Facing rising healthcare costs and rapidly aging populations, legislatures continue to mandate supplemental retirement and medical programs to ensure the health and financial well-being of their citizens. Here is an update on the global medical trends for 2019:
Global Medical Trends
Costs and Inflation Change Nominally
The 2019 global medical trend rate is expected to remain at or about the same as it was in 2018 (some reports show a slight increase, others a slight decrease), with no expected change to the global inflation rate. The overall global medical trend rate for 2019 is projected to range from 7% to 8%, while general inflation predictions see the rate holding steady between 3.5% and 4%. Expect lower trend rates in 2019 in Europe (approximately 5%), Asia Pacific (8% to 9%), and North America (6.5% to 11%), compared to higher trend rates expected in the Middle East and Africa (12.5% to 14%) and Latin America and the Caribbean (10.5% to 13%).
New Universal Healthcare and VAT
Universal health insurance will be implemented in the first quarter of 2019, following approval of the National Health Insurance Law (Law No 23/2018) by the King of Bahrain in June 2018. All Bahraini citizens, permanent residents, foreign nationals, and visitors will be required to have health insurance. The government will enroll Bahraini citizens, but employers will need to enroll foreign national employees and visitors. Also, effective January 1, 2019, Bahrain approved a Value Added Tax which will be applied to most goods and services. Under the Royal Decree No. 48 law of 2018, non-life insurance premiums are subject to the VAT and life insurance premiums are exempt.
Equal Pay Legislation
On September 5, 2018, France’s government passed the law, “For the Freedom to Choose One’s Professional Future,” to thwart the 9% gender pay gap. All companies must comply with the principle of equal pay and pursue eliminating gender pay gaps; however, only companies with 50 or more employees are subject to disclosure and financial penalties. This affects employee benefits because insurance coverage in France is tied to employees’ salaries, thus producing a gender disparity in both salary and benefits. Companies will have a three-year grace period to plan for and correct any pay gaps before being fined.
Effective Dates: January 2019 for companies with 250 or more employees and January 2020 for employers with at least 50 employees
New Mandatory Retirement Program
On September 1, 2018 the Georgian government approved the Accumulated Pension System (APS), a new mandatory individual retirement account program, with an effective date of January 1, 2019. All employees will be enrolled automatically (with an opt-out for those under age 40) and employers and employees will each contribute 2% of pay up to GEL (the Georgian Currency, Georgian Lari) 60,000 per year. The government will also contribute 2% (from GEL 0 to GEL 24,000, then 1% from GEL 24,000 to GEL 60,000). A centrally managed internal investment council will invest participant’s funds, giving employees a choice of three risk profiles.
Changes to Statutory Paternity Leave
Staring January 18, 2019, statutory paternity leave will increase from the current three days to five days with the passage of the Employment (Amendment) Bill in October 2018. Employers will be required to pay at least 80% of an employee’s daily salary during paternity leave, based on an average of the employee’s 12 months of service prior to the date of leave. Expecting fathers must give their employers three months’ notice prior to taking paternity leave. Paternity leave days may be taken consecutively or individually, from 4 weeks before to 10 weeks after delivery.
Mandatory Retirement Details Finalized
Defined contribution retirement plans are now required and all employees (ages 19 to 55 with at least three months of service) will be auto-enrolled via a phased approach by employer size. Passed in November 2018 and effective January 1, 2019, the law will allow exceptions for companies with existing PPE (Pracownicze Programy Emerytalne) retirement plans and will require companies without existing PPEs to establish a PPK (Pracownicze Plany Kapitalowe) retirement plan. Employers will be required to contribute 1.5% of salary and employees will be required to contribute 2%.
Effective Dates: July 2019 for companies with 250 or more employees; January 2020 for 50 to 250 employees; July 2020 for 20 to 49 employees; January 2021 for employers with less than 20 employees
Social Security for Foreign Nationals
Officially announced in October and effective December 1, 2018, the new law requires that employers enroll foreign national employees and pay on their behalf to Vietnam’s social security system, meaning foreign nationals are now eligible for the same social benefits as Vietnamese citizens. Employers in Vietnam were expected to contribute up to 17.5% of salary per employee (excluding allowances and additional pay) to the social insurance fund as of January 2019, and employees are expected to contribute 8%.
“The information provided in this update should not be construed as legal advice. The content is intended as a general overview of the subject matter. No action should be taken on the basis of any content in this update without seeking appropriate legal advice regarding your particular situation.”
Read previous international benefits updates/compliance alerts from Woodruff Sawyer