Health insurance to be mandatory for private sector employees in Oman

Only 9 per cent of nationals and 10 per cent of expatriates currently have private cover

Private sector workers in Oman will benefit from the right to health insurance paid for by their companies from 2018, in a move that will see the cost swing from the government to employers.

The announcement was made recently by Oman’s minister for health, Dr Ahmed bin Mohammed bin Obaid Al-Sa’eedi. However, despite a government plan to begin phased implementation across the private sector from the beginning of next year, no actual law has been issued yet, said Alessandra Zingales, counsel at Curtis, Mallet-Prevost, Colt & Mosle LLP.

“The Labour Law already provides that the employer is responsible for the payment of health-related expenses of the employees, and a number of companies comply with this obligation by way of a group insurance policy covering the staff,” said Zingales.

“The obligation to insure, if and when it will be officially issued, will determine the way in which these commitments are complied with rather than introducing new obligations. An interesting point is that Omanis are supposed to be covered by insurance, albeit they have free or almost free access to government health services.”

Steve Clements, health & benefits leader Middle East at Willis Towers Watson, points out that companies will need to find the funds for the mandated insurance, and this will in turn impact on their overall people costs. He said: “Many companies take a total reward view and will undoubtedly wish to form strategies to mitigate the impact.

“Companies will also need to consider how, in the future, they can differentiate their offering to employees – healthcare is a highly-valued employee benefit and a key part of attraction and retention strategies,” said Clements.

“We expect to see companies looking closely at how they can make the mandated plan deliver improved workforce productivity and how they can use it effectively to optimise their wider employee benefits and rewards.”

According to Willis Towers Watson’s 2017 Global Medical Trends Survey, the medical insurance premium in Oman was around 5 per cent in 2016, with a similar level anticipated in 2017. “This is below the global trend rate of 7.3 per cent in 2016, forecast to rise to 7.8 per cent in 2017,” said Clements. “However, locally it is above the rate of general inflation.”

Mohammed Al Darmaki, head of HR at Daleel Petroleum, agrees that mitigating the additional cost will be key for companies. “It is not clear what the government wants to achieve, as all locals already have access to governmental health institutions for free, although shifting the financial burden of providing health cover to companies will mean that the cost of medical treatment is not solely on the government,” he said. “I expect that the productivity of employees and quality of private sector goods and services will improve as a result.”

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