Portable insurance schemes yet to catch on with firms

Portable insurance schemes yet to catch on with firms

SINGAPORE - Portable insurance has been around for more than 10 years but cost, administrative hassle and employers' attitudes may hinder firms from taking it up, human resources experts said.

Fewer than one in 20 companies offers the benefit even though there are tax incentives available for those who do so.

Unlike company medical benefits, which cover a person only while he is working for the company, portable medical insurance schemes stay with an employee for life.

Portable medical benefits have come under the spotlight after the MediShield Life Review Committee suggested that more tax incentives and grants be made available for companies to take up the scheme.

This would reduce duplication of coverage between employer medical benefits and the compulsory MediShield Life, when it kicks in next year.

Instead of paying for group insurance, firms could distribute the money individually to workers so they can put it towards their MediShield or MediShield Life premiums or upgrade to Integrated Shield Plans, which cover them for higher-grade wards.

Helping workers pay for Shield plans also offers them an incentive to invest in such plans when they are young and healthy, instead of when they are awaiting retirement.

By then, the likelihood of being charged extra for pre-existing illnesses is higher.

However, portable insurance may be more expensive as staff are covered individually and employers may not enjoy a "group cost-saving benefit", said Singapore Human Resources Institute president Erman Tan.

Employers' attitudes are also an issue. "Usually, companies think about hiring staff for the long run and covering them with group benefits," said Mr David Leong, managing director of recruitment firm PeopleWorldwide Consulting.

"They do not typically think about how employees are insured when they leave," he added.

Another complication for employers is that foreign employees are not eligible for MediShield Life.

It would mean the hassle of running a separate scheme for them and portable benefits for Singapore citizens and permanent residents, the Life Insurance Association said.

Currently, DBS is among the few companies in Singapore that provides portable benefits, which cover the deductible and co-payment portions of employees' insurance plans, up to a specified limit.

Those with pre-existing illnesses can also choose to come under the company's group insurance.

Mr Leong said a critical mass of companies in Singapore would have to switch from group coverage to portable benefits at the same time if they want their employees to benefit most.

"Or else there would be discontinuity when a worker switches from one company that provides portable benefits, to another that does not," he said. "He might have to end up paying his own premiums again."

Association of Small and Medium Enterprises president Kurt Wee said portable insurance would help companies "recruit and retain talent".

He said: "Most SMEs have heard about portable insurance but they don't know what exactly a switch entails.

"We may study this and communicate some basic awareness."

This article was first published on JULY 2, 2014.
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