Can Companies in Indonesia Buy Health Insurance Offshore?
For international schools, NGOs, and businesses operating in Indonesia, health insurance for faculty and expat staff is a critical part of their employee value proposition. But many organizations face a key question during renewal season:
Can we legally buy health insurance from an offshore insurer — and if so, is it a good idea?
The answer? Yes — but it comes with important tax and compliance considerations.
Onshore vs. Offshore Health Insurance: What’s the Difference?
- Onshore insurance refers to plans underwritten by insurers licensed and regulated by the Indonesian Financial Services Authority (OJK). Premiums are paid in IDR, and the insurer is required to comply with Indonesian regulations.
- Offshore insurance is underwritten by a provider based outside of Indonesia — often in jurisdictions like the EU or the UK. These plans typically offer greater flexibility, broad international coverage, and direct billing access in multiple countries.
Why Choose Offshore?
Offshore plans are often preferred by organizations with:
- A globally mobile or expat-majority workforce
- Staff who frequently seek care outside of Indonesia
- A need for high-end coverage, wellness benefits, or global direct billing access
It’s not necessarily about cost — in fact, offshore plans aren’t always cheaper. But they often come with better servicing, multilingual support, easier onboarding, and direct billing at top-tier hospitals abroad, making them more attractive to international employers.
So What’s the Catch?
The main challenge when purchasing an offshore plan from Indonesia is tax compliance — specifically, withholding tax (WHT).
Under Indonesian tax law:
- Payments to non-resident insurers are usually subject to 10% withholding tax
- This tax must be withheld and reported by the Indonesian entity (the employer)
- In some cases, VAT may also apply
While some companies overlook this, failing to account for WHT could expose your organization to tax audits, penalties, or back payments — even if the insurer is reputable and the policy is working well.
Important note: we’re not tax advisors. Always speak with a tax accountant or taw lawyer to ensure compliance. Insurance is about transferring risk and organizations should ensure they are compliant in everything they do otherwise your insurance plan might not work when you need it most.
Good News: Tax Treaty Relief May Be Available
If you’re considering an offshore insurer, there’s a potential way to reduce or even eliminate the 10% withholding tax — thanks to Indonesia’s Double Tax Treaties (DTTs) with many countries.
If the insurer is based in a country that has a tax treaty with Indonesia, your organization may be able to apply for a reduced WHT rate or a full exemption. To do this, the offshore insurer must provide:
- A valid Certificate of Domicile (Surat Keterangan Domisili or SKD)
- A completed DGT form (DGT-1) filed with your corporate tax agent in Indonesia
This process must be done proactively, and your finance or tax team should work closely with the insurer to ensure all documents are correctly submitted.
Countries with tax treaties that may qualify include (but are not limited to):
- Singapore
- France
- United Kingdom
- Germany
- Australia
- Hong Kong
- Malaysia
You can view a full list of Indonesia’s tax treaty partners and relevant provisions here (in Bahasa).
While this exemption doesn’t remove all administrative requirements, it can make a well-structured offshore plan more cost-effective and compliant — if you choose the right partner and document everything correctly.
What if the Insurer Doesn’t Have Local Presence?
Even if you find an offshore insurer with a great reputation, things get complicated if they:
- Don’t offer direct billing in Indonesia
- Can’t reimburse in IDR
- Have no local servicing support
- Aren’t familiar with Indonesian documentation requirements
That’s where doing your due diligence becomes critical.
At One World Cover, we’ve helped clients choose offshore plans with proven local capabilities — from direct settlement at top Indonesian hospitals to mobile apps that support IDR claims tracking and 24/7 support.
What Makes Offshore Work — and What to Watch Out For
If you’re considering offshore, make sure the insurer can demonstrate:
✅ Local hospital direct billing access
✅ Ability to reimburse in IDR
✅ Regional support team (ideally in Southeast Asia)
✅ Experience with Indonesia-based clients
✅ Clarity on your withholding tax obligations
✅ Claims transparency and regular reporting
If those boxes aren’t ticked, the short-term gain might come at the expense of long-term frustration.
So What’s the Right Answer?
There’s no one-size-fits-all approach.
Some companies will benefit from staying local, especially if their staff receive most care in Indonesia and value a local network. Others — especially those with international staff or high expectations for service and coverage — may find a well-structured offshore plan offers better long-term value.
At One World Cover, we work with both local and international insurers. We can help you:
- Benchmark your current plan
- Assess offshore vs. onshore options
- Structure your policy for maximum flexibility and cost-efficiency
While we’re experts in global health insurance, we’re not licensed tax consultants, and nothing in this article should be considered tax or legal advice. For any questions about your withholding tax obligations, we strongly recommend consulting a licensed professional in Indonesia.
If your school or company is reviewing its faculty or employee health insurance plan — and wants to explore both onshore and offshore solutions — we’d love to help. Contact us to start the conversation.
Michael Pennington, Customer Experience Director, One World Cover – [email protected]
