Balancing costs with good coverage

Q. I am starting a small company in Dubai with some 10 employees. How can I purchase good medical coverage for my employees without running a huge bill?

A. Medical insurance is expected to become complusory by law in Dubai following a similar announcement in Abu Dhabi.

Good coverage is very dependent on personnel or company requirements. One needs to consider various factors before deciding on a medical plan.

In the cost-driven environment of Dubai, many employers opt for a cheap medical cover package.

Conversely, employees always look for a medical plan which gives them complete coverage like routine check-ups, family coverage, dental coverage in addition to all their in- patient and out-patient treatments.

They are looking for 100 per cent reimbursement from their plan.

It is a tough task for the employer to create the right balance between these benefits and the costs involved.

Remember insurance needs to be one of those things that fits in with your routine expenses and should never be overlooked.

A group medical insurance plan by definition will pay if the insured employee goes to the doctor for some sickness, curable disease, or accident.

Purpose

The concept of healthcare insurance is more to do with cash flow and risk management.

Though medical facilities have improved a lot in UAE, you may still need to go to the UK or the US for sophisticated treatments and without insurance this is very expensive.

How will you console an employee's dependents if you have no cover in place and such care is required? This is what we mean by risk management or rather the reduction of it by incorporating a comprehensive coverage for staff.

An organisation can also opt for an international medical cover, depending upon employees profile, their travel demands.

Criteria

It is important to ensure you are satisfied with the financial security of the insurer, international rating and global office coverage. If you fall sick and your insurer is unable to pay claims due to financial difficulties for instant, will you as the employer step in to meet the bill?

Moreover, be aware that some insurers will not take you if you have pre-existing conditions.

And remember, medical insurance only pays your hospital bills - it excludes your regular check ups and optional surgeries etc. Everyone has some form of life cover but you have to die to collect - not a great plan in order to pay your bills.

Critical illness cover will pay out on diagnosis and help towards those expenses that will not go away while you recuperate.

So securing the right medical package for your firm is not quite straight forward, and there are other facts that need to be considered.

If you are a boss, don't think that the cheapest solution is the best one. Your false economy will become all too apparent should something happen to one of your staff.

The writer is senior financial consultant at Globaleye Group. The opinions expressed above are the writer's and don't necessarily represent views of Gulf News. Readers are encouraged to thoroughly investigate all investment decisions. Please send your questions to advice@gulfnews.com.