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Health boost for Brits in France - 1 October 2007

Changes to the French health system are set to affect investors and current ex-pats.

As Nicolas Sarkozy presses ahead with wide-ranging reforms, he has also continued with changes to the health system, which come into effect from 1 October 2007. These changes will affect both French and British living in France and there has been much confusion and debate over the changes and what is actually entailed.

Trevor Leggett, Executive Director, Leggett Immobilier comments, “These changes to the health system actually date from a 2004 European Directive, which stated that Europeans looking to move to another country within the EU should have enough capital or income to look after themselves and not have to fall back on state social security – including the state healthcare system.

Nicolas Sarkozy has continued with the implementation of these changes as part of a raft of reforms he is swiftly putting in place, including changes to Inheritance Tax and Wealth Tax. These health reforms will affect not only British people living in France – or planning on moving to the country – but also French people who have taken early retirement.”

Trevor Leggett continues, “The health reforms are regarded as essential because currently around 80% of France’s GDP is spent servicing the 1.4 trillion euro French debt. It is important to stress, however, in the light of the changes, that healthcare in France, unlike the UK, has always been partly contributory.

The state will normally cover between 15 – 70% depending upon the type of the medical treatment and the balance is either paid directly by the individual, or through a ‘top up’ complementary health insurance policy. British expats living in France have always had to pay something into the health system to cover the shortfall.”

Now under the changes, individuals from the EU who are resident in France have to meet the following criteria in order to be eligible for subscription to the French state healthcare system, the Couverture Maladie Universelle (CMU):

They are in receipt of a state pension, which would in the UK qualify then for an E121 form

They are in receipt of an E106 – valid for up to 2.5 years upon moving to France

They are working in France and therefore contributing to the French system

Previously, British expats who had moved to France before retirement age could make voluntary contributions to subscribe to the CMU, in much the same way as one can make voluntary National Insurance contributions in the UK. However, under the changes, this will no longer be available as an option.

What this means for British pre-retirees who already live or plan to live in France, is that once the reciprocal cover provided by the E106 expires, they will have to seek out a comprehensive private healthcare insurance policy for themselves and their dependants.

This is likely to cost in the order of 1,500€ per annum for a single person aged 50, or around 2,500€ for a couple around the same age. Although this may seem expensive, it is considerably cheaper than the compulsory earnings-related healthcare contributions made by all of those working in France.

Alternatively, British expats can start contributing into the French social security system, either by finding employment perhaps as a self-employed tradesman, or by starting up a small business such as chambres d’hotes.

This would mean that they are, in effect, paying their own compulsory earnings-related contributions to receive basic healthcare cover. While this may seem a good option for someone with modest earnings, high earners will obviously contribute more.

For individuals who have already or who will shortly reach UK state retirement age, under EU regulations they will be entitled to apply to the UK for a E121 form, which will give them and a younger spouse or other dependants, access to healthcare on the same basis as a member of the country in which they are living. However, they will, as now, require ‘top up’ insurance.

Trevor Leggett comments, “The good news for those Brits living in France, or looking to move here is that finally the position regarding healthcare has been clarified. The French healthcare system is an excellent system in terms of medical provision and care and is one of the reasons so many British people do want to move to France.

“Now, with these changes, Nicolas Sarkozy aims to simplify the previously quite complicated contributory system. It is also quite likely that these measures will, sooner or later, result in the lowering of the earnings-related contributions, which is good news for everyone working in France.”

Trevor Leggett ends, “It will be interesting watching the reforms come into being. The timing set for the recent reforms are considered by most of the large unions in France to be unreasonable. In some cases, Sarkozy has given the unions just 15 days to consider, which is likely to cause a stir! Change, while very necessary, may well be volatile!”

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