21 February 2019
Contingency planning for the potential impact of a no-deal Brexit involves looking at some of the social security and healthcare arrangements we take for granted – you really don’t know what you’ve got until it’s gone!
Existing EU social security regulations and reciprocal healthcare schemes between the UK and the EU enable employees and employers to access healthcare and avoid double social security contributions via the A1 programme.
However, in the event of a no-deal Brexit, we might be facing the scenario where UK individuals will in effect be treated as a third country national, i.e. any person who is not a citizen of the European Union and who is not a person enjoying the European Union right to free movement. This is unless we are able to negotiate to retain certain arrangements related to social security and healthcare.
Social security is often one of the most overlooked aspects of expatriate planning. Under the current arrangements, each country has its own independent social security system. However in order to prevent double contributions, the employee can elect to contribute to the home-country system for the first 24 months of an assignment, and, subject to further conditions, the period can be extended to a total of five years.
The EU social security regulations also provide for simple coordination of the member country social security systems. Under these provisions, amounts paid into a foreign country system will still be counted for matters such as state pension contribution histories and local benefit entitlements.
If, as a result of no-deal, these arrangements do not continue and UK nationals working in an EU member state are, in effect, treated as third-country nationals, this will create a significant financial burden in terms of dual contributions and benefit ineligibility; making many tax equalisation policies out of date and more expensive.
Access to healthcare
In addition to social security contribution considerations, an employer should not overlook the cost of the possible loss of access to healthcare in EU member states.
For seconded employees, this primarily revolves around the European Health Insurance Card (EHIC), and the S1 reciprocal schemes. The EHIC provides access to healthcare services across the EU for a period of fewer than three months. The S1 scheme allows individuals to receive ongoing health and social care in another country with the costs met by the state, and is in part targeted at individuals temporarily posted by their employers for periods of two years or less.
Loss of access or reduced access to healthcare for those working abroad could lead to increased costs in health or travel insurances, or a need to bring employees home earlier than planned, which would result in associated costs and repatriation challenges.
UK citizens traveling within the EEA, and EEA citizens visiting the UK, will also need to purchase their own travel or health insurance should access to reciprocal arrangements be lost. This may lead to EEA visitors and residents in the UK becoming liable to pay the IHS (Immigration Heath Surcharge), or individual fees for the care they receive.
What the Government has said so far
The government white paper published in July 2018, ‘The Future Relationship between the United Kingdom and the European Union’, says the UK will seek reciprocal arrangements on the future around some defined elements of social security coordination.
In particular, as part of what is described as a framework for mobility, the white paper says the UK will seek as part of any new arrangements to ensure workers only pay social security contributions in one state at a time. It also says there should be reciprocal health care cover for state pensioners retiring to the EU or the UK, continued participation in the EHIC schemes and cooperation on planned medical treatment. Of course, at present, we have no guarantee that the EU will cooperate.
All this may further complicate an already complex system and employers need to evaluate the potential implications, and prepare for the risk of losing access to these arrangements.
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