Your All-Encompassing Guide to Foreign Worker Insurance (including FW Bond and FWMI)

Maintaining business continuity is a top priority for any company. The last thing you want is to face the challenges of an employee being denied entry into Singapore or a workplace accident, resulting in hefty medical expenses. To safeguard your business and focus on revenue-generating activities, it's crucial to have the necessary insurance coverage in place. With the right insurance, you can have peace of mind even when accidents occur, knowing that the associated costs are taken care of.

Figuring out what insurance products and selecting suitable coverage for your foreign workers (or migrant workers) can be perplexing. It’s tough enough navigating through complex laws and levies, and when you add insurance terminology into the mix, it can become even more bewildering. 

But fear not – we've got you covered. This is your one-step guide to understanding essential insurance when hiring foreign workers. 

Who is considered a foreign worker?

Foreign workers refer to those who are not Singaporean citizens and work in Singapore. This article only covers foreign workers on Work Permit and S-Pass (skilled and semi-skilled workers as defined by MOM). 

The Ministry of Manpower (MOM) places strict conditions on employers to guarantee the welfare of their foreign workers. This includes providing appropriate housing, safe working environments and insurance coverage. 

When we speak of foreign worker insurance, it typically comprises 2 components: foreign worker medical insurance (FWMI) and foreign worker security bond. Additionally, work injury compensation (WIC) is sometimes included in the conversation. 

What should I get for my workers? 

Employers can decided if they want to provide medical insurance for Employment Pass (EP) holders. However, when it comes to S pass and Work Permit holders, employers are required to purchase and maintain a minimum level of medical insurance coverage. 

Foreign worker security bond is a compulsory requirement for all non-Malaysian workers, while WIC is necessary for all workers doing manual work (both local and foreign), as well as employees earning $2,600 or less per month. 

We will break this down for you to understand each better. Feel free to skip to the section you are interested in: FWMI, Security Bond, Work Injury Compensation.

Foreign Worker Medical Insurance (FWMI)

FWMI typically covers the medical expenses of foreign workers, including inpatient care, day surgery, and non-work related hospital treatments. Exact coverage may vary depending on insurance providers and policies chosen. Before purchasing, carefully assess if you are providing optimal protection for your workers by looking out for these features.

Employers will need to submit the insurance details online before you can request to issue or renew a Work Permit.

Why is there a need for FWMI?

Following MOM's directives, this was established to help employers manage the potentially high medical bills of their foreign workers. As employers are responsible for providing adequate medical treatments and covering the medical costs of their foreign workers, employers are encouraged to choose more comprehensive coverage to protect themselves from the burden of excessive medical bills.

Who pays for FWMI?

The employers will have to purchase FWMI for their workers. The insurance cost cannot be passed on to their foreign workers. 

Will the insurance provider reimburse for the entire claim? 

Under the enhanced Medical Insurance (MI) regulations established by the Ministry of Manpower (MOM), insurers and employers have to co-pay for claim amounts above $15,000. In this arrangement, insurers cover 75% and employers contribute 25%. 

Employers have the option for a co-payment arrangement with the Work Permit holder (excluding migrant domestic workers) for their medical bills. This means that the worker will pay a portion of their bills as well. The following conditions must be met:

• The co-pay amount is reasonable and does not exceed 10% of the worker’s fixed monthly salary.
• The duration of co-payment does not exceed 6 months within every 2 years of employment.
• The co-payment option is explicitly included in the employment contract or collective agreement, and the worker must provide full consent.

Optional features 

Employers can also enhance the insurance coverage with extra features or riders, such as:

• Waive for co-payment – This eliminates the 25% co-payment amount that employers are required to pay for claims exceeding $15,000.
• Repatriation of Mortal Remains benefits – This covers the costs associated with repatriating the remains of foreign workers back to their home country.
• Non-work related treatments for overseas hospitals – While most insurance plans only cover non-work-related medical treatments carried out in Singapore, this rider extends coverage to include emergency cases for non-work-related medical treatments overseas.
• Outpatient treatments – Most plans only cover treatment performed in the hospital. This rider allows for coverage of both inpatient and outpatient treatments.

What other changes are there under enhanced MI?

Starting from 1 July 2025, age-differentiated premiums will be implemented for insured employees aged 50 years and below, as well as those aged above 50 years. This change may impact the cost of insurance coverage.

Exclusion clauses will be standardised, and insurers will reimburse hospitals directly upon the admissibility of the claim. 

In short:

• FWMI provides coverage for foreign worker medical expenses such as inpatient hospital expenses or day surgery expenses due to illnesses or injuries that are not work-related.
• The employers will have to purchase FWMI for their workers. The insurance cost cannot be passed on to their foreign workers.
• Co-payment arrangement are available for all foreign workers, excluding for migrant domestic workers.

Foreign Workers Security Bond

The Foreign Worker Security Bond is a mandatory requirement when hiring employees on Work Permit.

This is a binding pledge to pay the government the bond amount, if either you or your worker breaks the law, Work Permit conditions or security bond conditions. This ensures both companies and foreign employees abide by MOM’s labour regulations.

For each non-Malaysian foreigner you hire, you must purchase a $5,000 Foreign Worker Bond. You will require a copy of your IPA (In-Principle Approval) letter from MOM to purchase the bond. The bond period can be 14 or 26 months depending on the In-Principal Approval (IPA) issued. Do note that you cannot ask the worker to pay the bond.

When should I buy the security bond?

Before your hired worker arrives in Singapore, you must purchase the Foreign Worker Bond and inform the insurer to send the security bond details to MOM. You can log in to MOM’s online Work Permit system to check whether your bond has been successfully registered, or if you need to update the details. 

Do ensure that the security bond is in place and valid before your worker's arrival to avoid any disruptions or complications at the immigration checkpoint. If the security bond is not in effect when your worker arrives in Singapore, the immigration officer will not allow them to enter. You also are unable to change the security bond effective date to allow the worker to enter Singapore. In such a situation, the only option is to send them home immediately. 

What is bond forfeit?

MOM states that employers are responsible for the well-being of their workers during their stay in Singapore. If either you or your worker violates the worker permit conditions or the security bond conditions, the security bond may be forfeited. Read the specifics here. 

What happens when the bond is forfeited?

Foreign worker bonds carry a clause called “Counter Indemnity”. This means that if the foreign worker bond is forfeited, the insurance company will first initially cover the cost of the bond payment ($5,000) to MOM. After the insurance company meets the bond call by MOM, the employer will have to reimburse the insurance company. 

This counter indemnity clause forces companies to act responsibly. It creates a shared interest in ensuring that both parties, employers and employees, adhere to the MOM's established regulations and do not violate any of the clauses set out. 

When will the bond be discharged?

You will be discharged from the security bond liability for a worker only if you meet all of these conditions:

• You cancel your employee’s Work Permit, and
• Your foreign employee has returned home, and
• You did not breach any of the bond conditions

Bonds are typically discharged one week after the worker has left Singapore. If you had placed a cash collateral for the bond through your bank or insurance company, you will receive the collateral back at this stage.

In short:

• If either you or your worker breaks the law, Work Permit conditions or security bond conditions, you will have to pay the bond amount ($5,000) to the government.
• You have to buy for each non-Malaysian worker.
• The security bond has to be effective before your worker arrives, or else they will have to be sent home.

Work Injury Compensation Act (WICA)

While this article only covers about WIC for foreign workers, WICA applies to a broader spectrum of workers, both local and foreign, who are under a contract of service or apprenticeship.

WICA addresses work-related injuries and occupational diseases, enabling workers to make claims for incidents occurring at work or as a direct consequence of work.

This compulsory insurance gives greater assurance, ensuring that more vulnerable workers have access to compensation in the event of work-related incidents. In the event of an injury, employees are entitled to claim for medical leave wages, medical expenses, and lump-sum compensation for permanent incapacity, if applicable, or death.

Who should have WIC insurance?

Foreign workers engaging in non-manual work who earn less than $2,600/month and those doing manual work are required to have WIC insurance. This insurance applies to workers in both manual and non-manual roles, with the exception of independent contractors , domestic workers and uniformed personnel.

For other employees, you have the flexibility to decide whether to buy insurance for them. Nevertheless, regardless if they are insured or not, if your employees make a valid claim, you will have to provide compensation.

How is WIC different from FWMI? 

FWMI provides coverage for foreign worker medical expenses such as inpatient hospital expenses or day surgery expenses due to illnesses or injuries that are not work-related. On the other hand, Work Injury Compensation Insurance only covers work-related injuries and occupational diseases.

What does WICA cover?

WIC covers various scenarios, including:

• Accidents as a direct result of and during the course of employment.
• Injuries sustained during overseas work assignment.
• Contraction of occupational diseases.
• Diseases contracted from exposure to biological or chemical agents at the workplace.

Who can claim for WICA?

Workers remain eligible to claim for compensation even if:

• They are no longer employed by the same employer or their work pass has been cancelled.
• The accident took place during an overseas assignment.
• The accident happened while on a flexible work arrangement that was mutually agreed upon with the employer.

Do note that workers cannot be sent home against their wishes if they have an outstanding claim under the Work Injury Compensation Act (WICA). 

Additionally, employers awaiting reimbursement from their insurance company must still provide the employee with medical leave wages and cover their medical expenses upfront, and get reimbursed later. This ensures that the welfare of the injured worker is not compromised during the claims process.

In short:

• WIC covers work-related injuries and occupational diseases.
• Employees can claim for medical leave wages, medical expenses, and lump-sum compensation for permanent incapacity and death up to 1 year from the date of accident.

Get Insured with the Right Help

With so many insurance plans available, it can be challenging to determine which one is the best fit for your specific needs. Not to worry, let us handle the selection process while you focus on your business. 

With a dedicated broker like eazy, you can count on us to provide prompt updates to MOM within the day. You can be assured that you will never encounter the unfortunate situation of a worker being sent home due to an invalid security bond or a Work Permit being rejected because of outdated medical insurance details.

Our experienced team is well-equipped to offer guidance on a wide range of insurance plans, including those covering motor, health, corporate, lifestyle, and marine needs. Reach out to us today to ensure that all your insurance requirements are well taken care of.