Following in the footsteps of Abu Dhabi, KSA and very recently Qatar, Dubai has announced the details of its compulsory health insurance regime. The Dubai Health Authority announced that the “Health Insurance Law for the Emirate of Dubai (No. 11 of 2013)” (the Law) was signed on 24 November 2013, and has now provided initial details of the roll-out of the scheme.
Under the new Law, health insurance will be compulsory for all residents of, and visitors to, the Emirate of Dubai including all the free zones within the Emirate. The obligation to provide health insurance cover for UAE expatriate residents will fall to employers and sponsors. In addition to its general impact on employers, residents and visitors to the Emirate, the Health Insurance Law will have wide ranging implications for the health insurance market (principally insurers, third party administrators (TPAs) and brokers) and healthcare providers.
In this update, we consider the implications of the new regime, which is intended to be rolled out in phases between 2014 and 2016 on employers and on the insurance market in Dubai.
Dubai’s admirable vision for the new regime is, on the one hand, to achieve universal access to quality health care services and, on the other, to develop through its open market approach, a vibrant dynamic health insurance system, by attracting quality market players and investment in the sector. The introduction of compulsory health insurance is also very much in keeping with a trend across the GCC region to reform healthcare financing.
Summary of the Law
The new Law is not yet publically available, although the DHA has promised that it will soon be available through their website. Although the Law was signed on 24 November, it has yet to be published in the Official Gazette; it will not come into effect until after it has been published. Based on information provided by the DHA, the following is a summary of key aspects of the new regime:
- Employers will be responsible for the provision of health insurance for their employees, sponsors for their dependants.
- The government of Dubai will be responsible for UAE nationals resident in Dubai.
- Complying with the health insurance requirements will be a pre-requisite to an individual obtaining a residency or visit visa.
- There will be mandated minimum coverage, in the form of a basic health plan, which will differ for UAE nationals, expats and visitors; it will be permissible to provide enhanced cover over and above the mandated essential package.
- Insurers, TPAs, brokers and healthcare providers will require an annual DHA permit in order to carry on their medical business in Dubai.
- Only DHA “Participating Insurers” will be permitted to provide the mandated minimum health insurance coverage.
- The DHA will publish an approved price list for medical services and healthcare providers will be required to adhere to the approved pricing.
- DHA approval will be required to offer insurance plans and for associated premium charges.
The implementation of the Law will be carried out in phases; the roll out will commence in 2014 and is expected to be complete by the end of 2016 in three phases as set out below:
Click here to view table.
The basic health plan
The DHA has indicated that the scheme will comprise a mandated minimum coverage, in the form of a basic health plan, which will differ for UAE nationals, expats and visitors (the Basic Health Plan). It will also be permissible for insurers to provide enhanced cover over and above the Basic Health Plan. Only “Participating Insurers”, discussed in more detail below, will be permitted to provide the Basic Health Plan.
The DHA has indicated, the health services that will be covered under the Basic Health Plan will include the following:
- In-patient: tests, diagnosis, treatment and surgery; and emergency treatment; and
- Maternity: out-patient ante-natal; in-patient maternity; and new born cover; and
- Out-patient: examination, diagnostics and treatment by general practitioners, specialists and consultants; laboratory testing; radiology diagnostic services; physiotherapy; medicines; vaccines and immunizations; diabetes screening (every 3 years from 30 years or from 18 years for high risk patients); diagnostics and treatment for dental and gum treatment; hearing and visions aids; corrective laser and surgical treatment for vision.
Under the new regime, insurers will not be permitted to deny individuals coverage under the Basic Health Plan due to pre-existing conditions, although treatment for chronic and pre-existing conditions may initially be excluded for the first 6 months of cover. The annual upper aggregate claims limit (excluding any coinsurance and / or deductibles) will be AED 150,000. There will be a coinsurance payable by the insured of between 10% - 20% with specific caps and conditions imposed by the DHA for different classes of benefits. A referral procedure will be implemented requiring the insured to first consult with a GP before consulting with specialists / consultants.
The DHA will expect insurers to set an index rate in respect of premiums charged for the Basic Health Plan. The DHA will expect the index rate to be between AED 500 to AED 700 per month / per year. Premiums will only be allowed to vary by +/ - AED 25 from the index rate. The index rate will need to be approved by the DHA prior to a health plan being launched and sold in the market. It will only be possible for an insurer to apply for adjustments to its approved index rate each November. The DHA has also indicated that there will be additional safeguards in place to protect low income workers (earning less than AED 4,000 / USD 1,100 per month).
Under the new regime, all employers will be required to enroll their employees into, and bear the cost of, the mandatory health insurance scheme. In contrast to the position in Abu Dhabi, employers will not, however, be responsible for an employee’s dependants. Where an employee sponsors dependants, the employee will be required to enroll such dependants in the health insurance scheme.
Notably, employers will not be able to simply provide an allowance and require employees to obtain private cover. The employer must put in place direct cover for all employees. The Law also prohibits employers from deducting the cost of the insurance from the employee’s salary. As mentioned above, employees may be required to pay a “co-insurance” or “deductible” (ie an amount payable by the employee directly to the medical services provider at the time of the visit), as is permitted under the regime in Abu Dhabi.
Employers will be required to submit evidence of health insurance coverage when applying for, or renewing, an employee’s residence visa and will also be responsible for ensuring the validity of the health insurance coverage for their employees throughout the period of their employment. In the event that valid health insurance cover is not in place, the employer will be liable to meet full cost of any healthcare services provided to their employees, including the cost of the emergency services. Financial penalties may also be imposed on employers who do not comply with their obligations under the Law.
Once the new Law is published in the Official Gazette and the precise obligations regarding level of cover becomes clear, employers should review any existing health insurance policies to determine whether the benefits currently provided are sufficient. Employers should also begin to undertake an analysis of the cost to the business of complying with the new regime and the products available in the market, which will ensure they meet their new obligations.
Health insurance market
As noted above, we expect that in the coming months the Law and implementing regulations will shed more light on the new regime and its requirements. However, we are already seeing some insurance market participants reevaluate their business models in order to ensure that they can continue to participate in the Dubai health insurance market.
Reform of health financing systems and the introduction of compulsory health insurance has long been a priority for GCC governments. Regional implementation has assumed different formats. In some cases, for example, in KSA, an open market approach has been adopted, allowing private insurers to participate and compete in the health insurance market. At the other end of the spectrum, as we are seeing in Qatar, the basic health package will be provided by a national health insurance company, thereby closing off the ‘basic cover’ portion of the market from the private sector. Abu Dhabi introduced its compulsory health insurance scheme in 2006, with the launch of a state-owned insurance company which provided the bulk of a subsidised basic benefits package for low-income workers.
Dubai appears to have chosen to follow an open market route and allow private insurers (subject to complying with local requirements) to provide both the essential and enhanced plans. This is good news for the private health insurance sector in Dubai and should allow for plenty of opportunities in the market in the coming years.
Compliance with the compulsory health insurance requirements is intended to be linked to the Emirate’s immigration and trade licensing processes, which will require employers and employees to provide suitable evidence that they have local health insurance in place in order to obtain trade licenses and residency visas. This will have knock on effects for companies with global health insurance plans in place, and how these are arranged and delivered to employees in Dubai.
The new regime will also increase the regulatory burden for insurers issuing health plans for residents of Dubai. This will impact on all who are managing health plans in Dubai. Going forward health plans will need to comply with mandatory requirements for essential cover. In addition, health insurance plans will also need to be approved, not only by the UAE Insurance Authority, but also by the DH.
DHA permits: payers & participating insurers
Ahead of launching the Health Insurance law, the DHA has imposed requirements that all payers (ie insurers, TPAs or brokers) register with and obtain a DHA permit by 1 January 2014, in order to continue to deal with DHA registered healthcare providers. In order to apply for the permit, it will be necessary to ensure that insurers, TPAs and brokers to comply with DHA and UAE Insurance Authority requirements. In the case of TPAs, this requires a UAE presence (not in a free zone) and authorization by the UAE Insurance Authority. What the new permit system means in practice is that it will become increasing difficult, if not impossible, to pay claims to medical providers in Dubai if the payer (insurer, TPA or broker) does not have the required DHA permit. In other words, failure to hold a DHA permit (or to have satisfied the DHA that it is under process) from 1 January 2014 is likely to have an adverse impact on the ability of insurers, TPAs and brokers to service their business in Dubai.
Under the new DHA regime, insurers will need to apply to become what the DHA refer to as a “Participating Insurer”. This will involve insurers completing an application process in order to demonstrate that they comply with specific DHA requirements. Applicants will need to demonstrate their ability to meet certain general and technical requirements including in relation to their capacity; complaints handling procedures; data security; financial reporting; policy wordings / benefits schedules; staffing; training and competence; reinsurance and minimum retention (30%) requirements; complaints ratios; underwriting performance etc. Although all insurers will be permitted to provide health insurance in Dubai, only “Participating Insurers” will be permitted to provide the Basic Health Plans. Insurers are required to submit, an “Expression of Interest” in becoming a Participating Insurer online via the eClaimlink by 31 January 2014.
The key for market participants now is to assess how Dubai’s new health insurance regime will affect them, and the implications for their business, in order to enable them to take action to ensure that they are ready to take hold of the opportunities that Dubai’s new regime will present.