Tag Archives: International Benefits

Five Secrets to Reduce Benefits Cost, Part 3

George Bashaw – Atlas Global Benefits

I didn’t know you have kids.  Seriously, aren’t you single? I need to see some documentation.

Ok, that is a bit overboard. However, if you want to get serious about saving money on benefits, a dependent audit may be a bumpy but lucrative road.   This blog is the third in a series of five techniques to lowering your benefits cost without changing your plan design or carrier.  Prior posts in this series include Know Your Claims and Duplication of Coverage.

Secret Three:  Dependent Eligibility Audit
The intention of a dependent eligibility audit is to ferret out those who are ineligible for benefits.  Examples of ineligibles may include non-resident step children, college grads who may feel like dependents but technically are not, or the classic unemployed ex-husbands who will not get off the couch, but like an old hound, you feel sorry for them.  Joking aside, these people add up quickly. Finding one ineligible participant in your plan can save up to $6,000 per year.  Finding a slew of them will have a noticeable impact and go straight to the bottom line.

Communication is Key
Caution!  People get a pit in their stomach when they hear the word audit. Second, they do not like sharing personal information. Therefore, the way you deliver the message about the audit is key. In other words, you do not want to blast out an email today saying “proof of your dependent status is due by the close of business Friday.”

Sell the benefits of an audit to the participant.  The participants’ costs are going up and their benefits are getting cut, too.  Explain, as an employer and plan sponsor, you have a fiduciary responsibility to make sure all dependents are eligible, and to misrepresent is fraud.  Therefore, it is necessary to make sure the plans are in compliance.

Steps to Successful Audit

  1. Positive Communication
  2. Communicate at least a month before you start your audit to set expectations
  3. Create a plan and review with your employment attorney
  4. Communicate “the plan” (don’t call it an audit)
    • The definition of eligibility requirements
    • Methods to prove eligibility
    • Halo period where the participant may change status without penalty or embarrassment
    • Final deadline (here is where you may decide to define the nature of fraud)

Please share any stories you have about your experience with employee dependent audits.  If you happen to try one and you do not find any ineligibles, I may respond, “Look closer, the employees committing fraud may have left the building out of embarrassment.”

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Five Secrets to Reduce Benefits Cost, Part 2

George Bashaw – Atlas Global Benefits

I developed five secrets to lowering your benefits cost without changing your plan design or carrier. Out of the five, I am confident at least one will help you. I posted the first one last week.  Here is number two:

Secret Two:  Duplication of Coverage
Every year, I find a new plan that has duplication of coverage, where a company is  paying for a benefit more than once.  This is most common in very large companies, and ones that that have experienced multiple mergers.

Case Study: Duplication of Coverage
Last year I discovered that a new client had three  Employee Assistance Plans (EAPs).  Of the three, they only knew about two of them, and communicated only one to the employees.  One EAP plan was a rider attached to a long term disability contract.  Another was a rider attached to the international expatriate medical coverage.  The third was a standalone EAP plan.

We decided to scrap the standalone plan and keep the two riders.  We felt the rider on the expat plan served the international employees needs far better than the other two plans.  Further, we decided to keep the rider on the LTD plan.  Even thought it was a rider, it was a good plan and it was less expensive than the standalone plan.

Financial Impact
Cleaning up the duplication of benefits in the scenario above took about two hours to analyze and saved my client about $50,000.  Even though the savings was insignificant in comparison their total benefits cost, we would not have reached our goal ($500,000 of total savings) without eliminating the duplication of coverage.

Scour Your Plan Designs
Have someone take the time to look at all your plans and see if you can find a duplication of coverage.  Who knows, you may be paying for something two or three times.

I would love to here where you have found duplication of coverage.

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Five Secrets to Reduce Benefit Cost, Part 1

George Bashaw – Atlas Global Benefits

There are only a few ways to negotiate with an insurance carrier on fully insured plans.  For most carriers, claims history is the most important factor in determining pricing.  Therefore, you better know your claims if you wish to negotiate with its leverage.   Over the next few months, I am going to share five simple ideas to help you save money on your benefits.  Out of the five, I hope you find at least one of them useful.

Here’s the first one:  Know Your Claims!

Fully Insured and Self Insured
Insurance plans are fully insured or self insured. Most large companies have both. Typically, large multinational companies have self insured medical plans and fully insured non-medical plans.  Medium and smaller companies tend to have a majority of fully insured plans.  Therefore, it is likely that your company has at least a few fully insured plans.  Only fully insured plans will be discussed in this blog.

What’s Inside a Premium?
Premium can be broken down in two parts, claims and retention.  When an insurance company prices a new premium, they estimate future claims by looking at your claims history.  Estimated Claims + Retention = Premium.  Retention is approximately 20%-25% of the premium cost and consists of the following:  premium tax, overhead/administration, margin/profit, and commission/fees.

A Happy Insurance Carrier
Insurance carriers want claims to be around 75%-80% of premium.  If claims are over 80%, the carrier starts to lose money; if they are below 75%, they start raking in the profits. 

Claims Analysis:

Do a thorough analysis of your claims.  If your claims history is running less than 75%-80%, demand a decrease in premium.  If you do not get it, there is some reason why the carrier does not want to insure your risk.  For example, a carrier may not want to cover offshore drillers, so they jack up the price to reduce that demographic in their pool.

If you claims are over 80% you are getting a good deal. However, there are some carriers that may want your group and will offer you a better deal, even if you are running over 90% claims.

Please tell me your thoughts and share your experiences.  Know your claims!

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Preparing Your Company for a Global Pandemic

Mariana Villa da Costa – Littler Mendelson

Over the last decades, we have seen new infectious diseases appear, some of which could kill millions of people within days: mad cow disease, bird flu, SARS, Hantavirus, Ebola, dengue fever, and most recently, spread of the H1N1 “swine” flu.  In 2009, the World Health Organization declared H1N1 a pandemic.  As of November 15, WHO reports that H1N1 is present in over 206 countries and territories globally, and over 500,000 cases have been documented.  The pandemic raises many HR issues, especially for global employers.  Why?

The workplace is an ideal place for spreading disease, from the common cold to the serious swine flu, as people are in a close daily contact, sharing printers, telephones, eating together in the office’s kitchen, and, most of the time, breathing the same, re-circulating air.  Every company strives to keep its employees healthy and safe, not only for their own benefit, but also to ensure its operations continue full force.  Let’s highlight a few of the issues companies need consider when preparing a plan to address a global pandemic:

Go global, but do not forget local!

Companies can draft a global, standard pandemic plan, but you still need to account for different laws and regulations in the specific countries or regions where you operate. So make sure your company reviews any local employment and health laws before implementing the plan, in order to avoid potential legal issues and liabilities.

What’s in the plan?

Every global pandemic plan must address at least these issues:

  • Communication – Procedures on how an employee must inform their employer of a disease and steps the company needs to take to ensure immediate safety for the sick employee and the other employees.
  • Discipline – How the company should deal with employees who refuse to go to work for fear of getting sick, and measures for abusive and unfounded absences.
  • Privacy – How the information about a sick employee or a sick family member must be managed, including required government reporting.
  • Shut Down – If a shutdown of the company facility becomes necessary because of the spread of a contagious disease, the company needs to define, according to domestic laws, how employees will be paid and alternative ways to keep the employees working.
  • Travel issues – Your plan should address issues related to employees traveling for work to risky locations.  The plan should cover the conditions when travel should be deferred or suspended. It should also address how employees traveling for personal reasons should deal with a potential contagious disease in order to protect the rest of your workforce.

Adapt, adapt and adapt!

Once you have your broad global pandemic plan, consult a local or international lawyer to draft specific provisions and re-write any conflicting ones, just like most companies do for their other global policies, such as Codes of Conduct, discrimination and harassment policies.

Tell your employees!

Communication is key.  Make employees aware of the implementation of a global plan by preparing presentations and/or training on the issues addressed by the plan. Use simple, common language to make sure employees understand the plan and are not alarmed by it.  Be sure to communicate the plan in all the common local languages in each country.  Encourage employees to take the information home and share it with their families.

Get Involved Now!

HR staff plays a key role in creating and implementing a plan to respond to a pandemic.  In addition to helping draft the plan and organizing implementation of it, Global HR must also focus on:

  • Education – Develop plans to educate employees in the prevention and spread of contagious and potential pandemic diseases in the workplace – signs, training, providing hand sanitizing, etc.
  • Partnership with the Community – Work closely with local health departments and other officials to take advantage of their resources, and secure a role for your company in community prevention efforts.
  • Awareness Make employees aware of the resources available to them for prevention and cure under the company’s health care plan or clinic, national health insurance, and other resources.
  • Policy Updates – Review and update sick leave policies to address a pandemic situation (for the employee and to take care of sick family members).

As you can see, there are many things to consider in developing a plan to address a global pandemic.  I hope this article provides you with a good start in developing a plan for your company.  Don’t forget that any global plan must be carefully prepared and reviewed by local or international counsel to avoid any liabilities for the company and risks for the employees.

Have you already developed a plan for responding to a pandemic?  Share your comments to enrich the information in this post!

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Mariana Villa da Costa

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Littler Mendelson

Can We Employ Them HERE When They’ll be Working THERE?

Alan Freeman – LOF International HR Solutions

We recently addressed a colleague’s question that echoed one we hear fairly often.  “We have an operation in Country A and want to hire our first employee in Country B.  He is a national of Country  B, will  continue to live there while working for our company, essentially all his work activities will be conducted in Country B and he will not be an expat.  Can’t we simply put him on a Country A  contract, enroll  him in Country A social insurance and our company benefits schemes, pay him through the Country A payroll and all will be well?”

Indeed, it is a true story (I am NOT making this  up!) that a senior executive once told me that he intended to hire seven employees in France under UK contracts and payroll from the UK.  His rationale?,  “We don’t want to have the extra burden of  setting up new administrative capacity in France and, besides, I don’t want to get tangled up in those restrictive French employment laws.”

While the desire to avoid the costs and efforts of establishing operations and additional administrative burden in “new” countries is understandable, it is not wise.  Here’s why.

What are the key issues?

In most countries, a person resident in the country and performing services in the country is considered an employee in that country.  It doesn’t matter where the payroll is paid, where the contract is issued, or what country the employing entity is located in.

In our example above, the likely circumstances would be:

  • The government of Country B would assert that the employment relationship must be governed by Country B’s employment laws.  This means that a local contract, and any additional “work rules” and requirements, must be executed in accordance with Country B’s rules.  This also means that, on an ongoing basis, the employer is required to manage the employment relationship under the terms of Country B regulations.
  • The employer and employee would be subject to Country B social insurance and, potentially, other mandatory program requirements, such as funded termination plans, 13th and 14th month payments and mandatory benefits.  Social insurance and other contributions usually must be withheld from payroll and remitted in accordance with Country B regulations.
  • The employee will be subject to income tax in Country B, not only on income generated related to his work in Country B but, potentially, on his worldwide income.  Many countries require regular ongoing income tax remittances as income is being earned (so-called Pay-As-You-Earn or PAYE arrangements).  In such cases, payroll once again is required to properly withhold, remit and report on income taxes in a manner akin to what must be done for social insurance.
  • If based upon Country A parameters, the employee’s compensation and benefits package probably will not conform to Country B legal requirements and market practices.  The employer could easily be paying too much or too little and if currencies are different, and there are exchange risks to consider.  Each country has unique practices for mandatory and supplemental benefits, and the latter are usually integrated with local social plans in some manner.  In the end, the inappropriately designed plans could be quite problematic and the employee would have the burden of dealing with them.
  • Finally, although it is not a purely an “HR” issue, there is a significant corporate risk that HR professionals must be aware of when setting up employment in additional countries.  Simply put, if an employee engages in business activities in a given country, especially if these activities produce revenue, the local authorities could rule that those activities create a “Permanent Establishment”, or PE.  A PE is an ongoing business that is subject to local country corporate income taxes.  If the company has not carefully established a local business entity that serves both as the employee’s “employer of record” and as a means for putting limitations around in-country business activities, then the authorities may assess corporate income taxes against the employer’s revenues both in-country and elsewhere.  To illustrate a worst case scenario, if our example employee is on contract with the Country A entity and triggers a Permanent Establishment ruling in Country B, not only could the company’s Country B revenue be subject to Country B corporate income taxes, but Country B might also demand taxes on all of Country A’s company global revenues.

Is there a simple solution?

Yes. Local employees must be employed on local terms and conditions, in accordance with local market practice, by a local employer-entity, and paid via local payroll services that ensure compliance with employment, social insurance and income tax regulations.  Oh, and by the way, if per chance the target employee doesn’t already have the appropriate immigration status, Work Permit and Residency Visa requirements come into play as well.

Exactly how the above can be accomplished is dependent upon what’s possible and appropriate in each country.  It isn’t overly difficult or expensive to “do it right the first time” and it is much less expensive and disruptive to the business than not doing it correctly.

More about Alan:

LOF International Human Resources Solutions, Inc.

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Report from Mombasa – Africa Forum 2009

Warren Heaps photo

Warren Heaps – Birches Group LLC

Many of you will already know that last week, the second Africa Forum conference, sponsored by the African Development Bank, Birches Group LLC and ORC Worldwide, was held at the lovely Sarova Whitesands Resort and Spa in Mombasa, Kenya.  The conference was attended by representatives from leading employers in Africa, with delegates from Kenya, Tanzania, Uganda, Sudan, Democratic Republic of Congo and South Africa.  I was lucky to be one of the organizers and presenters at the conference, so I thought I would share some of the proceedings with you.

Keynote Address
The conference opened with a wonderful conversation with Dr. Sipho Moyo, Residential Representative for the AfDB in Tanzania.  Dr. Moyo spoke about what managers look for from HR in terms of support, ideas and insight.

Overview of African Markets
The keynote address was followed by an overview of African markets.  The presentation included statistics capturing the impact of the global economic crisis on Africa, through reduced GDP growth rates across the region, higher inflation (double digit levels in over 25 countries), and reduced trade.  There was also a discussion about the nature of the labour markets in Africa, and the key role leading employers across all sectors, including international public sector organizations, play in the market.  Finally, some summary market data was shared for all countries in Africa, with a special look at Kenya, Mozambique, Malawi and Nigeria.

African Cafe I
The next session was a series of small group discussions.  Three topics were selected by the group – Market Intelligence, Impact of the Global Economic Downturn, and Incentive Pay.  Each topic was featured as a discussion group, and  participants rotated through all three topics, thus having a chance to participate in all of them.  These were lively, interactive discussions, where participants were able to raise issues, share their experiences and learn from the experience of others.

Focus on East Africa
Since the event was held in Kenya, we turned next to an in-depth look at the East African market, focused on Kenya, Tanzania, Uganda, Rwanda and Burundi.  There was comparative data to highlight the similarities and also the unique features of each labour market in the region.

Building a Pan-African Workforce
A lively discussion followed led by Awinja Wameyo of AfDB, about the challenges the bank faces in building a workforce for their operations across 25 countries in Africa.  Topics of particular interest to the group included recruitment of professionals from the African diaspora, and the desire for diversity, and how best to achieve it.

Market Intelligence
Day Two began with an in-depth look at market intelligence, and how the Birches Group surveys are tailored to address many of the challenges faced in small, volatile markets, with such a wide range of practices.  Birches Group staff demonstrated the Indigo survey portal for the group as well.

We also spoke about the comparative framework — how to best determine the right approach to matching positions in the African market to survey benchmarks consistently.

African Cafe II
Next we had another series of discussions on topics chosen by those in attendance at the Forum:  Intra-Regional Assignments, Performance Management and Talent Sourcing.  It was a wonderful chance to share insights and learn from each other.

Untying Knots
Following lunch, we kicked off the final afternoon of the Forum with a stimulating presentation about Performance Management and Pay Design.  Gary McGillicuddy spoke about the Birches Group Community approach to performance management, which uses multi-rater feedback and the answers to three simple questions to manage evaluations effectively and efficiently.  Gary also spoke about the “Wedding Cake” of pay design, demonstrating that in an organization, time-based, competency-based and performance-based compensation systems can coexist to drive overall organizational effectiveness.

Employer Branding
The closing presentation was an overview of employer branding.  Curtis Grund of ORC Worldwide shared his personal experiences as well as a summary of the leading practices in employer branding.  Curtis also looked at some employer website to highlight best practices.

In Summary
The Africa Forum 2009 was a great opportunity for human resources professionals in Africa to discuss critical issues, learn about trends, and most importantly, share information with each other and form what we hope will be an ongoing network for sharing and collaboration.

We expect that Africa Forum will be repeated, next time in Southern Africa.  Stay tuned for more information about next year’s Forum.  We are grateful, also, to the African Development Bank, for lending it’s name and providing resources to make the Forum a reality.

Conference Presentations
If you were unable to attend the Africa Forum, but would like to receive copies of the presentation materials, please let me know by using the Contact Us link.  Just indicate your interest in receiving the Africa Forum materials.

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Employer Mandated Health Coverage in Dubai

George Bashaw

George Bashaw – Atlas Global Benefits

On January 1st, the Dubai Health Authority (DHA) initiated the first phase of employer mandatory health insurance for expatriates and UAE nationals working in Dubai.  All expats new to Dubai must obtain a Health Benefit Contribution (HBC) compliant insurance policy.


The population of Dubai has exploded from 300,000 to 1.5 million since the Department of Health and Medical Services (DoHMS) was created over thirty years ago.  Considering the growth and significant demographic changes in Dubai, the DoHMS has done an adequate job (World Health Organization ranks the UAE 44th).  Did I say something in “Dubai” is “adequate”?  The two words are mutually exclusive. In Dubai, they simply strive for the best.  Therefore, the DHA was established to accomplish this goal by 2015.  What does this mean for you?

Existing Plans

If you manage an existing health plan in Dubai, it is valid until it expires. Upon renewal during 2009, the new plan must be HBC compliant.  By January 1st 2010, all corporate health plans must be HBC complaint.

Payment and Administration

Who pays the HBC?  The employer pays the tab.  The HBC is a flat-rate for all employees, including UAE nationals and expatriates.  There is another hitch.  All HBC policies must be sold by authorized insurance companies. Since most employers will provide benefits above the notional standard, there is a group of authorized insurance companies waiting to sell you a top-up plan.

Choosing a Clinic

Not so fast.  All employees must choose a primary clinic to complete enrollment.  They can do so by visiting an OCP (Outpatient Care Practice)clinic in person, on the web www.dha.gov.ae, or through their employer.  Want the good news?  The employer may choose a default OCP clinic.

Employer Responsibilities

Just so there is no confusion on the rules, I copied this from the DHA website: 

  1. This is a mandatory system enforced by law – employers must comply
  2. Every employer pays a standard payment (HBC) to the DHA for every employee once a new HBC policy is introduced
  3. System will be enforced through a licensing system
  4. All employees covered by a corporate healthcare scheme by 12/31/08
  5. Employees not currently covered by an existing corporate health scheme must be provided with a HBC compliant scheme from 1/1/09
  6. Everyone covered by HBC compliant corporate healthcare scheme by 12/31/09
  7. Every employer is responsible for enrolling every employee with DHA
  8. This includes contractual responsibilities for dependents
  9. Every employee most register at a clinic before employer enrolls them with the DHA
  10. Employers to help employees register with a clinic

 Still have questions?

You are welcome to visit the DHA but I would rather you just ask me.

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What do I need to know about the “war risk” rider for my BTA or AD&D plan?



George Bashaw – Atlas Global Benefits

The US State Department has already issued three travel warnings in the month of April for Georgia (gun fire and violence), Sudan (possibility of violence and harassment targeting westerners) and Central African Republic (armed rebel groups and bandits). Do you have employees working or traveling to the Middle East, Africa, or South America? If so, they may not be covered if you do not have war risk.

War Risk

War risk is a type of insurance that covers your employees due to acts of war, invasion, insurrection, rebellion and hijacking and may include weapons of mass destruction. Concerning benefits, war risk is a commonly excluded rider on Accidental Death and Dismemberment (AD&D) and Business Travel Accident (BTA) policies unless specifically requested.

What to look for:

Make a list of all the countries where your employees are traveling and make sure the insurance carrier has not excluded one of these locations. Typically, carriers classify dangerous countries “hot spots” or “hot zones” by area of severity. Notify your broker or carrier so the carrier can assess the risk and include these hot zones.

What if the countries you travel to varies depending on assignments and cannot be predicted? Disclose the known countries and request an annual audit to be performed at the end of the year.  An initial down payment is typically requested ($500 is fair).  This will give you flexibility to report known travel exposure at the end of the year. The carriers should be able to retroactively bill you for “actual” exposure.

Annual Audit vs. Fully Insured

Most carriers can offer War Risk as either a fully insured plan or an annual audit.  If you elect the fully insured plan, you will be paying a premium on an estimated exposure.  Depending on budgets, your company may prefer a ‘known’ premium for this coverage.

Annual Audit is the other alternative.  As previously mentioned, the carrier will perform an audit at the end of the year and bill for “actual” exposure.  In my experience, the amount charged back based on actual exposure will be less than the estimated amount in a fully insured offering.  In addition, the carrier rarely seems to conduct these audits annually when the policy is prepaid.

Cost and Payment Options:

BTA is one of the least expensive benefits your company can offer. Adding war risk is a great idea if you have any employees that travel outside of the US.

Typically there are three options for paying this premium: annual premium, annual installment, and three year prepaid.

Three year prepaid is the way to go. It is typically over 10% less expensive and you are less likely to get an annual audit. Plus, it is about the only benefit you will not have to renew next year. If you cancel the policy before the end of three years, most carriers will refund any “unused” premium.

If you want to pay every year, you should choose the annual installment over the annual premium since it will also be offered at a discounted rate (around 5%). The annual installment is essentially a rate guarantee for three years. No penalty if the policy is canceled prior to three years.

This is the skinny on war risk. Please let me know if you need your policy evaluated or if you have any questions.

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