Employee Benefits Abroad: What Companies Actually Need to Know

International employee benefits can be complicated enough when you’re simply trying to determine what benefits are legally required in the country you’re employing in. But in addition to statutory requirements, companies forming a global benefits strategy need to understand how to conduct employee benefits benchmarking, how to choose a benefits broker, and how to determine what constitutes “good” employee benefits by country. In this article, we’ll cover all of that and more, including what can happen when you select the wrong benefits broker, how to vet a broker before you sign with them, and when you may need a broker of record letter.

Companies often assume that when a country has a strong public healthcare system, they don’t need to offer supplemental benefits. Then they find out otherwise when they chat with candidates. How do you determine what's legally required versus what you actually need to offer to hire competitively?

In most countries across the world, it’s a comfortable assumption that the legally obligated benefits are a starting point, to build upon with supplemental enhancements or other benefits. Generally, medical/health insurance, life insurance, and pensions are standard competitive offerings as well as wellness and mental health support being a global trend.

How does a company know what “good” looks like in a market they've never hired in? Where does reliable benchmarking data come from?

If a company does not have access to local brokers, insurers, or other partners, establishing what looks good in a market can be extremely time-consuming. Benchmarking benefits should look at three key elements: What’s legally required, what’s commonly offered, and what would be considered a competitive offering. Reliable benchmarking comes from looking at the country benefits globally and what most companies in the country and your industry are offering. A global benchmarking system allows you to obtain country benchmarking data on a live basis, so it’s always accurate and up to date, as well as proactively prepare for any upcoming legislative changes which may impact benefits.

How do companies find and choose a local employee benefits broker, and what goes wrong when they pick badly?

Companies often choose their local broker through referrals or existing relationships, which sometimes works out well. However, without having first-hand experience with that broker to see how they service accounts, handle urgent matters, and understand compliant country benefits, companies sometimes find that their needs and what the broker can provide do not always coincide.

Poor brokerage, at the worst, can lead to disrupted, suspended, or cancelled benefits. The most common scenario we see is that the employee service is not appropriately provided, which results in employees’ claims not being processed in sufficient time or even their healthcare being delayed.

What should a company do if it needs to switch benefits brokers?

The good news is that moving to the right broker is always an option. Typically, the company needs to provide notice to the broker they want to leave and sign a broker of record letter (BORL) to move to a new broker. The handover should be seamless, and once the letter is completed, the new broker will be able to obtain the company’s policy information and have discussions and ongoing management actions with the insurer(s).

What can and can't be done with only one or two employees in a market, before you're large enough for a group plan?

This will vary by country, but typically, with one or two employees, individual policies can be offered. In this situation, the policy may be in the individual’s name, it may require medical underwriting from the employees, and premiums tend to be less favorable. If a company has any existing global policies or would like to consider a global policy, this can also be a solution to filling any gaps in benefits for those countries with fewer headcounts.

Setting up benefits in a new country takes longer than people expect. What actually eats that time, and what can run in parallel?

A common misconception is that initiating the benefit conversation and implementing benefits are not as important as other company set-up areas, however it should be just as important — giving the benefits team the time to get the offering right, first time.

Most commonly, the delays are caused by the time required for gathering the required information, obtaining documentation, and decision-making on the quotations from various insurers. Collecting company and employee data for the quotations as well as the post-quotation documentation (such as banking information and application forms) also take considerable time to get accurate.

Strategy, budget planning, and benchmarking can start alongside implementation, but they need to be settled before the policy design is finalized. Payroll setup can also happen in parallel with implementing benefits, however, a key consideration is that, in some countries, payroll is blocked from going live until benefits have been put in place. So, making key decisions in line with the timeline is critical.

What does a renewal cycle look like when nobody in the business owns local benefits? And what changes when you've got a partner with market scale behind you at the negotiating table?

Without clear structure or ownership, renewals as well as ongoing activities become reactive rather than proactive, which tends to lead to last-minute decisions that can negatively impact the benefit offering and/or the cost. Renewal conversations and actions should begin up to three months prior to the renewal date and should include reviewing the market for those benefits and claims utilization, evaluating any benchmarking or changes, and negotiating the premiums as appropriate.

What’s the most common oversight that companies make when implementing benefits while expanding globally?

Companies often look at the countries in silos, and while that works from a legislative and legal obligation perspective, it does not take into consideration what they want their entire global benefit strategy or philosophy to look like or become. Companies should take time to consider what they want to achieve in their benefit offering globally and design benefits that align with their values and resonate with employees.

How can Safeguard Global help companies manage benefits in new markets?

Safeguard Global’s HR & Benefits solution gives companies access to local benefits expertise in the countries where they employ their own people. We benchmark what is required, commonly offered, and competitive in each market. After launch, we manage the renewal cycle, reviewing claims utilization and negotiating premiums ahead of each renewal date. Because we work across many markets, companies can build one global benefits strategy instead of a set of separate country decisions, without replacing the HR systems they already use.