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The future of health benefits for Japanese expatriates

Health and Benefits
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By James Leung | July 5, 2021

Expatriates worldwide have been among those hardest hit by the pandemic. What actions can employers consider to optimise employee health benefits for Japanese expatriates?

The impact of the COVID-19 pandemic and its effect on health benefits for Japanese expatriates have recently drawn attention, due mainly to Japanese multinational corporations (MNCs) starting to evaluate the effectiveness of their current health benefit arrangements for Japanese expatriates. For globally mobile employees, benefits offered from Japan are often a combination of the National Health Insurance (NHI) and Overseas Travel Accident Insurance (OTAI), which in combination still may not provide comprehensive coverage.

Furthermore, group HR teams based at Japan headquarters have raised concerns regarding the availability of compliant benefit solutions considering the increasingly complex benefit regulations in countries where many Japanese expatriates are assigned.

Key points to follow will include:

  • Specific drivers and reasons for change
  • Considerations when comparing traditional health benefit solutions for Japanese expatriates against international private medical plans
  • Key deliverables to expect from a qualified health program for Japanese expatriates

Impact of the pandemic on the global expatriate population and their benefits

A commonly asked question by global HR is: What is the impact to expatriate employees as a result of the pandemic?

The answer is that, for the most part, expatriate benefits have remained unchanged, with HR now looking for solutions to optimise their benefits package for the evolving needs of international assignees, maximising the impact of the benefit spend with cost control for sustainability.

Throughout the pandemic, 14% of MNCs in Asia Pacific repatriated all or most of their expatriate population to their home countries. For repatriated employees, 51% of expatriate benefit packages remained all or mostly the same and 9% had some changes.1

Graphic shows that 14% of Asia Pacific employers have repatriated all or most expatriates, 51% of benefit packages for those repatriated employees remain laregely unchanged, 9% have had some changes.
Figure 1. Expatriate benefits remain largely unchanged for employees repatriated during the pandemic

Why is now a good time to review health benefits for your Japanese expatriates?

The key drivers:

Impact in the case of catastrophic illnesses especially during the pandemic – The effect of the pandemic has undoubtedly brought changes to the way we work and how we live our lives. For international assignees working abroad, the standard of medical care can vary from country to country, and in normal times expatriates often opt to travel back to their home country in case of critical sickness, or when hospitalisation is required. This has been especially true for Japanese expatriates who are enrolled under the NHI system, which covers treatments in Japan as well as overseas, but subject to co-insurance and normal and customary charges in Japan. In other words, when the Japanese expatriate is unable to travel home for treatment, the medical expense gap may become significant. The expense gap is either borne by the employee or – for some Japanese employers – the company might subsidise the difference.

Mental wellbeing – Traditionally, health benefits for Japanese expatriates have focused primarily on financial coverage for medical expenses. The wellbeing of expatriates living abroad has become an increasing concern, particularly for some who live apart from their family for a prolonged period of time. Many Japanese MNCs have started to explore wellness solutions, such as Employee Assistance Programs (EAPs) and counselling services to address the unique issues facing international assignees and their dependents.

Other drivers – Evolving benefits regulations around the world have become more complex, and of critical importance for HR professionals who manage global benefit programs. Willis Towers Watson’s 2021 Internationally Mobile Employee (IME) Benefits Design Survey reveals the top priorities for deciding on the right expatriate healthcare solution are, in order: (1) compliance, (2) contractual plan design and options, (3) quality of services, (4) pricing and (5) technology.2

Graphic shows top priorities for expatriate benefits as 1. Compliant solutions, 2. contractual plan design, 3. quality of employee services, 4. pricing and 5. technology.
Figure 2. Top priorities for HR according to our 2021 Internationally Mobile Employee (IME) Benefits Design Survey

When further compared with our recent client insights, compliant solutions still ranks highest – with 66% of respondents saying it is one of their top considerations. However, the need to address emerging health issues and mitigage risks have also become top priorities for global HR. This feedback aligns very closely with the evolving needs resulting from the current pandemic environment.

Graphic shows emerging priorities for expatriate benefits as keeping up with legislative issues, managing complex and new health issues, access to appropriate care and minimising coverage gaps, balancing costs with employee engagement and simplicity, policies and protocals to mitigate risk.
Figure 3. Recent client insights reveal emerging priorities for HR

Considerations:

Japanese-centric International Private Medical Insurance (IPMI) options as compared to traditional or domestic group medical arrangements

Japanese expatriates are generally covered under one of three main types of healthcare programs:

  1. Headquarters-led NHI plus Overseas Travel Accident Insurance (OTAI) programs
  2. Domestic (in-country) group medical plans
  3. International Private Medical Insurance (IPMI)

While headquarters-led NHI and OTAI healthcare programs have been quite common in recent years, there has been a fundamental shift in health benefits management mindset from traditional administration of overseas services and expenses to programs now focused on employees’ wellbeing. Apart from headquarters-led programs, we have often seen Japanese expatriates being enrolled under local (in-country) group policies, and IPMI has gained popularity for Japanese expatriates in countries such as the Netherlands, Switzerland, the UAE, and the United States where medical policies need to be compliant with the respective country regulations e.g. the Affordable Care Act in the U.S. This trend has extended to Asia where insurers are offering a robust suite of services tailored to supporting Japanese employees working abroad.

Considerations and options for Japanese expatriates

Figure 4. Insurance program considerations and options
Key Considerations Overseas Travel / Accident Domestic Group Medical Insurance International Private Medical Insurance
Globally compliant solutions Not necessarily Yes Yes
Global commercial leverage Yes No Yes
Coverage gaps Can be significant May not be sufficient for major illness Minimal
Pre-existing medical conditions covered No Yes Yes
Wellness, checkups No Optional Yes
Ningen Dock No No Optional
Telemedicine No Becoming common Yes
Employee assistance programs No No Yes
Evacuation and repatriation No For some markets Yes
Global direct billing No Local direct billing Yes
Japanese clinics No Not common Yes
Japanese help line No No Yes

Total cost of health benefits, maximising the value of the relative benefits spend

When evaluating the effectiveness of health benefits, employers should review the total cost of healthcare, and whether the health benefits arrangement is meeting the needs of the Japanese expatriate population. Total cost equals the combined cost of NHI, insurance premiums for any relevant private health programs, cost of benefits and services such as Ningen Dock comprehensive health exams, and medical evacuation and assistance services. It’s important to also factor in costs that some employers have incurred by subsidising any coverage gaps, as well as HR costs for supporting employees when treatment and translation may be required. Employers should evaluate the program options available with the total cost of health benefits in mind, against the complete suite of coverage and members’ services that each of the program options will bring.

It is also critical for employers to consider the impact of medical inflation and seek advice from their consultant for informed decision making, leveraging medical utilisation analytics to achieve sustainability. In countries popular for Japanese expatriates, medical cost inflation is often close to double digits if not higher: Australia (6%), China (9.3%), Hong Kong (6.7%), Indonesia (12%), Singapore (8.2%), United Kingdom (6.5%), United States (7.3%), Vietnam (10.2%).3 Employers should bear in mind that the costs incurred in medical clinics for expatriates are often higher than those in the general market.

Employers should bear in mind that the costs incurred in medical clinics for expatriates are often higher than those in the general market.

Key features of an effective health program

Catastrophic illness

Minimise the impact to members living abroad; Mitigate financial impact to employers.

Financial sustainability

Utilisation analysis for informed decisions on program design and to establish a cost containment strategy.

Compliance and administrative efficiency

Single compliant solution encompassing consistent coverage, wellness and coordinated claims process.

Plan design options

Achieving adequate balance in expense coverage and needs during their different life stages.

Mental wellbeing

Programs to support members’ health and mental wellbeing.

Medical facility access

Access to Japanese clinics and cashless global hospital networks.


Sources

1 Willis Towers Watson 2020 COVID-19 Benefits Survey, HQ perspective, Asia Pacific
2 Willis Towers Watson 2021 Internationally Mobile Employee (IME) Benefits Design Survey
3 Willis Towers Watson 2021 Global Medical Trends Survey

Author

Head of Expatriate Benefits and High-end Medical Solutions
Health & Benefits, Asia & Australasia

Contact

Hiroaki Sakamoto
Head of Health and Benefits, Japan

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