Covid-19 and Employee Benefits Abroad - Are You Prepared?
Global employee benefits are in the thick of the COVID-19 battle, and the HR function is on the frontline. HR leadership should be prepared to quantify global exposure, gaps in coverage, policy inadequacies and human risk by country and to identify options for mitigating these risks.
Employees outside the US are not only facing the COVID-19 health hazards, but also financial strain from high medical expenses, loss of income and potential mental health issues. Employer benefit programs designed under “business as usual” conditions to cover employees and their families in the event of illness, disability, unemployment or death may prove inadequate during this pandemic.
HR and employee benefit professionals in the USA are already consumed in their efforts to address the colossal magnitude of the human and economic impact of the Covid-19 crisis on the US population. To make matters worse, the virus has already affected 175 countries and hence its effects will be on a truly global scale. The impact on each country is hard to predict as the severity of the pandemic during the early stages varies by location as can be seen in the chart below which shows the speed of transmission of the virus in a selected group of countries.
Data Sources: WHO, Johns Hopkins University
The financial and reputational risks to companies, and employee concerns will come from many angles:
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Government social protection and healthcare programs are already reaching a saturation point in a number of countries and healthcare access and treatment quality may be inadequate. Employer healthcare plans which rely on parallel private sector healthcare facilities may be the best or the only course of action for a multinational’s employees and their families at these locations
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Social distancing, quarantine, isolation, work-from home measures, home-schooling, travel and broader mobility restrictions, and other government mandated actions will significantly affect employee productivity, disrupt family dynamics, add stress and increase mental health risks
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Employer benefit plans, their carriers and healthcare providers are also experiencing significant strain. Under these conditions, pandemic-related exclusions, limitations and other conditions in insurance policy contracts may become enforceable and adversely impact employer and employee financial protections
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The robustness of a company’s leave programs will be tested by an influx of employees: healthy employees where working remotely is not feasible, employees (or their families) who prove positive for the virus and are prevented from working, and employees who are experiencing severe symptoms from the virus and cannot work
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Significant medical expenses and extended loss of income from job elimination, layoffs, reduced working hours and lower variable compensation levels are exerting financial and mental stress on affected employees and their families
Yet, there are opportunities as governments around the world are announcing extraordinary measures to provide short term relief to both businesses and individuals such as special government enhancements to unemployment benefits and to other social programs, and temporary concessions to employers that minimize job losses.
Also, multinational employers may have resources around the world within their control such as:
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In-house clinics, physicians or similar facilities that can be offered to the employees’ extended family members
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Medical plans that can be temporarily extended to furloughed employees
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Long term savings programs that may be tapped for emergency loans to employees
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Global EAP programs that can be extended to overseas locations
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Leave programs that can be tweaked to extend coverage to laid-off workers or those on extended illness due to the virus
The combination of government and employer resources presents significant opportunities that may be factored in by employers in supporting their workers’ needs.
Company leadership will look to HR to quickly summarize and quantify global exposure, gaps in coverage, policy inadequacies and to develop risk mitigation plans across all locations.
Teams will need to collect, compile and analyze critical data from multiple countries and multiple sources to fully understand the issues of concern at each location and to formulate effective mitigating initiatives to present a fully-integrated picture of all the relevant benefit programs - healthcare, retirement, life and disability insurance, unemployment and PTO around the world – a draconian task especially as the HR function is overstretched dealing with the US problem.
About Alta Actuaries & Consultants
Alta is an independent, lean and agile organization that focuses exclusively on global benefits consulting. Alta has experienced actuaries with skills and resources to gather, analyze and integrate global benefits information and to provide optimal solutions for our clients in an unbiased, timely and cost-effective manner.
Alta stands ready to partner with you, leveraging your existing resources, to successfully manage this crisis. For more information contact us at:
Wil Gaitan: wil.gaitan@altaactuaries.com Direct Line: +1-312-961-4375
Miguel Santos: miguel.santos@altaactuaries.com Direct Line: +1-312-315-8591
Douglas Carey: douglas.carey@altaactuaries.com Direct Line: +1-203-434-0434