Moving overseas as an American brings big benefits as you explore new cultures and opportunities, but it also creates financial complexity. As a US expat, you face risks Americans back home don’t, and choosing the right cover is important for to ensure your financial stability and bring peace of mind. In this article, we provide an overview of some of the insurance considerations Americans living abroad should be aware of.
Health insurance for Americans in Europe
As an expat, your domestic US health plan is unlikely to cover you for treatment abroad. You may be able to access a local national healthcare system, but quality can vary depending on the country and region where you live. Many residency visas require you to purchase private healthcare though, and your options are either local private healthcare, or a more comprehensive international policy that offers global medical coverage tailored for expats. Providers let you build a modular plan: you can pick hospital cover, out-patient care, evacuation back to the US in an emergency, and even add vision or dental.
For this reason, many Americans abroad choose a dedicated international health insurance plan gives more predictable protection, especially in case of serious illness or emergencies.
Key health-insurance considerations:
- Investigate local coverage abroad, but beware of limitations, or choose a reputable global insurer. Reliability matters.
- Decide whether you want US-based coverage included. Some plans exclude the US to lower premiums; others include it.
- Include medical evacuation coverage (or “medevac”), especially if you live in a region with limited medical facilities.
- If you plan to retire abroad, look for lifetime-renewable plans. Some global medical plans stop at a certain age; others may cover you for life.
- Don’t hide pre-existing conditions in your application – insurers want full disclosure, and failing to do so can cause problems when you claim.
- Consider your premium payment method. Paying annually often saves more than monthly.
Also note that as a US citizen abroad, you may be exempt from paying Medicare, unless you’re working for a US firm or you’re self-employed.
Life insurance for expats
If you have a US-issued life policy, you should check with your insurer whether their policy covers Americans living abroad, as some domestic policies may restrict coverage when you live abroad permanently. Failing to disclose that you moved abroad meanwhile could lead to denial of a claim.
International life insurance plans are available that offer broader protection. These plans are underwritten with expats in mind and provide term-life policies that work across many countries. Ensure that they are compliant for U.S. citizens and don’t have products that are problematic PFICS.
With these policies, beneficiaries can receive a lump sum in a currency that works for them (e.g. USD or euros).
If you live abroad for the long term, global life coverage may make more sense than keeping a US policy with limitations or risk of non-payment.
You might investigate local policies too, however avoid buying investment products wrapped inside a foreign life-insurance contract. These are marketed in many countries as “tax-efficient” or even “guaranteed return.” Unfortunately however, to the IRS, they often qualify as Passive Foreign Investment Companies (PFICs).
PFIC ownership triggers adverse US tax treatment, and you may owe US tax on assumed income you never actually received and you’ll also need to file IRS Form 8621 annually.
In most cases, US-domiciled life or mutual-fund investments are far simpler. If you’re tempted by foreign-domiciled “insurance plus investment” products, talk to a cross-border financial advisor first.
Disability and income protection abroad
Depending where you live, i you became ill or disables, your new country’s social security or employment benefits may not replace your income reliably.
International income protection (or disability) insurance is designed for internationally mobile professionals. Some of these policies can pay up to 80% of your income.
This kind of coverage ensures that, if you become unable to work, you and your family can maintain financial stability regardless of where you live.
Long-term care insurance for expats
Long-term care (LTC) insurance covers things like nursing home care, assisted living or home care, services that traditional health insurance often excludes.
As an American expat, consider what long-term care is like in your host country. Is care similar in cost and quality to in the US? Would it be better for you to insure LTC in the US or in your country of residence (if possible)? Depending on your age, health and financial plan, LTC insurance can be a sensible strategy. Discuss your situation with your expat financial advisor to explore your options.
Social security considerations for Americans Abroad
Your Social Security benefits may depend on totalization agreements between the US and your new country. These treaties can prevent double taxation on social security contributions, and also allow you to pool contributions made in both countries for your ability to receive payment in retirement in whichever of the two countries you ultimately retire in.
Medicare, however, generally does not cover you outside the US. Most Medicare Advantage plans exclude foreign medical costs.
Working with an expat specialist financial advisor
Insurance for Americans living abroad is more complex. There are more options, and your insurance strategy should fit in with your financial situation and life plans. Discuss your requirements with an expat specialist financial advisor as part of your wider financial planning. They wll discuss with you questions and considerations including:
- Should you buy US, local or international plans?[Text Wrapping Break]
- Have you checked whether any US-based life or health policies will still work when you live abroad?[Text Wrapping Break]
- Carefully evaluate and normally avoid insurance-plus-investment products. PFIC rules and other cross-border tax issues may change how you view investments.[Text Wrapping Break]
- Reassess your insurance regularly, especially if your circumstances change — new country, new salary, family, retirement plans.
When you live abroad, your “risk profile” changes. Basic health costs may be lower in your new country, but emergency evacuation or serious illness could become very expensive.
At the same time, you don’t necessarily need every policy. Prioritize based on your situation. If you’re young and healthy, start with health and life cover. As you build assets or retire overseas, layer in disability, long-term care, and other policies if needed.
