Group Health Insurance

Health insurance articles for businesses, group managers, HR teams, and business owners.

Avoid these 5 common corporate health insurance mistakes

Avoid these 5 common corporate health insurance mistakes

In China, as in many other countries, attracting and retaining the best employees can provide companies with an edge over their competitors. While there are many different tactics you can employ to ensure that your staff are the best, there is one that is increasingly in demand by almost all employees: company-sponsored health insurance plans. Having a company health plan can bring a variety of benefits, most notably increased productivity and decreased sick leave, both of which directly impact a company’s bottom line. However, if the plan is not implemented correctly there could be a negative impact on your Return on Investment. If you are looking to avoid this when you implement your plan here are five common corporate health insurance mistakes you should avoid.

Mistake #1: Not implementing the right coverage

Sure, this might seem like it’s pretty obvious: Not selecting the right coverage will inevitably result in poor plan performance and poor satisfaction with the plan. But the problem is, it is easier said than done to select the best plan for your employees. There are a huge number of factors involved in corporate health insurance, factors that all need to be considered and addressed in order to not only identify but also implement coverage.

In short, a lot can go wrong and while a lot can be done to avoid this mistake there is one thing that is absolutely important that you get right: the type of insurance coverage you secure.

In China, there are two types of private health insurance plans available to secure:

  • Local health insurance plans – Plans designed to provide cover of healthcare in China only.
  • International health insurance plans – Plans designed to provide cover not only in China but also worldwide.

The core concept of these two types of plans is similar: They provide coverage of most health care employees will pursue. It is important to note here that these plans are on top of the social insurance scheme that all employers and employees need to pay into.

The major difference between the plans is not only in the area they cover, but the fact that international health insurance plans tend to have higher coverage limits which allow employees to seek care at more expensive and higher quality private medical facilities.

From our experience, the major mistake made by companies here is that they don’t select the right level of coverage for their employees. For example, if you have employees who travel frequently for work a local health insurance plan will not cover them outside of China. If they get sick, they will have to pay for care out of their own pocket. It would be better to secure them international coverage.

Mistake #2: Assuming your plan covers pre-existing conditions

This is a common corporate health insurance mistake made by companies all over the world as historically, group plans have included what insurers refer to as a ‘Medical History Disregard’ or MHD. This clause means that insurers will not consider a person’s existing medical conditions when they join the plan. In other words, your pre-existing conditions are covered.

This is different from individual plans which normally do not cover pre-existing conditions. The mistake here however, is assuming that the MHD is automatically included in any group health insurance plan.

The truth here is that many insurers will usually only consider adding MHD to group plans that cover over a certain number of people, usually between 10 and 20. So, if you are selecting a group plan for say nine of your employees, you should carefully read the plan details provided by the insurer or ask your broker about MHD and whether it is covered.

In some cases, you might be able to negotiate with the insurer to have it added to your plan, but it might come with a higher premium.  

Mistake #3: Not understanding the eligibility requirements of the plan

Health insurers who offer corporate health insurance plans often include what’s called compulsory membership. This clause states that all employees of the same level must be added to the plan.

For example, if you implement a plan with local coverage for your middle managers then all middle managers will be required by the insurer to join the plan.

The mistake companies often make here is that they don’t fully understand how this clause works or that it is actually included in the plan.

To avoid this, it is important that you read the plan documentation and ask the insurer whether this clause is included and how it works as some insurers will define it differently. Beyond that, in many cases you might be able to actually negotiate with the insurer over this clause. For example, if they say that all employees must be covered you might be able to negotiate so that only employees at a certain level need to join the plan.

Mistake #4: Leaving employees out of the selection process

One of the key success factors of any group health insurance plan is whether your employees feel it is valuable and will use it. The mistake here is that companies don’t involve the employees when selecting a plan and ultimately implement a plan that is not used by staff, or doesn’t meet their needs.

If a plan is not utilized, you are essentially throwing good money after bad and could actually end up losing money. To avoid this, it is a good idea to discuss with employees about what they want in terms of coverage and what they need. From there you can set expectations and look for plans that meet the majority of their needs.

Mistake #5: Going with the cheapest option

These days, businesses often operate on increasingly thin margins and when managers go to implement a health insurance plan there might be a bit of sticker shock around the actual up-front cost. This can often lead to businesses going with the cheapest option available.

Businesses that have pursued this strategy have often found that it ends up costing them more in the long run. For example, cheaper plans might have lower levels of service meaning that if there are claims issues or concerns you might need to spend a fair amount of time dealing with them instead of focusing on more important things like running your business.

What’s more, plans that are cheap now might see a massive jump in premium in the near future as insurers realize that they don’t have enough premiums available to cover claims. You could quickly find that your cheap plan is now the most expensive option.

How can I avoid these corporate health insurance mistakes?

One of the best ways to ensure that you find the right corporate health insurance plan for your employees and your company is to work with a broker like Pacific Prime China. Our team of dedicated corporate advisors can help you identify your insurance needs and then select, implement, and even manage a solution that works for your business.

To learn more about how we can help, contact us today.

Posted by rmcbroom in Group Health Insurance
Do businesses in China need insurance?

Do businesses in China need insurance?

For the past two decades, China has been a country of near constant change. For the most part, this change has been for the better and it has vaulted the country of over 1.35 billion from near total poverty into the single largest middle class on earth. It is primarily because of this that many people view the country as one of the best for business opportunities, and as the country increasingly relaxes regulation around businesses, we are starting to see an increasing number of small to medium businesses launch.

For example, in 2014 EconoMonitor reported, ” 1.7 million businesses were registered nationwide in the first half of the ongoing year [2014], up almost 60 percent year-on-year. Among them, almost 1.6 million were private businesses, which provided nearly 10.1 million jobs.” This growth has also subsequently resulted in an increase in Foreign Direct Investment (FDI) in the country, with a reported 4.3% increase in FDI in the first half of 2016.

This increase in investment along with generally improving operating environments is indeed attracting a number of entrepreneurs and established businesses to the country. If you are opening a business in the country, you are probably going to want to protect your business, and while there are many things you can do to ensure you stay in operation there is always a chance that something out of your control will happen. A helpful way to mitigate these risks is to secure the right types of insurance. The question is, which qualify as “the right types”? Let’s take a look.

Compulsory insurance

For businesses operating in China, there are a number of potentially compulsory insurance policies you may be required to secure. Before we look into these, there is one type of insurance all businesses in China are legally required to attain, and that is Social Insurance.

Social Insurance

Officially called the Social Security Scheme, China’s version of social insurance was officially implemented across the country in 2011 and strives to ensure that employees have at least some sort of safety net. This scheme is similar to many other social insurance schemes in other countries where both the employer and employee are required to make contributions to a fund that is then used to secure cover for five major elements:

  • pension

  • medical

  • work-related injury

  • unemployment

  • maternity

Like most things in China, contribution is mandatory for all Chinese citizens. When it comes to expats, the rules are a little fuzzy as to whether you are required to join the scheme. The government has said yes, foreigners are required to join the scheme. In some cases, however, it appears this is not being enforced.

Industry/business specific compulsory insurance

For some industries or types of businesses, there may be compulsory insurance you need to consider. Here are some of the most commonly secure compulsory insurance plans:

  • Green Insurance – For businesses that the government deems to be a high environmental risk, you are required to acquire this type of insurance which covers your business from liability arising from environmental damage, third party medical treatment that is needed after an environmental disaster, etc.

  • Third party motor insurance – If your company is going to have vehicles that employees will drive, you are legally required to secure at least third party motor coverage for all vehicles that will be on the road.

  • Construction worker insurance – By law, any company that hired construction workers who will be doing “dangerous” jobs are required to secure liability coverage that covers employees in cases of bodily injury. Most companies will secure either company-wide liability insurance or personal accident liability coverage for individual employees.

Non-compulsory insurance

These types of insurance plans are recommended to be acquired, but as of the writing of this article, there is no set law stating that businesses must secure them. Regardless, these following five types of insurance could prove to be beneficial for your business:

  • General liability insurance – Covers your company from any damages or charges that arise from a case where an employee or service causes damage to a third-party such as a person or property. This type of insurance will also usually cover your business should damages happen as the result of negligence.

  • Employer’s liability insurance – A policy that covers you or your employees in the event of an accident, injury, dismemberment, or death that results while they are working. Most businesses that secure this type of insurance look for a policy that extends coverage beyond the legally required coverage.

  • Property insurance – For any business that is purchasing the building they will be operating out of, it would be beneficial to secure this type of insurance, which is designed to cover the building and its contents from damage, theft, and loss.

  • Errors and omissions insurance – Also referred to as ‘professional liability insurance’, this type of insurance is designed to protect a business from damages that are due to the failure of your service or product. For example, if you are a lawyer, this type of insurance will protect your from any lawsuits that arise should you fail to offer what the other party deems to be satisfactory insurance. It is important to note here that some general liability insurance plans don’t cover this, so it is best to find out if you need to secure it.

  • Personnel insurance – It is often said that a business is only as good as its employees. In other words, it is beneficial to take care of your employees. In terms of insurance policies in China, this often means offering something like life insurance, home insurance or, most importantly, health insurance plans better than the ones required by law (which don’t really provide adequate coverage).

Here at Pacific Prime China our sales team are able to offer a wide variety of business insurance solutions to all manner of businesses in China. If you are looking to learn more about the policies we offer, visit our website today.

Posted by Jess in General Insurance, Group Health Insurance