Saudi Arabia: Employers must use a single policy to provide health insurance
Posted on Mon, 12 Jun 2017
EMPLOYER ACTION CODE: ACT
The Council of Cooperative Health Insurance (CCHI) has issued new regulations that require all private sector employers to register their employees and their dependents under a single policy for mandatory health insurance. Every sponsor is identified by a unique employer ID number. Under the new rules, all employees granted work visas under their employer’s ID number must be covered under the medical insurance policy linked to that ID. The regulations are intended to address any gaps between the number of sponsored persons and number of insured persons and eventually reduce the burden on public health care. (Under the Cooperative Health Insurance Act, employers are required to provide both Saudi and foreign employees and their dependents with health insurance.) Companies with different subsidiaries, each with their own employer IDs, could still have different insurers under the new rules.
Employers currently providing health insurance under multiple policies, either with the same or multiple providers, will need to consolidate their coverage under a single health insurance policy with one local provider. Phase-in depends on the number of employees:
100 or more employees — July 1, 2016
50 to 99 employees — October 10, 2016
25 to 49 employees — January 10, 2017
1 to 24 employees — April 10, 2017
The Ministry of Labor and Social Development and CCHI have formed an inspection committee to ensure employer compliance. Employers that breach the new regulations will face penalties that include a temporary or permanent recruiting ban.
Furthermore, new CCHI regulations make it mandatory for anyone wishing to obtain a short-term visitor or business visa to purchase travel health insurance from a Saudi insurance provider exclusively through an online portal. The online visa application system offers applicants a choice of plans that provide coverage up to a maximum of SAR 100,000. The cost of the insurance depends on the length of stay and is integrated with the cost of the visa application.
Private sector employers that operate in Saudi Arabia should review their health insurance arrangements to ensure a smooth administrative transition and to avoid penalties that could impact their talent recruiting efforts.