RESTRICTED  
  
WT/BFA/W/627  
 
1 May 2023 
(23-3013) Page: 1/6 
Committee on Budget, Finance and Administration    
 
 
UPDATE ON WTO MEDICAL INSURANCE PLAN AND ASHI  
1  OVERVIEW OF THE MEDICAL PLAN COSTS  
1.1.  The WTO Medical Insurance Plan  ("the medical plan")  is a key part of the social security and 
benefits package offered to current and former employees (retirees) and their dependents. WTO 
staff and former employees residing in Switzerland are exempted from the mandatory participation 
in the Swiss Health Insurance scheme (LAMal) by virtue of the Hea dquarters Agreement  entered 
into by the  WTO and the Swiss Authorities , provided the medical plan offers a coverage at least 
equivalent to that of LAMal.  
1.2.  The medical plan provides for staff members, retirees,  and their dependents  a combination of 
base sickn ess and accident coverage  as well dental and optical  coverage . Reimbursements under 
the plan are limited to the reasonable and customary costs applicable for the location of treatment.  
1.3.  The medical plan is a pay -as-you-go plan, with t he medical insurance pr emiums WTO 
beneficiaries  pay every year determined based on a formula that includes: the amount of medical 
reimbursements made during the previous year, an estimate of the medical cost inflation,  an 
estimate of  the Incurred but Not Reported claims (IBNR)1 as well as the average ratio of the claims 
paid to any  individual  insured person s in excess of CHF 90,000. The formula also considers  the 
annual insurance premiums paid, as well as a fee for the Administrator  of the medical plan  ("the 
Administrato r"). The administration contract  signed by the WTO  contains a  protection which limits 
the maximum premium increase in any given year to 15%.  
1.4.  In years when total premiums paid exceed reimbursements, a mechanism within the annual 
premium adjustment formula a llows for the accumulation of funds which, in turn, are used to offset  
future increases to the premium . 
1.5.  The cost of the WTO medical insurance  premium is split between the plan members and the 
WTO. The ratio varies individual -by-individual depending on the grade of the staff member or the 
pension benefit  of the retiree.  Overall , the WTO bears 60% of the costs of the Plan with 40% borne 
by the participants. Family members  are only subsidized if they are a child or if the staff member or 
retiree receives a dep endency allowance for that person. At the end of 2022, out of 2,251 total 
participants, 115 participants (or approximately 5%) are unsubsidized and pay the full premium 
themselves.  These unsubsidized participants include non-dependent and divorced spouses , adult 
children  (between 25 and 30 years old)  and a few remaining secondary dependents . 
1.6.  The premium  paid to the Administrator increase d by 5% in 2020 and remained unchanged in 
2021, 2022 and 2023.  The recent  stability is at least partially attribut able to the COVID -19 pandemic 
and the resulting short -term changes in behavior related to how people consume medical services.  
1.7.  The table below illustrates the indexed evolution of the premium comparing the WTO and the 
Swiss Medical Insurance premium  since 201 6. Overall, it should be noted that the WTO premium 
index and the Swiss index  track closely . 
 
 
1 Incurred but Not Reported claims (IBNR ) is a contractually agreed statistical estimate of the claims yet 
to be filed at the time the premiums are updated. Claims can be mad e up to 18 months following the d ate of 
the medical treatment.  WT/BFA/W/627  
 
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  Table 1 Swiss Medical  Insurance Index  Comparison  
 2016 2017 2018 2019 2020 2021 2022 
Swiss medical 
insurance premium 
Index2 100 104 108 109 109 109 109 
WTO premium index  100 100 100 105 111 111 111 
2  ON-GOING COST CONTAINMENT MEASURES  
2.1.  Reimbursements  under the medical plan  are capped at the "reasonable and customary" limit 
for the location of treatment but cannot, in any case, exceed the rates applicable in Geneva. As 
medical costs are often lower outside of Switzerland, plan Participants are encouraged to seek 
treatment in  lower cost areas when feasible.  
2.2.  Prior approval requirement s for planned  hospitalizations  and numerous  medical procedures and 
treatments  are an opportunity for the Administrator  to ensure costs are reasonable and , whenever 
possible , obtain additional discounts . The prior approval process also allows the Administrator to 
reimburse beneficiaries for a second opinion or assess whether other treatment options would be 
available that would reduce hospital stays or unnecessary expenses.  
2.3.  The Administrator has negotiated special discounted rates and direct payment agreements with 
many hospitals, doctors and specialists.  
2.4.  In 20 21, through the Administrator 's active management, the following savings have been 
reported:  
• Inpatient network in Switz erland: CHF 467,000;  
• Inpatient network in the USA: USD 276,000;  
• Active  case management: CHF 223,000; and 
• Claims adjudication: CHF  884,000. 
2.5.  The MIMC review ed, in 2022 , several  proposals  from the Human Resources Division  (HRD) for 
ways to increase cost consciousness as well as to ensure overall alignment  with the Swiss base 
health insurance scheme  LAMal. The Director -General approved the  proposed  benefit s changes,  and 
they are effective as of 2023. The objective of the changes i s aligning the benefits broadly with those 
provided in the Swiss system, reducing risk exposure through introducing increased controls on 
medical expenses and enhanced coverage for preventative care and diagnostic tests.  
2.6.  The WTO is engaging with plan participants to educate them on how the plan is designed, the 
evolution of costs, specific benefits and draw their attention to the need to be conscious of, and 
conscientious about, their medical consumption and its impact on the m edical plan and future 
premium s. 
3  MANAGEMENT OF THE MEDICAL PLAN  
3.1.  The responsibility of the management of the  medical plan falls under t he Director -General . 
Operationally, the management of the plan is allocate d to HRD. In addition,  a joint advisory body, 
the Medical Insurance Management Committee (MIMC) , advises the  Director -General on any 
proposed changes to the medical plan. It is composed of representatives of the Director -General, 
the Staff Association,  and the Association of  Retire es from  GATT/WTO.  
3.2.  The MIMC has the followi ng responsibilities : 
a. Keeping under review the working and the financial status of the medical plan , taking 
account of the provisions of the group contract concluded with the Administrator.  
 
2 Source: Office fédéral de la statistique, IPAM . WT/BFA/W/627  
 
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  b. Recommending the total premium for each year to the Director -Genera l. 
c. Analysing, and where necessary, renegotiating the insurance premiums and benefits 
considering the specific needs of staff members and retire es and their dependents.  
d. Analysing and recommending to the Director -General the policy for subsidizing the total 
premiums per insured person.  
e. Informing the Director -General and the plan participants of any change in the terms and 
conditions of the contract with the Administrator, in contributions , or in the practices of 
the Administrator.  
f. Interpreting the provi sions of the group contract with the assistance of representatives of 
the Administrator , the WTO Legal Counsel  and HRD, and  making decisions on cases 
referred to it.  
3.3.  The MIMC, in coordination with  HRD and  the Administrator engages in a  continuous  review of 
the benefits table with an emphasis on the sustainability of the medical plan. 
4  POPULATION OF INSUREDS  
4.1.  Active staff and their dependents represented approximately 7 0% of the total insured 
population, whereas retirees and their dependents represented 30% at the end of 2022. 
4.2.  The following graph illustrates the evolution for selected years of the WTO's main insured 
categories of population . The active population decreases slightly , whereas the retirees' population 
shows a sharper  increase.  
Graph 1 Evolution of Insured Population ( 2016 and 2022) 
 
 
 
 
 
 
 
WT/BFA/W/627  
 
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  5  BROAD FINANCIAL OVERVIEW OF THE MEDICAL PLAN  
5.1.  The graph below shows the trends of net premiums and reimbursements over the past 
six years.  
Graph 2 Evolution of claim reimbursements and net premium   
 
5.2.  The higher level of reimbursement as compared to the total net premium paid led to the 
increase in  the Plan premium for 2019 as well as  for 20 20. In 202 0, however, due to the COVID -19 
pandemic leading to the postponement of many planned consultations and h ospitalizations, the WTO 
plan experienced a temporary drop in reimbursements.  There can be variability from year to year in 
the experience of the plan. Periods of stability can be followed by jumps in costs , as is the case in 
2022. The overall trend is that premiums have increase d over time due to medical inflation , 
increased offer of medical  services  and evolving demographics among the  WTO Plan's Participants . 
5.1  WTO Members' contribution to the Medical Plan premium  
5.3.  The table below shows the evolution of WTO  Member s' contribution to the medical plan  
premium of active staff  members , retirees and eligible dependents between 201 6 and 2022. In 2022, 
the contribution increased by CHF 205,000 and stands at 4.51% of the over all WTO budget . Cost 
increase s remain modest and below general medical inflation  in Switzerland  (6.6% in 20223). 
 
3 https://www.admin.ch/gov/fr/accue il/documentation/communiques.msg -id-
90514.html#:~:text=Berne%2C%2027.09.2022%20%2D%20Apr%C3%A8s,avant%20(2013%2D2018)  
 
WT/BFA/W/627  
 
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  Table 2 WTO contribution to the Medical Plan premium  (CHF)  
Year 2016  2017  2018  2019  2020  2021 2022  
WTO budget  
in CHF  197,203,900  197,203,900  197,203,900  197,203,900  197,203,900  197,203,900  197,203,900  
WTO 
Members' 
Contribution 
to the  
Medical 
Plan in CHF  7,882,878  7,397,624  7,832,600  8,109,942  8,189,556  8,703,526  8,908,827  
WTO cost of 
Medical 
Plan in %  4.00%  3.75%  3.97%  4.11%  4.15%  4.41% 4.51%  
Year -on-
Year 
Change in 
cost in CHF  348,058  -485,254  434,976  277,342  79,614  513,970 205,301  
Year -on-
Year 
Change in 
cost in %  4.62%  -6.16%  5.88%  3.54%  0.98%  6.27% 2.36%  
 
6  REIMBURSEMENTS RELATIVE TO PREMIUMS BY INSURED CATEGORY IN 20 21  
6.1.  Active staff  members  and their dependents represent 7 1% of the total insured population, 
contribute 6 7% of the premiums and receive 5 0% of the total amount of reimbursements under the 
medical p lan. Retirees and their dependents represent 29% of the total insured population, 
contribute 33% to the premiums and receive 50% of the total amount of reimbursements under the 
medical p lan. As not ed above, the  excepted evolution of the  demographics of the medical plan's 
population will lead to ASHI costs  (which are on a pay -as-you-go basis)  representing an increasing 
share of the overall cost of the medical plan  in the  future.  
Table 3 Reimbursements relative to premiums by insured category in 20 22 
Population  Percentage of total 
reimbursements  Percentage of 
overall amount of 
premium 
contribution  Percentage of the 
insured population  
Active staff members 
including dependents  50% 67% 71% 
Retire es including 
dependents  50% 33% 29% 
Total  100%  100%  100%  
 
7  AFTER SERVICE HEALTH INSURANCE (ASHI) LIABILIT IES 
7.1.  Since 2012 , the WTO has used International Public -Sector Accounting Standards (IPSAS) to 
guide its financial reporting. Under IPSAS, organizations must report full estimated long-term 
liabilit ies at the end of a reporting period for employee benefits, including ASHI. 
7.2.  The medical  plan constitutes a defined benefit plan with promise of long -term benefits 
(therefore, long term liabilities ) because  it promises to cover the health costs of retirees from the 
WTO and their eligible dependents, after they have completed their  service with the WTO.  WT/BFA/W/627  
 
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  7.3.  This is a form of deferred compensation in the future in the form of a pre -defined benefit4. 
Currently, the ASHI liabilities are significantly under -funded. As at 3 1 December 2022 the total ASHI 
liabilities were CHF 240 million whereas the corresponding assets were only CHF 10 million , resulting 
in an ASHI funding gap of CHF 230 million . 
7.4.  The reporting of the ASHI liabilit ies as recognized in the financial statements  (and as reported 
above) shows the accrual of benefit obligations as of the date of the reporting . Another view of the 
liabilities for the purposes of on -going management of the medical p lan estimates how the liabilities 
are projected to evolve. This kind of analysis was first undertaken in 2014 and revised in 2018  and 
2021. It is normal that these projections are undertaken only every 3 -4 years.5  
7.5.  Given that the Members have determined that the WTO funding approach is pay -as-you-go, 
the annual cashflow estimates are more important for annual budgetary implications than the  
absolute value of the estimated liability.  Currently, the cashflow required to fund the ASHI liability 
is approximately CHF 4 million per annum. However, the question of long -term liability is different 
from the budgetary implications, as described in pa ragraph 8.3 below.  
8  SPECIAL RESERVE ACCOUNT FOR THE MEDICAL PLAN  
8.1.  With the development of the WTO's ASHI Strategy in 2017 the Secretariat proposed adopting 
a partial funding approach to the ASHI liabilities through the creation of an ASHI Fund to be initiall y 
funded with the accumulated budget surpluses from 2012 -2017. The  Committee on Budget, Finance 
and Administration (CBFA) did not accept to create such a fund and decided to stay on a pay -as-
you-go basis at that time. The CBFA decided to establish a Specia l Reserve Account for the medical 
plan. This account was established to "ring -fence" savings from the medical plan budget lines and 
retain them exclusively for ASHI . Any decision to use funds from the Special Reserve Account  would 
be subject to CBFA approv al. 
8.2.  In 2021, the External Auditor recommended establishing a special account for the after -service 
health insurance scheme, endowing it gradually, using the funds currently put into the "special 
reserve account" and extraordinary contributions, to eventual ly accumulate sufficient assets to cover 
the ASHI liabilities. The Secretariat modified the structure of the Statement of Financial Position  as 
at 31 December  2022 to distinctly reflect  the funds available in the Special Reserve Account as WTO 
ASHI Assets  (under Cash) . 
8.3.  As of the end of 2022, the medical plan Special Reserve Account (SRA) had an accumulated 
balance of CHF 8.4 million , resulting from savings on the medical plan budget lines. There is an 
additional ASHI -related source of funding derived from a  surcharge on the salaries of extra -
budgetary funded staff. This assessment has contributed an additional CHF 1. 8 million to the SRA.  
While the creation of the SRA is an important step, it is an ad -hoc measure and does not 
fundamentally address the structu ral aspects of the liability.  Members will ultimately have to decide 
if the pay -as-you-go budget approach is sufficient or if additional steps are appropriate.  
 
__________  
 
4 The provision of after -service health insurance is also reflective of the international character of the 
WTO Secretariat and that staff  members are  generally  not eligible to participate in national health schemes in 
their home countries after retirement.  It is also in accordance with the Headquarters Agreement entered into 
by the WTO and the Swiss Government.  
5 Information on the 2021 est imates can be found in WT/BFA/W/543 .