Giving new life to portable insurance

Legacy acts like a boulder that impedes proposed changes to employer-paid medical benefits, and lethargy is the other stumbling block. Caught between that rock and a hard place are workers who lose precious medical insurance when they resign, are retrenched or retire. Though fully covered by a group health plan while employed, they are in reality swimming naked, as it becomes evident when the tide runs out.

It was precisely to help such workers that the concept of portable medical benefits was born.

But despite over 15 years of debate, regrettably, most employers have not revised their existing schemes and employees have been content with the status quo. Low levels of awareness, costs, lack of monetary incentives for change and implementation issues are cited for the weak take-up of portable health plans.

The labour movement is now making a renewed effort to coax more firms to make the switch to portable benefits. The argument advanced is sound.

Shorter business cycles and the prospect of frequent job changes call for a fresh approach to employer-based health plans so workers can retain adequate cover in between jobs and when they retire later.

The game changer now is the new national insurance scheme which will offer all Singaporeans better protection against large medical bills, for life. As MediShield Life is set to significantly reshape the nation's health-care financing framework, the logic of dovetailing variegated employer-paid insurance plans with it is clear, especially if there is consensus that premium duplication ought to be avoided.

The National Trades Union Congress sees merit in putting the money earmarked by firms for group insurance in the hands of workers instead.

In the form of additional contributions to their Medisave account, it can pay for MediShield Life premiums, and cash offered can go towards private Integrated Shield plans offering more coverage and higher ward classes.

However, critics say portability is "fraught with practical problems" and will make some worse off, for example, when outpatient benefits are dropped because these may be only available as add-ons to hospitalisation plans.

To help win over detractors, the NTUC has proposed doubling tax deduction from the current 2 to 4 per cent for firms adopting a portable model. While it is natural for employers to weigh overall costs and monetary incentives in making a decision, they should also take a longer view of their workers' welfare as a social obligation.

Benefits to address workers' immediate needs are important, of course. So is the resilience of health-care provisions for individuals. The latter is simply too crucial to be assigned an expiry date.