What’s my health worth?
Gen Y employees are increasingly wanting to choose their own medical insurance terms. But do they really know what is best for them? Sabrina Zolkifi reports on what HR can do to prescribe the right insurance schemes for a new generation.
Issue Date - 01/07/2012
Unfortunately, one of the company’s employees who had decided not to top-up the difference in coverage, had a tragic accident and died. The drastic drop in basic coverage became a problem for the employee’s family, highlighting the importance of choosing a package wisely.
“Where is that coverage now going to come from?” Tan asks.
“My advice to HR leaders thinking of moving to a flexible benefits plan is not to rush.
“Observe others, speak to your peers and understand and anticipate problems that may crop up.
“Conventional programmes may be old fashioned, but they are still the safest. When it comes to insurance, you do not want to take any chances.”
When facing healthcare and insurance issues, companies have to strike a balance between protecting their bottom-line and the employees’ welfare, while providing a competitive and attractive plan to their talent pool.
Ricardo Alarcon, head of rewards for APAC and GTME for Diageo, says one way companies can manage cost is minimising risks.
Aside from providing an insurance package, HR also needs to look into incorporating a healthy lifestyle for employees.
“Establish a framework that depicts in detail the purpose behind the different benefits, what we want to achieve in terms of employee perception and competitiveness – all aligned to our EVP – while allowing local markets enough room to tackle specific needs within parameters,” Alarcon says.
Goldberg agrees, adding healthcare management services are important to identify risks within the employee population and take appropriate steps to enhance wellness and prevent illness.
“Helping employees to understand how they can improve their own health and effectively access the healthcare system benefits both the employees and the employer in reduced costs and improved satisfaction,” he says.
However, Alarcon admits Diageo does not currently offer flexible practices for staff.
“My personal belief is this adds little value compared to other types of segmentation. Benefits differentiation by demographics is not our main approach because it hardly becomes an important attraction or retention lever.
“It does not mean we would not consider providing choices in the future, more as a communication and cost-control initiative.”
At the end of the day, companies will need to focus efforts of balancing the needs of the organisation with the expectations of employees.
“Cost reduction is always in the mind for most companies. However for us, cost-cutting should not be at the expense of staff benefits or the bottom-line,” AirAsia’s Yeoh says.
“At the same time, having an insurance policy will also reduce the company’s risk in the event any major claim should happen.”
Insuring the future
Looking forward, the focus when it comes to insurance may not only be on Gen Ys, but also on older employees.
With the Reemployment Act in place in Singapore, businesses can expect mature-aged workers to stay in the workforce longer.
“The concern is that older staff expect to enjoy the same benefits after rehiring. I would not say it is unrealistic, but companies may consider it a burden because medical costs do go up with older employees,” Tan said.
As it is, companies are already battling rising medical costs.
“In many markets, they are experiencing double-digit increases in healthcare each year,” Goldberg says.
“There is little indication that the trend of rising healthcare costs will end anytime soon. Finding the right mix of health insurance benefits and healthcare management services to control those costs will be an ongoing challenge for all companies.”