PUMA Health Insurance Charge 2016/17
Friday 06 January 2017
The basis on which economically inactive individuals are assessed for their health insurance charge has changed.
As we reported in our Newsletter in February 2016, last year the French government introduced a new 'universal' system of healthcare in France, called the Protection Universelle Maladie (PUMA).
In essence, the aim of the reform is to bring about a greater degree of unity in the administration of healthcare, by reducing the barriers between the different branches of the system.
The main change has been the abolition of the Couverture Universelle Maladie (CMU), a branch of the system that covered those not insured for health through current or former employment or business.
This has now been replaced by PUMA, which grants an automatic and continuous right to health care to all those who are legally resident in the country, without the need for any administrative formalities on a change in circumstances.
As part of the PUMA there has been a change to the basis by which individuals are registered in the health system.
Hitherto, spouses and other family members have been attached to the insurance regime of their partner as a 'dependent' in order to obtain their health cover.
This system of 'ayant droits' has been abolished by PUMA, so that all eligible persons have been granted an individual right to healthcare, which they will maintain for their lifetime.
This significantly improves the status and rights of professionally inactive spouses.
Health Insurance Contribution
The transfer to PUMA from the CMU last year meant that there was no call for a health insurance contribution from those affiliated through the CMU for their healthcare.
This particularly affected expatriate early retirees in France registered in the health system via the CMU (without an S1) who were not required to pay their usual CMU health insurance charge.
The transition period ends this year when those affiliated to PUMA, and not paying standard social security contributions, will be required to pay la cotisation subsidiaire maladie (CSM).
The insurance rate of the CSM is 8% of eligible income.
The full details of just how this process will operate have yet to be published, but from what we have learned so far we can make the following analysis.
Who is Liable?
Those individuals and households who are liable for the CSM are:
- Persons with no professional activity (business or salaried), or those who have a professional activity, but whose income from this activity is no greater than €3,862pa,
- Whose income from their revenus de patrimoine is greater than €9,654pa.
In short, those liable for the CSM are persons not exempt on grounds of low income or because they are insured on some other basis.
More specifically, exempt households are:
- Those who obtain health cover in France via an S1 certificate of exemption, who are insured for health from their home country. This mainly affects EEA nationals on a State retirement pension, but it also includes anyone else who holds a S1 certificate;
- Economically inactive households with an income less than a minimum threshold, which in 2017 is €9,654pa (2016 income);
- Business owners and salaried employees with a professional income greater than €3,862 a year (2016 income), as they pay their usual social security contributions;
- Households in receipt of a retirement pension, annuity, widow's pension or disabilty pension.
One of the key issues that remains unclear from the regulations so far published is whether early retirees in receipt of an employment based retirement pension would be exempt. Thus far, the regulations make no distinction between State retired pensioners and early retirees, so it is possible that all pension income is simply excluded, as might be inferred from the process of income assessment that is undertaken (see below).
In addition, where one member of the household is in receipt of a pension, the regulations state that their spouse/partner would also be exempt from the CSM, whether or not they also receive a pension.
The position of those who are covered for health through a private health insurance policy is not stated, but if they are not registered with their local CPAM then it can be assumed no demand for the CSM will be made.
As with the CMU, the insurance contribution rate is 8% of net income, but the income that is taken into consideration is narrower than under the CMU.
The only income that is assessed is the 'revenus de patrimoine'. That is to say, investment income, rental income and capital gains.
So if you have no such income you will not be liable for the CSM, as confirmed to us by the French Ministry of Health, who have stated that: "Si vous n'avez pas de revenus du patrimoine, vous n'aurez pas de cotisations à payer au titre de la CSM."
In addition, if the total sum of your revenus de patrimoine is no greater than €9,654, you will also be exempt from payment of the CSM.
In the case of those with a professional activity, whose net business/salaried income is less than €3,862pa the full allowance of €9,654 may not be applied, depending on the level of the professional income.
For the purposes of determining the amount payable the authorities can also take into consideration your lifestyle (train de vie), an assessment that will particularly affect those households living on their capital resources. Details of this process have yet to be published.
With the abolition of ayants droits, those liable for the CSM will be assessed on the basis of their own income, plus half of the joint revenus de patrimoine they earn with their partner.
By way of example, an individual with an annual net personal income of €15,000 and who also enjoys joint net income of €25,000 in revenus de patrimoine with their partner.
In such a case the calculation is:
- €27,500 (€15,000 + €12,500)
- €27,500 - €9,654 = €17,846
- €17,846 x 8% = €1,427
- CSM = €1,427
The same assessment will be made on the income of their spouse/partner, with each spouse/partner liable for their own CSM charge.
The CSM for 2017 will be assessed on the basis of your 2016 income tax declaration. The tax authority will notify the social security collections agency 'URSSAF' of the amount payable.
The demand for payment will be made in the autumn, and payable in November, although it is likely procedures will be put on place to allow payment on a monthly or quarterly basis.
It can be anticipated that errors will occur in the calculation and determination of the income that is liable for the CSM, but there are existing procedures in place to appeal against an incorrect assessment.
We shall be providing more information in a future Newsletter.