Where in the World Is Hylant?
As the world becomes more interconnected and businesses go global, human resources (HR) professionals are tasked with managing employees and benefits around the world. It is challenging because every country has its own regulations and practices.
The “Where in the World” blog post series introduces some of the cultural and benefits-related differences HR professionals and others should be aware of when employees work in or travel to countries outside the United States. We first looked at the United Kingdom. Now, we turn our attention to Brazil.
Brazilians are very friendly people and do whatever is necessary to make others feel comfortable. However, their tardiness often frustrates newcomers. When in Brazil, do not become angry when people arrive late. It is normal, and it is not considered impolite.
When planning social events, Brazilians expect their guests to arrive up to an hour or so late (you should never arrive on time). They “forgive” the lack of punctuality from friends in the name of friendship, a sign that this is valued above everything. People are more punctual in Brazil when it involves a business setting, but tardiness is still not uncommon.
Some historians and anthropologists believe that this behavior has its roots in the colonial past, when it was not uncommon for people in power to leave those less fortunate waiting before talking to them. This behavior imbedded itself in the culture and is now common practice in everyday situations.
The Brazilian social security system (INSS) has undergone several conceptual and structural changes over time involving coverage levels, benefit availability and system financing. Currently, the Brazilian government is actively discussing and negotiating substantial changes to INSS.
When it comes to employee benefits, one of the things that Brazilians look for most when applying for a job is health and dental insurance. Unfortunately, the public health system, Sistema Único de Saúde (SUS), is inefficient and its services are often inadequate. In general, it provides poor-quality care and has long queues for routine medical consultations and long waiting lists for nonurgent surgeries. As a result, employees seek supplemental insurance to ensure that their loved ones are covered by a good health and dental plan. In fact, 99 percent of employers offer supplemental medical policies.
When a health or dental contract is set up, a utilization limit (i.e., breakeven) is calculated. Most of the time, the breakeven is 70 percent for health contracts and 65 percent for dental contracts. Companies should pay attention to these limits and work to understand and control the utilization of the group, as it will reflect in the readjustment that is applied to the contract every 12 months of its term.
As a rule, there are two types of readjustments: (1) financial and (2) technical. The financial readjustment is the result of the medical inflation that reflects the costs of materials, new procedures and exams to the group covered. This is mandatory for all contracts and is controlled by the National Agency for Supplementary Health Services (ANS).
The technical readjustment is based on the group’s utilization (i.e., claims ratio). This readjustment is applied if the established contractual utilization limit is exceeded. Offering and encouraging employee participation in health and wellness programs is one way to try to control utilization and prevent the technical readjustment from being applied.
How a contract is assessed can also depend on the number of lives presented in it. Most contracts representing fewer than 30 lives are placed under a risk pool, and utilization is based on the whole group. This is a good way to share the utilization and receive low readjustment rates. This method was established by the Normative Resolution No. 309 by the ANS.
One last readjustment is by age group, whereby the premium is calculated according to age. Premiums are readjusted as plan members move from age group band to another in their birthday month.
Brazilian Red Tape
Brazil is one of the most bureaucratic countries in the world. According to The World Bank Group, the country ranks 109th out of 190 in terms of ease of doing business.
Expect red tape when you establish a business in Brazil. Even the country’s citizens feel it when applying for jobs, trying to obtain certain documents, buying a property and so on.
Employers should be prepared for the vast number of documents and signatures required to establish a business, hire employees and contract services. The process likely will seem confusing. It is essential to have a knowledgeable team to assist in the creation of a Brazilian entity or operation.
It is also wise to consider hiring a lawyer and granting them the power of attorney. This is the best way to avoid losing unnecessary time with processes, as most documents must be signed by someone representing the company in country. Another useful consideration is to learn as much as possible in the beginning, so that all documentation and signatures can be gathered at a single point in time. This will prevent frustration and additional stress.
In short, having a knowledgeable team and understanding the critical steps in the process will ensure a successful transition into Brazilian culture.
Here to Help
Our in-house international employee benefits experts in conjunction with our Worldwide Broker Network partners in more than 100 countries are ready to help you execute your global benefit strategy with confidence. Contact your local Hylant office to learn more.
Thanks to our broker partner, Sciath Benefit Solutions, for their contributions to this post and for their insights on how to remain compliant when doing business in Brazil.
The above information does not constitute advice. Always contact your insurance broker or trusted adviser for insurance-related questions.