Insurance law hikes contractors' costs
Abu Dhabi firms pay up to US $2,178 in health cover for workers' families as regulation takes effect.
Contractors in Abu Dhabi are facing extra cost burdens now that they have to cover health treatment for their employees and their families.
The second phase of the emirate's new health insurance law, which applies to companies with less than 1,000 employees and their dependents, took full effect on 1 January.
The mandatory regulation is a government-backed initiative to ensure that low-paid workers and their families do not have to foot the bill for their own medical treatment.
But on top of an extra US $136 (AED500) yearly premium that companies have to pay for each worker, they are also paying up to $2,178 to cover the medical costs of spouses and children.
The family coverage forms part of the second category of the Abu Dhabi health insurance plan, which applies to employees earning more than $1,089 a month.
"This part of the plan is having a severe financial impact on companies," said Jack Matar, managing director, Toledo Construction.
"We are now obliged to insure the employee, his wife and up to three children. The problem is, we didn't know before the law was implemented exactly how many of our employees had families here - as they were employed on a ÃƒÂ¢Ã¢â€šÂ¬Ã‹Å“bachelor' status.
"This isn't something that we included in our estimates, so we have ended up paying out a big chunk of money for families that we didn't know about, and we were not given enough time to look into this before the law took effect."
Matar added that companies are now obliged to pay maternity costs for wives, which works out at around $953, as well as about $408 to cover health treatment for each child.
Another problem with the scheme, which falls under category one and applies to employees earning less than $1,089 month, is that insurance coverage is not applicable for those employed by an Abu Dhabi company but working on projects elsewhere in the UAE.
"If an Abu Dhabi company has a project in Dubai or Sharjah, for example, and a worker falls sick, he cannot go and see a doctor there, he has to come back to Abu Dhabi," said Matar.
"The only time he can seek treatment elsewhere is when it's an emergency."
While the new scheme has incurred extra costs for contractors, Matar said that it is extremely worthwhile and will provide more incentive for workers.
"We're finding that our employees are feeling much more secure now that they have sufficient health care, and in the future, we can use it as an incentive to attract more workers."
National insurance firm, Daman, was set up last year to provide government-subsidised cover. Companies can also take out insurance with 14 other authorised private insurance firms.