COMPANIES starting an employee benefit scheme tend to place a higher priority on medical benefits than on a retirement fund, according to John Snelgrove, general manager for employee benefits and corporate affairs at National Mutual Insurance (NMI.) 'Because we don't have a welfare state, the need to provide medical benefits is very important here,' he said. Companies set up medical schemes to ensure that if staff fell sick, they could recover and return to work without any financial hardship, Mr Snelgrove said. All major schemes include hospital cover but companies need to spell out which, if any, employees can qualify for private hospital care. As a guide, firms can refer to the annual list of recommended benefits published by the Medical Insurance Association. It is based on a survey of hospital charges. Premiums differ between companies, based on the services needed for staff cover and the company's claim history. Companies that employed many expatriates tended to have higher hospital bills, Mr Snelgrove said. Staff at some companies also fell sick more often than others - or had higher numbers of staff seeking more expensive treatment. 'That is why insurance companies work closely with companies. Their participation in restricting the amount of claims is important.' For bigger firms, National Mutual offers profit sharing, which gives the client an incentive to keep medical costs down. An average medical scheme would add one to 1.5 per cent to a big company's wage bill, Mr Snelgrove said. 'That would be a typical client with a few senior managers on top benefits. The cost varies according to the extra benefits.' NMI offers smaller companies a standard group medical plan under its Employee Benefits Insurance Package, while bigger companies usually need tailored policies. At the top of the scale is the Super Health Plan, which offers unlimited hospitalisation coverage to companies with more than 20 employees. NMI's assets under management exceed $11 billion and premium revenue is running at over $4 billion a year. The group has over 2,000 companies as medical clients and runs retirement schemes for about 1,300 firms. Along with the rest of the retirement fund industry, it is anticipating extra business as more employers offer retirement schemes to their workers. 'About 30 per cent of the workforce is covered by private schemes but, on the last figures I saw, that represents less than 10 per cent of companies. Big companies have it and small companies do not. 'So, if you are looking for a new market, you have to say it is the small-to-medium-size market.'