Chances are if you’re preparing to expand your business internationally, you’ve got a LOT on your plate. You’re preparing your market entry strategy, determining your operational model and finalizing your brand positioning.
But at some point or another, it’s going to come time to discuss insurance. Insuring your international expansion can be a daunting task, but here are some major points to help prepare you.
1. Be Cost-Savvy (But Understand Your Coverage)
In most cases, the U.S. is the most expensive country to provide private or employer-sponsored healthcare – the intent in the U.S. is to provide comprehensive coverage. Outside of the U.S., this isn’t necessarily the case. Most countries provide state-run insurance that have statutory benefits in place that may or may not be as comprehensive as a traditional U.S. employer-sponsored plan.
As a result, many U.S.-based companies purchase supplemental coverage for their international employees. International state-run healthcare is typically funded through an employer’s payroll taxes, so the costs are harder to recognize. If simply comparing the supplemental coverage purchased versus private insurance paid in the U.S., the cost of the supplemental will be significantly lower.
There’s one other significant factor to consider and that’s the cost of living in the country your employees are in. For example, covering 50 employees in France is significantly more expensive than covering 500 lives in China, simply due to the cost of living differences between countries.
Finally, you must consider your goals as a company—you must decide whether you want to provide the minimum requisite coverage or purchase rich supplemental plans to be used as a recruiting tool.
2. Ensure You’re Fully Covered
The owner of one of my clients was traveling in Mexico for business, and the taxi transporting him from the airport to his hotel got into a car accident. He had to get stitches in his nose from crashing into the front seat.
Hospitals in Mexico require payment upfront before they will service you, and the owner had to pay $1,500 U.S. before he could get care. He received an invoice and submitted the bill to their domestic carrier for reimbursement.
The domestic carrier required ICD9 codes (the coding system U.S. hospitals use to describe diagnoses) to pay the owner back, but unfortunately, no other country uses those billing codes. It took the owner 2 years to get reimbursed, and only after the owner was able to get the carrier to code it themselves based off a typical ER visit in the U.S.
For international travelers, the employer is obligated to provide “duty of care,” which means they should take all reasonable steps to ensure the health, safety and wellbeing of the employee. The employer didn’t have the proper coverage for international travelers and, therefore, didn’t provide duty of care.
The lesson here is that if you have employees who travel out of the country, make sure they have the proper international coverage specifically designed for those travelers. If this owner had proper foreign travel coverage, the provider would have coordinated payment upfront with no billing issues.
3. All Policies Aren’t Created Equal
The biggest misconceptions I see from business owners expanding overseas is the expectation that laws and insurance coverages operate the same way they do here in the U.S. For example, many owners believe because the foreign country provides national healthcare, then we in the U.S. aren’t obligated to provide anything.
Additionally, workers’ compensation laws vary from state to state within the U.S., but the differences can be far greater when opening an operation in another country. And life insurance policies have varying differences, too – if you provide life insurance in the U.S. at 2x salary but have employees in the U.K., the minimum statutory plan there is 4x salary.
The key takeaway is you cannot simply mirror your domestic plans across the world, regardless of coverage type. There’s a lot of nuances and differences to understand, and while it can get confusing, we’re here to help.
If you’re taking the (exciting!) leap and expanding your business overseas, be sure to consult with the experts on all of your insurance needs.