Q&A: Annalinde Nickisch: “The challenge for most employers is the additional cost”

Author: Kirsty Tuxford | Date: 24 Feb 2016

The Thought Factory's HR consultant talks about Dubai’s mandatory medical insurance for employees

Annalinde NickischOrganisations in Dubai must provide medical insurance for their employees. The law was enacted in 2014 and has been implemented gradually with the final stage – stating that organisations with fewer than 100 employees have until the end of June 2016 to comply – nearly complete. Annalinde Nickisch, consultant at The Thought Factory – which specialises in training and support on laws, regulations and policy outlines – spoke to People Management about how organisations are coping with the new legislation.

Are employers finding it challenging to provide medical insurance?
It is not a time-consuming process. The most important aspect is to make sure that the person responsible for the implementation is equipped with the knowledge and tools to successfully enrol all employees.
 
Once the organisation confirms the quote and submits all the required documentation, the provider usually reviews and approves the application within two working days, and will then submit the letter of acceptance (LOA) and payment terms. The health insurance membership cards are issued within five to seven working days on receipt of the completed LOA and premium settlement.
 
Is private insurance more affordable for larger organisations than for SMEs?
The cost is determined by two key factors: workforce size and industry requirements. A perfect example of this is that if there is an organisation with 200 employees but most of them are labourers or low salary band (LSB) workers, compared to an organisation with 50 employees but all of them are architects: the insurance cost of the latter may be greater. This is because of the subsidy provided to LSB workers by the government in the form of the DHA or the HAAD (Abu Dhabi) plan (the minimum level of benefits).
 
The challenge for most employers is the additional cost. Organisations that have high manpower requirements, especially organisations that earn hourly service rates per staff member, such as cleaning companies, outsourcing businesses, maintenance and security firms, are affected the most. Because of the competitive market conditions, it makes it extremely difficult to apply the additional cost when invoicing for services, further reducing already small margins.
 
While employers in Dubai don’t legally have to insure the spouses and dependents of workers, is it good practice to do so?
One of the key differences of Dubai’s health insurance law, compared to Abu Dhabi's, is that employers are not required to provide coverage for the dependents of their employees. I would certainly recommend including the coverage of employee’s family members. However, given that this is more costly, it’s not always viable and depends on the organisation’s bottom line.