With early retirees barred automatic entry to the State health system, many are obliged to take out private health insurance, but for some it is not all bad news.
As regular readers will be aware, getting health cover in France as an early retiree is no longer the formality that once was the case.
Since 2007 the French government have imposed a 5 year residence qualification on early retirees for access into the State health system and in July this year the UK government ended the issue of S1 certificates to early retirees, which granted temporary health cover for up to 2 years.
As a result, in order to obtain health cover early retirees are having to either take employment, set up a business, or take out a private health insurance policy. A few lucky ones do get through the net into the health system as an early retiree, a process that requires patience, skill and determination, without the guarantee of a successful outcome.
Although private policies do not come cheap, and are not going to be available to everyone, there are some compensatory tax breaks for those who need to take out such a policy and who are able to do so.
This is because those who are not covered by the State health insurance system are not liable for social charges on their pension income or the statutory contribution to the French health system.
i. Social Charges
Ordinarily, pension income in France is subject to the social charges at the rate of 7.1%, with the exception of government service pensions, which are taxed in the country of origin.
The Regulations concerning social charges are enshrined in French law through Article L 136-1 de la code de la sécurité sociale, which states: 'Il est institué une contribution sociale sur les revenus d'activité et sur les revenus de remplacement à laquelle sont assujettis......Les personnes physiques qui sont à la fois considérées comme domiciliées en France pour l'établissement de l'impôt sur le revenu et à la charge, à quelque titre que ce soit, d'un régime obligatoire français d'assurance maladie;'
In other words, to be liable for the social charges on your pension income you need to be in the State health system, l'assurance maladie, a point that is well documented in subordinate legislation on the subject.
This is the principal reason why retired EU nationals who are on an S1 for their health cover in France escape the payment of social charges on their pension income, as their health cover is provided through their country of origin.
ii. Health Contribution
In addition to the social charges, non-active persons under the age of retirement are also required to pay an annual health contribution to the Couverture maladie universelle (CMU), that part of the State system that covers those persons not otherwise affiliated through employment or as a business.
The contribution level to the CMU de base is 8% of household income above a minimum threshold. The current threshold is €9,534 per household/annum, a figure that applies to September 2014 and is revised annually.
Thus, if your net taxable income is €25,000 a year you deduct the CMU threshold of €9,534. This leaves €15,466 as the base figure used for calculating your 8% contribution to the CMU. This gives a premium of €1,237 pa for health insurance cover
Only non-active persons with an S1 certificate of exemption, or on a low-income, are exempt from this charge.
Total Amount Payable
Accordingly, let us take the example of a couple aged 55 years, whose annual liability to social charges on their early retirement pension income, and to the health tax on their total income at different income levels is shown in the following table. For illustrative purposes we have assumed pension income = total income.
|Income||Social Charges||Health Tax||Total |
|€40,000||€2,840 ||€2,437||€5,277 |
Those who choose to take out complementary 'top-up' health cover to meet those health charges not covered by the State system (around 30%) would need to add the cost of this cover to arrive at a total costs. This 'top-up' cover might expect to be around €1,000 a year for a couple in their 50s, although it will depend on the terms of the policy.
Private Health Insurance
If you are unable to join the State insurance system you need to take out a private health insurance policy. You cannot be legally resident in France on any other basis, even if you wanted to take the risk.
Johanna Matthews of health insurers Exclusive Healthcare says the company have a range of private policies to assist those unable to affiliate to the statutory system.
Their basic policy is called 'Platine Hospital' policy, which covers the costs of hospitalisation. The standard annual premium of such a policy for someone aged between 55-59 years in good health is currently €1,552, or €3,105 for a couple. The policy does not cover routine GP consultations or dental care, and cover is limited to treatment in France. It is also subject to a total insured value of €80,000 per person per year.
If you wished to also cover GP fees, then with their 'Platine France' policy the standard premium for a couple rises to €4,138 pa, although dental care remains uncovered. There is a standard excess of €120, although this can be replaced by opting to pay an extra 25% premium.
With their 'Platine Global' policy you also get cover outside of France, but it does hike up the annual standard premium substantially, to €6,724 for a couple. However, given that those not in the State system would not be entitled to a European Health Insurance Card to cover travel outside of France, such a policy may well be important for many expatriates.
State V Private
In summary then the comparative costs for our 55 year old couple in good health and at different income levels is as follows:
|State V Private Cover|
|Income||State||Platine Hospital||Platine France||Platine Global|
|€40,000||€5,277 ||€3,105||€4,138||€6,724 |
In considering the above figures, it needs to be remembered that only pension income escapes social charges, so if you are an early retiree whose main income comes from, say, investments and/or rents, the comparison will be less favourable. Such income also faces social charges at the rate of 15.5% and there is no exemption for not being in the State system.
Similarly, those on a government service pension are not liable for social charges on their pension, so would almost certainly be better off in the State system.
It is also always important to review the small print in private health policies and in order to obtain cover and these rates you will need to complete a medical questionnaire, which will be individually underwritten, so the policies are not going to be suitable for everyone. Depending on the assessment of your replies to the questions, the premium may be higher, or cover may even be declined.
In the State system no pre-existing medical conditions apply, and long-term treatment for serious illnesses is guaranteed for an unlimited duration, with 100% reimbursement.
Johanna says "Nothing beats getting into the French State system and holding a complementary policy, but for those who are unable to affiliate, private policies do offer a reasonable alternative for those unexpected medical expenses."