The clock is ticking.
Actually, it’s worse than that. The clock is about to stop ticking altogether because Dubai businesses have until June 30 to put health insurance in place for their expat employees. Following in the footsteps of Abu Dhabi, which introduced mandatory health insurance for all residents several years ago, Dubai is now nearing the completion of its own three-stage roll-out of health cover.
And let’s be clear, this isn’t just a case of fines being issued for those who do not comply. There is also the potential for employment visas being declined (or not renewed) as well as business licences being revoked.
There are ramifications for employees as well, as medical insurance for their dependents (this includes spouses, children and domestic workers, such as maids, nannies and cooks) resident in the UAE who are not covered by their sponsor’s employer will now be their responsibility. However, the deadline for this category has been extended by six months. So here is a guide to how medical insurance now works in Dubai:
The situation for businesses in Dubai
While Emiratis are covered by a government-sponsored scheme, private health care provisions must now be made for the expat community who make up the majority of Dubai’s employed population. The scheme has been in place for a while: starting in October 2014, the first wave affected larger companies with over 1,000 employees, while the second wave in July 2015 targeted companies that had between 100 and 999 employees. To date, 75 per cent of Dubai-based expats have been accounted for in the plan.
The end of June sweep-up will account for the remaining 25 per cent of Dubai’s expat business community – those working for small to medium enterprises (SMEs) of less than 100 employees.
This third and final wave of the legislation will ensure that all expat employees working in the emirate have access to a minimum level of health care cover as set out by the Dubai Health Authority (DHA). Part of that stipulation means the health care cover must be compliant with the scheme and provided by a local insurer. The good news is that there are 48 health insurance companies permitted by the DHA to market plans, so prices for policies should be competitive.
Minimum level of cover
Here is what the DHA guidelines say about the minimum cover. In short, it must include the following (it’s important to stress that this is just the minimum and if an employer wants to improve the cover they can do so, something encouraged by the DHA):
• An annual limit of Dh150,000 per person on all claims per year
• Pre-existing and chronic conditions – covered in full, subject to a six-month waiting period where the insured has not had any previous medical coverage of this form in the UAE
• In-patient treatment – covered with a 20 per cent excess up to a maximum of Dh500 per encounter and a maximum of Dh1,000 per year
• Outpatient treatment – covered with a 20 per cent excess
• Cost of medicine – capped at Dh1,500 per person
• Maternity services – eight outpatient visits, inpatient treatment covered up to Dh7,000 for normal delivery, and up to Dh10,000 for medically necessary C-section and other complications. All maternity services are covered with a 10 per cent excess
Why employees need to act
One of the key differences with Dubai’s mandatory health care is that companies are not obliged to provide coverage for the dependents of their employees. Instead, cover for resident dependents falls to the employee themselves, and they must comply by July 2016 if their dependent is not fortunate enough to receive cover from their employer. It’s important to stress again, however, that the DHA has just issued a six-month grace period here. The move means that individuals who sponsor dependents and domestic workers will not be fined if they fail to honour the deadline and will still have visas issued.
What’s more, employers are not permitted to pass the cost of providing health care cover on to their employees in any way – be that direct or as a salary deduction. The full cost of the cover for employees must be met entirely by the employer.
So as the clock ticks down to June 30, do Dubai-based businesses have adequate plans in place? And what are the consequences for those who do not?
From fines to visa refusals: risks of ignoring the deadline
The DHA has just recently announced that the June 30 deadline for compliance still stands firmly in place.
As for what those fines will look like, according to Netherlands Business Council Dubai, the financial penalty for non-compliance is Dh500 per employee, per month.
Let’s think about this for a moment: a company with 50 employees, which avoids providing cover for just three months could face a bill of Dh75,000. It’s also worth noting that these fines apply to both companies and individuals – remember that in the absence of an employer providing cover, the responsibility of covering dependents falls to the employee - however, as detailed above, individual sponsors who fail to provide insurance for their dependents and domestic workers are excused from fines until January 2017.
There are also consequences for non-compliance beyond just the financial. The DHA has declared that in extreme cases it reserves the right to call for business licenses to be revoked as well as potentially bringing forth civil and criminal cases. There will also be issues regarding the hiring and retaining of staff, as proof of compliant health coverage with a local insurer will be required for visa applications and renewal processes.
The official line is clear: no visas will be issued or renewed if a qualifying health care product is not provided by the employer. Again dependents are excused from this.
How to protect yourself
So what do those without proper plans in place need to do to become compliant?
First, move quickly as the deadline is close. Second, do some research into the various health insurance companies that can supply you with compliant cover for your expat employees. Third, make sure you work with an insurance broker and take direction from them as to what may be the best health care cover for you. Why is this important? Insurance brokers not only know the market inside and out, but they’re also highly likely to be acutely aware of the current landscape in Dubai. They can ensure you are fully compliant within the given time frame. It alleviates the pressure and gives you peace of mind.
Finally, remember this: even if you find a provider, product and price you are happy with, it may take time to process. In fact, the average length of time for buying insurance is approximately two weeks and you can expect this to be longer during the busy lead-up to the end of June. So act swiftly but strategically. Research the options. Get the best advice. Then be decisive.
Because June 30 just got even closer.
Stephen MacLaren is the regional head of Distribution human capital and benefits at Al Futtaim Willis.
pf@thenational.ae
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