This article was written in collaboration with Financial Alliance. All views expressed in this article are the independent opinion of DollarsAndSense.sg
Competition among companies for talent in Singapore has led to better working environments, attractive remuneration packages, as well as more comprehensive welfare benefits.
A common part of many Singaporeans’ packages is group employee insurance, which typically covers hospitalisation and surgery (H&S), outpatient GPand even personal accident.
Given that the average period a person may stay in a single job (or company) is only a few years, one question many working adults could have is how to view the group employee insurance benefits that they receive from their companies.
Should Singaporeans plan their own insurance coverage while disregarding what is provided by their company? How can employees plan for their own insurance coverage, while taking into account the protection they receive from their job?
Among his many skills, Kang Jun has developed a specialisation of helping companies structure their group employee benefits scheme, so that their employees enjoy the best possible coverage in a cost-effective manner.
DollarsAndSense (DNS): For the uninitiated, how should working adults in Singapore think about their group employee insurance?
Chan Kang Jun (KJ): “Group employee insurance is one component of a larger employee benefits package. These perks are one way companies attract and retain employees, and allow them to stay competitive.
While enjoying relatively good benefits provided by companies, employees tend to have a (false) sense of security and often overlook their own individual insurance coverage, especially for the long run.
It is crucial to understand that by default, group employee insurance is non-portable. This means that coverage ceases the moment you are no longer an employee of the company, even if you were willing to continue paying the premiums.
Employees who have worked for a long time and are retiring, or have developed illnesses since joining the company, their future insurability is a major concern. This is because if they were to purchase new insurance on their own thereafter, they will not be covered for their pre-existing conditions.
On the other hand, group employee insurance does have its benefits over regular private insurance. The biggest one is the fact that many of the pre-existing conditions that will be excluded by private insurance may actually be covered by a group policy – usually after a waiting period of 12 months.”
DNS: Is there any way for an employer to provide portable insurance coverage?
KJ: “There are two main ways for companies to provide their employees with coverage that is portable.
The first way to do this is through the Transferable Medical Insurance Scheme (TMIS). In the event the employee joins another company with a TMIS plan,their pre-existing conditions can be covered without waiting period.
From my experience, not many companies offer TMIS plans, so employees may find that they do not enjoy portability when they leave, even if their company buys a TMIS plan.
The second way is to provide coverage using the integrated shield plan (IP) framework, either by paying for the employees’ IP premiums or by making additional MediSave contributions for their employees to pay for IP coverage or pay their medical bills directly.
Insuring employees using IPs may be prohibitive for some companies because the administrative process is not so straightforward, since such health insurance is underwritten individually. Costs might be much higher as well, and some employees may not obtain coverage due to their health conditions.
Another concern is whether employees would know how to use the additional MediSave contributions to purchase enhanced IP coverage. If they don’t, they could remain underinsured.
Because of these shortcomings related to employers’ attempts to provide portable coverage, standard employee group insurance nevertheless remains widespread and it is the most common practice despite having its limitations.”
DNS: Which is more useful: private insurance or a group employee policy?
KJ: “They are different tools and each has its place. I have assisted clients with numerous claims under both types of policies, including some death claims, and I can see the value that each provides. While there might be some redundancies between them, there are also unique advantages provided by each of them that we can leverage on to complement each other to obtain the best possible coverage.”
DNS: How should a company’s Chief People Officer or human resources department go about planning for their employees’ group insurance benefits?
KJ: “First of all, rather than merely following how other companies structure their employee benefits, speak to your company’s stakeholders and understand your company’s focus, budget and workforce profile.
Survey your employees and find out how well-insured (or not) they are. Think about how the company can supplement their existing arrangements, rather than to start from scratch.
Due to economies of scale, even small companies with a few employees can already form a “group” and enjoy coverage under a group employee insurance scheme. The bigger your company is, the more you can tweak the plans and enjoy cost savings.
Unlike personal insurance, group employee insurance plans need to be renewed yearly or bi-yearly. Like motor insurance, renewal periods are a great opportunity to shop around to see if you can get a better deal from another insurer.
There are advisers in Financial Alliance like myself who specialise in helping companies review their current arrangements, revise their requirements, and get customised quotes from multiple insurance companies. The best part is that companies won’t be paying more when using our services than if they were to engage tied-agents from the respective insurance companies.
We help with the tedious process of getting quotes for various packages, filtering and shortlisting the best ones for companies to choose. Group employee insurance plans from different insurers are seldom exactly the same, so it can be complicated to compare to see which gives better value.
Part of our process is to look at additional perks that could sweeten the dealfor our clients, such as choosing the right panel of GP doctors that is most convenient for employees, dental benefits, Traditional Chinese Medicine (TCM) benefits, or the option to enrol dependants into the scheme.
Financial Alliance also have partners who can provide lifestyle benefits or additional services, such as letting your company outsource the claims process to a third-party.”
DNS: Do you have an example where your experience and expertise with group employee insurance value-added to a company?
KJ: “I previously structured employee benefits for a large Multi-National Corporation (MNC) with more than 1,000 employees in Singapore.
Their management liked the coverage provided by MediShield Life to their Singaporean workforce, and learnt that two thirds of their workers had their own private integrated shield plans (IP) coverage. The company then gave me the mandate to work on reducing overlaps in coverage provided by the company.
They eventually decided to scrap their existing group employee insurance and work on a reimbursement basis instead, giving employees cash to pay for their own IP coverage. This would actually cost the company a lotmore, but they decided to do it to enable their employees to enjoy portability.
After helping them to structure the scheme, I helped to conduct a series of educational workshops to help their employees understand what they will be receiving and how to select the best IP coverage. This was important to mitigate the risk of employees treating the additional cash as a bonus and spending it on holidays, rather than using it for insurance.
The engagement sessions also gave employees the opportunity to ask questions and uncover blind spots in their insurance coverage.
As an adviser who does both group and individual insurance, I have experience in handling both ends of the spectrum, especially the “grey” area in between where group insurance benefits end, and individual coverage begins.”
DNS: What advice do you have to offer to readers who run their own company or work in human resources?
KJ: “We don’t blindly renew our handphone plan at the end of the contract period. In the same way, as a company, rather than merely retaining the status quo for your group employee insurance plans, why not get a second opinion from a broker and see what’s available out there?
At the very least, you could end up reaffirming that you’re already on the best plan for your company’s needs. On the other hand, you might end up happier if you discover another plan that gives you better benefits or even lets you save money.”
The intent behind group employee insurance is laudable, but for companies and individuals to benefit to the largest extent requires carefully planning, aided by the expertise of a capable financial professional.
This will allow the company to have a holistic plan that fits the needs of their employees and gives the best value for the money.
Financial Alliance continues to leverage on technology and shared resources to ensure their advisors can give the best service to both individuals and corporations.
To find out more about Financial Alliance and what they can offer, you can visit their website. Alternatively, if you’d like to get in touch with Kang Jun to find out more about what he can do for your company, you can contact him directly on his Financial Alliance profile page.