Restricting Circulation

To protect their own markets, some countries have passed legislation to stop expats buying international healthcare policies. But there are loopholes, says J. Leslie Smith.

Expats often strive to achieve the status of "non resident for tax purposes" when working overseas. But they often keep a property in their "home" country, or even a bank or savings account. A "link" to a home country can also help with securing international private medical insurance (PMI), which is something you shouldn't forget to acquire when moving to live or work in a different country.

International PMI contracts, offered by companies such as Bupa International and ExpaCare, vary considerably. Policies and premiums depend on a range of factors, but the three biggest are: the range of benefits required; the age of the insured; and the location of the insured, especially for treatment in the US or Canada. On the latter point, almost all PMI providers split the world in to "geographical bands" to better match premium costs with treatment expenses. Most insurers usually divide the world in to three areas: Europe; worldwide excluding US/Canada; and worldwide cover including US/Canada.

The costs of healthcare are expensive in North America; hence premiums for insurance policies that cover treatment there are also correspondingly high. Indeed, the huge costs mean few international PMI providers want to consider cover for permanent residents of the US.

Some countries have legal restrictions to prohibit foreign residents from using international PMI policies, as happens in the US, France and Switzerland. The French government, for instance, is protective of its domestic medical insures and insists that permanent foreign residents acquire domestic health cover and pay domestic health payments and taxes.

There are ways around this legislation, however. These rules do not apply to most expats who are "roving residents" located in one country for perhaps two or three years, before returning to their county of passport origin. An expat, almost by definition, is on the move, outside the taxpayer net of his or her host country. Their substantial place of residence is considered to be elsewhere. Expats who, therefore, retain a passport property or similar "link" with their home countries but move to the US can still buy an international PMI policy if they have multiple domiciles or homes in other countries where they may also reside for part of the year.

No "offshore" or foreign insurance contract can be declared illegal by any domestic national government regulator if the client holds a foreign passport and is also domiciled in another country or has another substantial home in their country of origin. So bona fide international health insurance contact cannot be deemed illegal by a domestic regulator such as that of Switzerland, France or any other EU countries.

Many providers of international medical insurance will be happy to cover a couple from the UK, for instance, with a London home, who spend six months a year in Florida at a second home. By definition, these lives are covered under a foreign jurisdiction, not US Federal or State Law, as they are temporary residents in the US only, with their main homes and addresses of contract elsewhere. Dispute or claim would be based in the UK under UK law, with most clients using an address there too.

The situation for expats in the US is more complex as many insurers are wary of exposing themselves to potentially huge medical costs of any policyholder who intends to reside there permanently. There are clear distinctions between individuals intending to live or work in the US for a period of time or part of each year, and those intending to become permanent residents (green card holders) or US citizens.

Governments around the world, particularly the US, are trying to attract "a new breed of high net worth patient" to their countries for medical treatment. They also want to protect their domestic insurance market from international competition. But they cannot have it both ways. Expats want good international healthcare plans, without boundaries, that are valid worldwide.

Article Prepared By

J Leslie Smith
Founder
Medibroker Limited