Benefits

Despite mounting world tensions, companies continue to send their employees to operate in other countries for extended periods of time. For many organisations, preparing and supporting expatriate workforce represents an important investment of company resources. In fact, the stakes are high for all involved. For employees, such an assignment is often viewed as an opportunity, yet they must also contend with unfamiliar surroundings and cultural adjustments that can be particularly challenging.

For the employer, providing ongoing support for an expatriate worker involves many judgment calls. Handling employees' personal safety and well being while they are on assignment can be problematic without established policies that also adhere to local employment laws and practices.

MAKING THE RIGHT CHOICES

Identifying an approach to expatriate benefits that works well both for the company and its employees is critically important. Before deciding on an approach for your organisation, a key decision must be made: Will you handle expatriate benefits in-house or with the assistance of a third party expert?

Achieving consensus on this point takes time. Expatriate benefits decisions rarely fall under the responsibility of a single individual. Finance, human resources and business unit leaders often have strong and varied opinions. In addition, the demands of the expatriate employees themselves must be taken into account. Often the origins of problems with international assignments can be traced back to program design and its inability to address specific needs of international employees.

These occasional disconnects continue to play out even today. In a recent study of more than 700 expatriate workers around the world, nearly 40 percent felt their employers did not do an adequate job preparing them for their international assignment. The 2002 study was conducted by CIGNA International Expatriate Benefits, a business unit of CIGNA International; the National Foreign Trade Council which supports open international trade and investment; and WorldatWork, the leading global rewards association focused on attracting, retaining and motivating employees.

Additionally, 55 percent of those surveyed said that a lack of information about finding appropriate health care locally as well as what to do in a medical emergency or security crisis was detrimental to their peace of mind and performance on the job. Yet despite recent volatile world events, 74 percent saw no change in their likelihood of accepting another international assignment if the opportunity arose.

HANDLING BENEFITS IN-HOUSE

Developing the right expatriate benefits plan requires that companies first come to terms with whether they can meet the needs of these employees in-house.

In these situations, there are three possible arrangements:

• The first involves total in-house support where claims are submitted to the company, which, in turn, settles any claims with the employee.
• A second option involves a combined solution where employees are covered by a home-country plan and can claim any shortfalls back from their employer.
• The third option involves a hybrid multi-local, where employees are enrolled in a host-country plan and can claim back any shortfalls through the company as well.

Home or host country plans can take on various forms. Such plans can range from private insurance to coverage provided by the State. Levels of employer support can vary as well. In some instances, an employer may go with whatever coverage is available without offering supplemental coverage. In other instances, the employer may want to provide supplemental coverage in the event the employee faced unforeseen incremental costs.

Historically, in-house services may have worked very well for large multi-national employers with extensive benefits support systems. But today, the complexity of providing such benefits raises challenges even for large companies. At the other end of the spectrum, smaller employers are simply not able to offer hybrid multi-local coverage simply because they lack the size and scale to secure such coverage.

Whilst some may assert that in-house approaches can be beneficial for organisations wanting to maintain maximum flexibility, consistency and cost effectiveness, other considerations must be weighed. For example, an employee may object to their employer making judgments about medical treatments - especially if the decision-maker is not a recognised medical expert. In-house plans also mean that the benefits manager himself must handle the complexities of settling claims in various countries - each with their own payment procedures and currency requirements. Other times, especially with hybrid multi-local plans, an employer often must intervene during a medical emergency in another country when the host country coverage is insufficient.

In medical emergencies, in-house approaches also require resolution for a myriad of decisions. To start, benefits managers must decide what exactly they will cover. And these decisions are always subject to scrutiny, especially if expatriates in one geographic setting are believed to be the beneficiaries of superior coverage in contrast to employees on assignment elsewhere.

The issues can be wide-ranging and difficult to resolve. For example, what about those situations where a unit leader operating abroad finds himself spending weeks at a time operating in a variety of different countries? Should a company negotiate individualised health care coverage for the employee in each country? Or, should benefits managers arrange for health care coverage in a single country - hoping that service extends to cover medical necessities in surrounding nations?

Cost and quality issues raise questions as well. For example, should an expatriate worker overseas return home for cancer treatments if quality medical services are available where the employee happens to be working? And if a medical condition necessitates a trip home, should the company assume the cost of travel?

Some employers may simply offer employees a lump sum cash payment that allows them to arrange for health care coverage on their own. But in these instances, employees run the risk of mismanaging their own benefits coverage. For example, for European workers operating in the U.S., the costs of health care may come as a surprise.

Benefits managers using in-house approaches also may find that they there are risk management issues and budgeting issues that arise. Countries worldwide all have different policies and practices related to health care, and it may be difficult for an employer to accurately gauge the true cost of expatriate healthcare in various locations. Other times, when legal or service delivery disputes arise in particular countries, many benefits managers can find themselves ill-prepared to manage and resolve such disputes. This makes reliable budgeting extremely difficult for managers handling expatriate benefits support.

BRINGING IN EXPATRIATE BENEFITS EXPERTS

With so many challenges facing benefits managers attempting to handle expatriate benefits internally, it is perhaps not surprising that an industry has developed to provide specific solutions to the many and varied needs of expatriate workers.

For many employers, the decision to out-source expatriate benefits is made much easier when one considers the unique set of services available from these specialised providers. They typically offer a broad range of benefits relevant to any number of populations operating inside multi-national companies. These providers also offer a consistent global delivery mechanism, something that is difficult to replicate, particularly for small companies.

Out-sourced benefits experts also can work in collaboration with sponsoring employers on issues such as cost management. With an extensive understanding of various international health care systems, these experts may be able to identify savings opportunities - or at least provide sound guidance so that employers may avoid paying unnecessary health care charges.

Additionally, specialised expatriate benefits providers often have robust emergency evacuation and repatriation services in place. They may also offer a vast provider referral network, something that is important for expatriates operating in exotic or remote locations.

Out-sourced benefits solutions also offer the advantage of live, multi-lingual, 24/7 customer service and support. Certain out-sourced providers also specialise in risk management, where they design benefit plans to provide maximum employee benefits, yet still protect employers from excessive legal exposure.

EMPLOYEES: LIABILITY OR ASSET?

In making a final decision whether to manage expatriate benefits in-house or with the assistance of outside experts, company leadership should carefully assess its view of its own employee population.

Whilst in some cases there may be no formal requirement for companies to provide health care for expatriate employees, in actual fact, many nations now require that companies provide such coverage. Therefore, it seems sensible that managers would look at these employees as business assets, seeking an approach to expatriate benefits that contributes to the most productive use of these human assets.

So while many companies may be sincerely interested in providing robust expatriate benefits, sometimes even these efforts fall short when a support system is not in place to guarantee service delivery. By investing in services and support systems specifically designed for expatriates, benefits managers have the unique opportunity to make significant contributions to the productivity and general morale of their expatriate workforce.

As business continues its march toward full global-isation, companies that develop solid approaches capable of meeting the needs of international executives enjoy a rare competitive advantage in comparison to other companies that do not yet understand how to best support their expatriate workforce population.