February 01, 2018
A common practice among U.S.-based multinational corporations has been to use country-specific market norms when developing benefits packages. Some use the market median, others (in tight labor markets for example) may target above the median. Gaps in coverage have often been viewed as difficult to change and actually normative in light of the need to compete locally. Recently however, more companies are seeking to operate as truly global enterprises. As a result, some have been reconsidering a locally driven, market approach to benefits. Other factors, such as the demand for greater consistency and equity across the workforce, are also at play. The concept of minimum core standards arises when gaps appear in what many consider basic benefits (e.g., life insurance, medical coverage, vision, dental, etc.) Health and medical benefits are of particular interest as gaps in coverage can have life or death consequences for employees. For this reason, this guide has been developed primarily with an eye to medical coverage although many of the elements included are applicable to other types of benefits as well.
Business Case and Rationale
Here are seven business reasons why large employers consider implementing global minimum core benefits:
- Global enterprise. Multinational corporations, especially Business Group on Health members, increasingly seek to operate as global entities. As such, they see the need for some degree of consistency in key benefits offered. Taking a global point of view calls into question the common practice of the past where local market norms guide decision-making.
- Global mobility. The need to move employees around the world is increasing and their willingness or ability to relocate depends on the adequacy of benefits, especially medical coverage.
- Equity across employees. In truly global corporations, employees may routinely work on cross- national teams. Despite the distance, technology makes it easy to “talk over the water cooler” and compare notes about differences in company sponsored benefits. This may especially be the case when an employee or family member has a critical medical condition.
- Protection against catastrophic financial loss. Gaps in or lack of benefits such as life insurance or critical illness coverage can leave an employee’s family in financial ruin which some enterprises consider unacceptable.
- Alignment with company mission, values and CSR priorities. If a company is committed to ‘being a great place to work’ supporting highly productive employees, do the benefits offered support this aspiration? From the CSR point of view, if a corporation has an active HIV/AIDS agenda for those in the community but doesn’t offer its own employees medical coverage for HIV/AIDS because it’s ‘carved out’ of the health plan in many countries, what does that disconnect say?
- Align with company’s health and well-being strategy. Do the benefits that are available to employees (through government programs or employer supplemental plans) square with the company’s commitment to a culture of health and employee well-being objectives? Is commitment to a culture of health really possible if the benefits provided are replete with exclusions or grossly inadequate coverage?
- Right thing to do. Whether viewed as an equity issue or a business imperative to attract, retain and move talent, does some core minimum coverage simply make good sense?
Considerations for Approaching Minimum Core Benefits Globally
Implementing minimum core benefits is an iterative process that will evolve as markets change. It takes time to get crucial buy-in from local and regional colleagues as well as from the vendors that need to create products that fill gaps or new offerings entirely. Every Global Institute member company that has started this effort has offered valuable insights and know-how as captured here:
Develop guiding principles
Creating a minimum core benefits package can become overwhelming. Guiding principles give all stakeholders a better understanding of a company’s strategy for this issue. Elements to consider include:
- Aligning with global benefits and business strategy.
- Supplementing benefits provided by social systems, not replacing them.
- Sustainable benefits.
- Aligning with diversity and inclusion efforts.
Acquire Stakeholder Buy-In
One crucial component of this process is to engage all stakeholders at appropriate times around global core minimum benefits. Discussing benefit needs with local and regional colleagues will get their buy-in early in the process. Once an employer determines the minimum core benefit, communicating that to the relevant stakeholders is key as well as sharing recommendations with the leaders of affected markets. Having C-suite buy-in can be critical for getting buy-in at the local level.
On the vendor side, this should be a conversation before the renewal process occurs to get buy-in and answer questions. If you have access to actuaries, you may want to have them help the insurer build the model for the benefit to prevent ballooning costs. Leverage bundling multiple countries together (with separate country- specific plans) when completing an RFP with a regional vendor to ensure smaller markets gain access to the benefit. Multinational pooling arrangements and captives are also very useful tools in getting gaps addressed.
External organizations can be helpful to drive change that can fill gaps in coverage. For example, Stanford University’s Asian Liver Center has a number of resources for employers to use when educating employees about preventing and treating Hepatitis B as well as reducing stigma of the disease.
Factor in Funding and Cost
Typically, for many companies, benefits are funded locally. To jump-start an endeavor like minimum core, one company provides corporate seed money for the first two years after a new preventive service benefit is implemented. This covers the cost for the initial high use of the benefit, but after the second year, the costs lower to a maintenance level (i.e. benefit given to new employees or as a beneficiary hits the recommended age for the particular preventive service). At this point, the local staff is expected to fund the benefit. Keep in mind that insurers may overprice new products due to the lack of actuarial knowledge needed. Also, some business lines might not have the margins to cover the additional costs. The company may have to figure out creative ways to cover those business lines.
Assess benefit needs and gaps
Understand what the company currently offers around the world and where there are gaps or inadequacies. This can be done by reviewing data available in benefits inventory databases/governance-related tracking tools or performing a needs assessment if necessary. The challenge with benefits inventory databases/governance-related tracking tools is that the data can be missing, out of date or too much detail to easily analyze. If focusing on health care, a company can use the Institute on Health Metrics and Evaluation’s Global Burden of Disease tool to determine the greatest health needs at global, regional and local levels. Most companies have conversations with local and regional HR/benefits staff to understand pain points and employee concerns. This allows for better local buy-in to the project and tends to be more efficient than trying to make sense of the benefits inventory database reports.
Here are additional considerations when using international health data:
- Is it targeted at the most common causes of disability/absence or at the most common causes of death and disability? How do the two lists differ?
- Are the most common conditions identified at country, regional or global level? Are global statistics too aggregated to be useful at a country or even regional level?
Prioritize gaps and markets
After compiling the gaps in benefits or coverage, an employer can find the results overwhelming. Given limited resources, a company cannot address every gap in every country at once. Here is how other large employers narrow their focus at a gap and country level:
Prioritize areas of focus. Given that this is an iterative process, the company can tackle gaps in phases. When trying to determine where to start, the selection process should consider:
- how many employees are impacted by the gap,
- gap severity (i.e., does the benefit not exist or have severe limitations),
- how gaps align with other benefit initiatives (e.g., company rolling out a voluntary Hepatitis B screening and counseling effort might want to make sure Hepatitis B vaccination and treatment options are covered under the medical plan),
- how gaps align with what the company considers a core benefit, and
- how gaps align with the larger organizational goals.
Most employers start with 3 to 6 areas of focus. See Employer Examples. Once these areas are addressed, a company can tackle the next set of challenges.
Prioritize markets of focus. Given limited resources and complexity of local markets, a company needs to determine on what countries to focus initial efforts. Here are the factors most companies consider:
- Countries with the highest need. If a company can succeed where demand is high (i.e. gaps are big and/or numerous), that success can demonstrate feasibility in less challenging markets. Keep in mind that launching minimum core benefits can be incredibly difficult if you don’t have a sizable population or if the benefits market isn’t mature.
- Growth markets. Focusing here allows the minimum core benefits initiative to synergize with the company’s business initiatives and can help from a talent acquisition viewpoint. Successes in these markets might not translate as well to more mature or smaller markets due to higher costs without the business alignment.
- Countries with largest headcount. This allows the company to utilize its employee populations to influence insurers and partners to create new products that will fill gaps. Successful results in these markets will have minimal impact on smaller markets unless the company bundles multiple countries to a regional vendor (each market having country-specific plans) or uses a captive or multinational pooling arrangement.
- One country to serve as an incubator. For some companies, they use one country as a pilot for innovative benefits and programs. The country is selected based on having access to data (e.g., U.S.) that can be extrapolated to other markets. The challenge with this model is that can come across as country-centric unless a company addresses local cultural concerns and needs. Failure to do so could result in a lack of local employee buy-in into initiatives.
Develop a dashboard tool
Once the countries and benefits are selected, create a chart or Excel file that lists out at a country level the current benefits the company offers, regulatory and compliance considerations, and current challenges. Make sure to include details regarding definitions, eligibility, coverage level, dependent coverage, portability, exclusions, limits (e.g., dollar, visit, etc.), and waiting periods. This will allow an employer to track challenges in one location versus multiple documents or databases.
Determine what the minimum core will include
This will require looking at the dashboard tool to determine what the company considers a basic level of coverage. For example, several companies use two times the annual salary as a floor for life insurance benefit level. To determine the minimum core of a particular benefit, here are questions to consider:
- Why does the company offer the benefit?
- What does the company consider the global definitions for the benefit?
- What does ideal floor of benefit coverage look like?
- What is equitable for employees?
- Who should be eligible for the benefit (i.e., employees, dependents)?
- What are acceptable limits and restrictions?
- Should the benefit include cost-sharing components?
- What are the cost implications and does a business line have the margins to cover the benefit increase?
- Are there diversity and inclusion implications to consider?
For health care specifically, here are additional questions to consider regarding adequacy of coverage:
- What does evidence-based medicine recommend for coverage so as to prevent or reduce disability?
- What access do employees have to the recommended services?
- Is that access acceptable to meet the cultural needs and standards of the community (e.g., addresses issues of stigma and discrimination in the cases of HIV and Hepatitis B)?
- Is the service affordable to employees?
- Is the service of sufficient quality for employees?
Develop recommendations for each market
Once the minimum core is set, figure out a roadmap whereby each country can offer the core. Getting input from local and regional colleagues can help bolster the efforts and ensure it meets local needs. Questions to consider are:
- What vendors are needed to address the issues? Brokers? Insurers? Multinational pooling partners? Captive? If you have access to actuaries, they may be needed to help vendors properly model the cost of these benefits. Otherwise, the vendor may come back to you with an unreasonable cost increase to cover identified gaps.
- If needed, are there specialty vendors or non-governmental organizations that can help fill gaps? Such partners can help with educational efforts that tie into the larger community’s activities around an issue.
- How will the benefit be funded? At a local, regional or corporate level? This will require getting stakeholder buy-in. How will it impact a business line’s margins?
- What stakeholders need to be engaged to make the changes successful? Beyond who pays the bill, what other parts of the organization (e.g., line managers, procurement, etc.) or external partners (e.g., local insurers) should be involved in addressing gaps?
Collect data on why implementation succeeded or failed
After the renewal process is complete, make sure to note what worked and what didn’t. If a vendor won’t cover the gap, require documentation on why they won’t or cannot do so. Compile this information in your dashboard. Review lessons learned and consider whether to continue to apply pressure during the next renewal cycle or develop an alternative approach. Use this information as you bring additional countries and benefits under the minimum core umbrella.
Communicate new benefit to affected employees.
When rolling out the new benefit or benefits, explain to employees the reasoning for it. That it is part of the company’s approach to be one organization across the world in these key areas. Employers can also provide education to remove any issues of stigma and discrimination about particular diseases or conditions. This will improve employee engagement in the new benefit and hopefully bolster employee satisfaction.
With so many issues to address around the world, the Global Institute lists these priorities that member companies have focused on in developing a minimum core.
- Cancer Navigation
- Critical Illness
- Family Planning
- Financial Education
- Hepatitis B
- Medical Check-up
- Mental Health (beyond EAP)
- Life Insurance
- Pre-Existing Condition Exclusion Removal
- Preventive Services
- Same-Sex Coverage
- Tobacco Cessation
- Transgender Treatment
Global minimum core benefits are an exciting yet challenging concept. Several Business Group members have started this effort with varying levels of success. The main take away is that this approach is a journey, and it will take time and persistence to make meaningful gains. Remember to get buy-in and track progress as those are the two keys to succeeding in the long run.