Businesses in Singapore remain supportive of the push to keep employees on beyond 65 years of age, amid the country's ongoing labour crunch.

To manage the expected higher medical costs of rehiring older workers, they are exploring ways to tap medical insurance, company bosses told The Straits Times.

Mr Jeremy Fong, managing director of Fong's Engineering, which makes medical devices, noted the higher costs associated with older staff, who may fall sick more easily.

"The overall costs would increase and no employer is happy about that because it comes back to competitiveness for the company," he said.

One option is to negotiate the overall pay package of the older worker and lower his salary slightly to offset the cost of the medical insurance coverage, he said.

Fong's Engineering has a staff of 130, with one employee aged above 65.

One company that has been able to tap medical insurance for its workers, including older ones, is restaurant chain Han's.

About 15 per cent of the firm's 460 employees are over 65 and they are covered by medical insurance.

Han's general manager Gan Yee Chin said the company's annual medical insurance costs have risen considerably from about $30,000 a decade ago to some $250,000 now.

The jump was caused by a host of factors, including having more and older workers as the company expanded.

Another factor was higher premiums per worker, he said.

Instead of focusing on the overall quantum of the medical insurance cost alone, Mr Gan said Han's keeps the insurance cost as a proportion of turnover at below 1 per cent. This helps the management to keep an eye on the workers' contribution to the business' top line, not just their costs.


"We can see the benefits and value-add that the older workers bring. Many of the older workers are quite healthy, so the claims in their medical history are not so high," added Mr Gan.

However, some existing workplace medical insurance arrangements do not cover older workers.

Surface finishing firm Cel Coating Industries, which employs 85 people, buys medical insurance for its staff, said director Pauline Shu. But one issue the firm is facing is that the current group insurance policy does not cover its two workers above 65.

"They have no coverage, so when they go see the doctors, or are hospitalised, the company covers the medical costs," Ms Shu said.

"It adds on to the costs, but not all costs are measured in dollars and cents because they are part of the family and they have given much to the company."

The Government has led a push to encourage firms to voluntarily rehire workers past the age of 65 before legislation kicks in to raise the re-employment age to 67.

Giving firms help to foot the medical costs of older workers, such as subsidies for insurance premiums, has been mooted by bosses as a possibility to incentivise more firms to rehire older workers.

A worker above 65, however, will enter into a new insurance coverage age band that typically places them in the 66 to 70 years old grouping, entailing a hike in insurance premiums.

Insurers say group insurance policies, unlike individual policies, can smooth out the spike in premiums for older workers.

Tokio Marine Life Insurance Singapore chief executive Lance Tay said: "Unlike the premiums paid by individuals, which can vary greatly based on the age profile, the insurance premiums to be paid for an older worker would not have a large impact on companies because the age profile of a company's workforce tends to change very gradually from year to year."

He added that firms can consider cost-saving features such as co-payments by workers in the group insurance programmes.

Some group policies could also cover workers up to 70 or beyond. Premiums for such policies would also take into account other factors like claims history, not just age.

Ms Susan Ong, senior manager for the group and health division at NTUC Income, said: "While a group that has a larger group of older policyholders is more likely to make more claims and, as a result, worsen the claims experience, age is in itself not a key determining factor of group insurance premiums."