International Insurance: Social Security
What is Social Security?
Social security, sometimes also known as national insurance, traditionally covers the following branches:
- health insurance and medical care
- invalidity and disability benefits
- family benefits and bereavement grants
- unemployment benefits
Of course, the availability and scope of national insurance plans heavily depend on the country you are looking at. Additionally, expats have to be careful about which national insurance plan they need to pay into and what claims they can make where. To help you figure out this aspect of your international life, we have summed up the most important facts you need to know about claiming insurance payments while living abroad, as well as details on international social security agreements.
If you are, however, interested in international health insurance, e.g. who is going to foot your medical bill in case of illness or an emergency abroad, check out our article on Expat Health Insurance. Or would you like to know more about international retirement coverage? Then make sure to visit our article on Pension Planning for Expatriates.
Claiming Social Benefits While Living Abroad
Whether you are able to claim social benefits during your international life heavily depends on several factors:
- the country you are currently living in
- which country you are originally from
- where you have been or are now paying national insurance contributions
- what kind of government benefits we are talking about
The U.S., for example, allows their citizens to receive social security payments worldwide, as long as they are eligible and don’t reside in Cuba or North Korea. In the case of these two countries, payments will be withheld until you have moved somewhere else.
Citizens of the United Kingdom, on the other hand, may only claim their UK benefits while living in a member state of the EEA, Switzerland, or any other country which the UK has a social security agreement with. The UK state pension is the exception to this rule and can be claimed elsewhere, too. However, your pension will only increase annually if you are staying in one of the aforementioned places or come back to the UK for at least six months a year.
So, as you can see, international agreements can play an important role in regard to social insurance coverage and the possibility of claiming benefits across borders.
The Benefits of Social Security Agreements
Every country has its own rules and regulations concerning their national insurance system and how it is financed. As a consequence, it is immensely important for expats who live and/or work abroad to collect detailed information and to find out whether there are any social security agreements between their old home and new host country. Such agreements typically serve two main functions:
Firstly, they are supposed to prevent dual insurance coverage and double payments. You wouldn’t, after all, want to be charged e.g. for health insurance in two different countries at the same time. While you may not be able to freely choose which national insurance system to contribute to, an agreement between two or more nations usually establishes a set of rules that regulate where one has to pay.
Often, these regulations are based on the so-called “territoriality” rule: You are part of the national insurance plan in the country where you earn your money. There are, however, many cases where this is not as clear cut. You will also read some examples of this in our sections on EU Social Security Coordination and other international agreements concerning national insurance cooperation.
Secondly, international agreements also serve to enable a totalization of benefits: Periods of paying insurance contributions in an agreement country are taken into account when calculating your benefits, just like similar periods spent at home. Or you get partial benefits from both countries. This way, money spent on national insurance schemes abroad is not lost, but transferable; a process you might also encounter under the term “portability”. While the details in the various bilateral or multilateral agreements might vary, especially in how they are implemented, the basic idea is the same.