How do we extend insurance for our expatriate employees?

The first thing you should do is check with your insurance carrier, as they ultimately determine whether the plan you have will extend abroad. Next, consider some of the issues that factor into extending insurance to expatriates: Health Insurance – Affordable Care Act Under the Affordable Care Act, United States citizens working abroad must maintain […]

2018 HSA contribution limit

The first thing you should do is check with your insurance carrier, as they ultimately determine whether the plan you have will extend abroad.

Next, consider some of the issues that factor into extending insurance to expatriates:

Health Insurance – Affordable Care Act

Under the Affordable Care Act, United States citizens working abroad must maintain health insurance (i.e. minimal essential coverage, or MEC) or risk facing a tax penalty.

However, if the employee on foreign assignment has a tax home outside the US, is a bona fide resident of a foreign country, or has been present in the country for 330 days over 12 consecutive months, they’re considered to have met MEC requirements and won’t be penalized. You can read more about those requirements here.

Certain plans – for instance, group plans where the majority of employees work outside the US for at least 180 days – are exempt from many Affordable Care Act provisions. Be sure to check out if your plan qualifies for exemption here.

Global Medical Coverage

If you are an employer that frequently sends employees overseas for extended periods of time, perhaps to complete contracted work, open a new location or simply for the international career exposure, you may want to consider obtaining a group global medical policy for those expatriates. Several of the major insurance carriers provide this type of coverage. There are requirements that must be regarding the minimum number of employees that must be eligible, but this varies between carriers.

Keep in mind that your domestic medical plan will only cover emergencies for those employees that are overseas, regardless of whether they are there for pleasure or business.

Other Types of Insurance

While health insurance is subject to regulations such as ACA provisions, that’s not necessarily the case for other types of coverage. For example, extending coverage of life insurance, short-term disability, long-term disability, or accidental death and dismemberment insurance, is generally up to the carrier. The Certificate of Coverage will outline how employees outside the US are covered, typically in the definition of eligible employees.

When it comes to these other types of insurance, there are two questions that often determine whether coverage is extended:

  • What country will your employee be working in? You can check with the carrier to find out if the country to where your employees are headed is approved for coverage.
  • What’s their resident status? Generally, an expatriate (or expat) is a person who’s living in another country, but keeps the citizenship of their home country. Usually, expatriates are expected to return to their home country eventually. In contrast, if you send an employee to Italy for a month-long assignment, they wouldn’t be considered an expat. Most insurance plans cover employees on short-term foreign assignments, but that doesn’t necessarily apply to expats.
  • Final Tip

    Though insurance is important to keep in mind for expatriates, other forms of compensation can also be affected by crossing international lines.

    There are many options for developing the best compensation package for expatriate employees. The five most common methods are a balance sheet, negotiation, localization, lump sum, and a cafeteria plan.

    Helpful Links:

    Expatriate Salaries and Benefits – justlanded.com – Discusses how to determine expatriate salaries and benefits

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