, they should allow your company as it grows to absorb scalable risk (i.e. self insurance).
3. Commitment – make it clear that you intend to develop a long term partnership. Perhaps not immediately but an insurer will be more likely to agree to realistic premiums when they perceive a client is not treating expatriate medical as a commodity. Do not threaten plan cancellation every time the going gets tough.
4. Experience – track claims and understand how they relate to and the composition of premiums. Try to gather information how the insurance company mitigates its risk and what it pays to reinsure your company’s risk.  No more able to tell the future than you insurance companies are unlikely to absorb all of the risk themselves. With this data you can begin to understand their margins and heave realistic discussions about premium levels.
5. Integration – for organization operating in exposed locations ensure that your emergency evacuation plan is ready to work in tandem with your health care plan particularly if they are provided by different carriers. Don’t wait until an emergency to discover that a plane cannot land or which medical practitioner takes precedence.