Insurance and regulatory considerations for your traveling employees (Part 2)

In our last column, we described the predicaments of Frank, John, and Mary Jane—talented and dedicated employees all, who encountered various visa and health coverage troubles while working abroad—in order to help illustrate the kinds of scenarios for which every U.S. company with employees working internationally should prepare.

Comprehensive regulatory and statutory requirements exist within the U.S. and outside of the U.S. and international laws vary on the permissibility of insurance coverage and application of rules and associated enforcement. This variability is rivalled only by the differences in the hundreds, if not thousands, of available insurance products in the market.

See also: Employers face crackdown over worker misclassification.

You might think that legal and compliance is the insurance company’s responsibility or that these items don’t need to be looked at up front. The scenarios described in our last column, however, highlight the point that failure to properly contemplate local regulatory environments can have negative ramifications for you and your company. Following are some key considerations and questions every benefits manager must ask:

Is my insurance coverage adequate?  Is it compliant with applicable laws?

You might know that many countries have rules and regulations that prohibit unauthorized insurance. What you might not know, however, is that sometimes these laws make no distinctions between core medical insurance versus travel insurance, and sometimes these laws go so far as to require locally licensed insurance coverage as a condition of immigration.  Consider the following:

• Saudi Arabia: Under the Cooperative Health Insurance Law (11/8/1999) and Article 2 of the Executive Regulation thereunder (2/6/2009), employers are required to obtain insurance coverage for employees and accompanying family members under their sponsorship. Only licensed Saudi insurers can provide this coverage. Further, under a new residency law (passed in July 2014) and the Cooperative Health Insurance Law, no resident permits (iqamas) will be renewed without such compliant health insurance.
• UAE: Per Article 26 of the UAE Federal Law No 6 of 2007, only locally licensed insurers can cover a risk “within” the UAE. No distinction is made between health insurance and travel insurance. Further, employers of expatriate employees working and residing in the emirates of Abu Dhabi and Dubai must provide private health insurance in accordance with the Abu Dhabi Health Insurance Law No. 23 of 2005 and the Dubai Health Insurance Law No. 11 of 2013, respectively.
• Australia: Australia has mandatory private health insurance requirements that apply to expatriates (as part of the visa application process), based largely on the individual’s citizenship and tax status. Expatriates applying for a 457 visa to live and work in Australia must prove that they have made adequate health insurance arrangements for themselves as well as for any accompanying family members they are bringing to Australia. Such coverage must be maintained for the entire duration of the expatriate’s stay in Australia and be provided in accordance with the requirements set forth by the Department of Immigration and Border Protection. Further, only locally registered private health insurers may provide health insurance coverage for “Medicare Eligible Persons” (i.e., Australian citizens, permanent residents and certain inbound visitors from countries with reciprocal healthcare arrangements). The 457 visa is most commonly used by Australian or foreign employers to sponsor skilled foreign workers to work in Australia temporarily (typically between three months and four years).
• Germany: As part of the entry and resident permit process, expatriates must provide proof of coverage via insurance certificates, produced by their insurers, evidencing that their coverage is provided in accordance with the German Statutory Health Insurance Scheme under German Social Code 5 (Sozialgesetzbuch 5 “SGB 5”). Under German law, the expatriates’ length of stay technically dictates whether locally licensed insurance coverage (i.e., from a German licensed insurer) is required. For stays over six months, only German licensed insurers are statutorily permitted to provide the requisite certificates. Enforcement by immigration officials has not been consistent.
• Netherlands: Pursuant to Section 2 sub 1 of the Dutch Act on Healthcare (Zorgverzekeringswet) and Section 5 sub 1(b) of the Dutch General Act on Special Health Costs (Algemene Wet Bijzondere Ziektekosten), a U.S. citizen living and/or working in the Netherlands must have medical insurance provided by an EU Member State insurance company authorized to conduct non-life insurance business in the Netherlands. However, subject to certain confirmations, a U.S. health insurer may (continue to) provide medical insurance to U.S. citizens that temporarily work in the Netherlands if they work for a U.S. company. If expatriates become subject to wage taxation in the Netherlands, they may become obligated to take out local Dutch health insurance.
• India: Under Indian law, there is a long list of factors which qualify a person as being a resident in India (e.g., living in India for more than 183 days). Residents of India (i.e., local nationals or localized (local payroll) employers) may only be covered by local Indian insurers registered with the Insurance Regulatory and Development Authority (Section 3 of Insurance Act, 1938 and Insurance Regulatory and Development Authority Act, 1999). No distinctions are made between health insurance and travel insurance.

We’ll continue to delve into this subject in our next column, which examines questions about duty of care responsibilities when it comes to employees traveling on business or expatriated on assignments.
Brian P. Iaia, Esq., is General Counsel with UnitedHealthcare International