A Strategy for Health Insurance Cover in France
Tuesday 04 December 2007
With early retirees to France now expected to take out private health insurance, the use of self-employment as a temporary 'holding' strategy to get French health insurance, is not such a madcap idea.
As regular readers of our Newsletter will be aware, provided UK residents have paid national insurance contributions in the three tax years preceding their relocation to France, then they are entitled to up two and a half years health insurance cover from the UK via an E106.
Once you have completed five years residence in France, you will then be entitled to affiliate to the health system, unless by then you have reached the official retirement age (60 or 65 and rising for UK residents), when you will be able to obtain free State health insurance through an E121, which UK residents can obtain from the Pensions Office in Newcastle.
What this means, therefore, is that for up to 3 years you are going to need to take out private French health insurance.
Whilst the market for private health insurance in France is likely to open up in the next few years, at least for the time being, many will find that the premiums will be higher, and the scope of cover lower, than would otherwise be available under the State system.
Indeed, for those with a pre-existing medical condition, the terms of a private insurance policy may be prohibitive (although they may be able to get access to the State system on appeal).
Accordingly, one route to lower premiums and a higher, more secure level of cover, would be to obtain French health insurance through limited self-employment.
Not only is there a disregard of pre-existing medical conditions through employment based health insurance, but your spouse and family will also be covered, and you will also be covered for routine medical costs, unlike most private health plans, which generally only cover hospitalisation costs.
Many are turned off the prospect of running their own business in France because of the high social security contributions that are payable.
Whilst this might be the case for those taking on-going self-employment as their main source of income, for those who only need to run a business on a part-time basis as a 'holding position' until they get entry into the State system it is, in fact, a cheap and easy option.
Only the income that you earn from your business will be taken into consideration in determining the level of your health and pension contributions.
Moreover, if you start the business, but later do not feel it is going to be successful, then it is possible for you to close it, and to receive continuing cover from your Caisse for a limited duration, and then later join the French health care system.
This is because the new regulations only apply to those from the EU who remain 'inactive'. Once the cycle of 'inactivity' is broken, and you have undertaken a period of employment, then you are entitled to the same rights as French persons, including the right to join the CMU, the French health insurance system. We hope to be able to give more detailed guidance on this point in the near future.
There are also easily accessible and perfectly legitimate ways for a new small business in France to pay very little in social security contributions, and almost certainly less than you would pay for private health insurance.
- Register Unemployed - If you register as unemployed (without the right to unemployment benefits) for at least six months, and then set up a business, you are entitled to relief from the payment of most social security contributions for up to two years.
- Low Profits – If your business earns profits of less than €4489 (2008) per year then you can get relief from some social security contributions. Indeed, with even a higher profits figure, some business activities/professions are able to gain relief from social security contributions.
- Low Turnover - For most business activities in France you can elect to pay social security contributions on the basis of your turnover. Depending on the nature of your business you will pay either 24.6% or 14% of your turnover in social contributions, although it is subject to a minimum contribution, which is not onerous - circa €1500.
- Development Area – If you live in a French development area, then you can similarly obtain relief from business taxes and, in some cases, social security contributions. There are many development areas in France, with both rural and urban locations.
Many hundreds of thousands of semi-retired French people run a small business turning over only a few thousand euros a year, merely as a supplement to their early retirement pension. Even if your turnover was negligible, provided you could demonstrate (if, per chance, asked) genuine intent through production and marketing activity, no-one is going to bother you.
We are not advocating here that you simply register a business and do nothing, but even registering yourself as a professional seller, and buying and selling on e-Bay, would get you into the French health care system! Indeed, health insurance aside, there are also good social and psychological reasons for having some limited self-employment in your retirement in France.
You can read more about running a business in France in our guide to Starting a Business in France.