Retire In France?

Health Care & Carte Vitale
22

Hi Deborah,

Ballarat does have the reputation of being colder. Still my place is near Heathcote and the nearest weather station is reporting +1. Your consolation is that tomorrow will be sunny after the fog.

I suggest you shop around and see if you can find a better deal. If you are going to stay in the house for more than 12 months, I think that solar is worth a serious look and when you sell it should add value. 1950s house should be solidly built so you should be able to insulate with batts or wool. Don't forget the floor, unless it's a slab. Wood heater is a good idea and even a sleeve to heat water. I have 2 heaters, one built into a fireplace which are kept going day and night in the winter. It's important to know the best wood to burn, which is not redgum.

23

Catherine, my hubby likewise worked in UK for 30 years and only a few years in the US but we moved to France in '02 and my hubby worked here for 9 years paying into the French system. We are now fully retired and have been for 2 years. Hubby also receives pension from France and our health care is fully paid by RSI. We pay no monthly charges whatsoever. We also do not qualify for British S1 as we are under French system. I didn't mean to sound as if I was complaining because I love France and the health care is the greatest, but it is my legal mind that when I read the US-French treaty and it specifically states that US social security is taxed at source and no other taxes or levies of any kind can be placed on those benefits, I truly believe that an argument can be mounted in exclusion of at US social security pensions. The UK treaty is worded differently. I can understand though why Medicare does not cover us outside the country. My gripe though is that the IRS does not consider French tax on social charges a foreign tax that is deductible on US return.

25

Deborah,

According to my reckoning your gas and electricity bills would add up to over $500 per month, which is $6,000 pa. You should be able to get a 5KW solar system for that and switch your energy consumption to electricity and your consumption habits to daytime use. That would knock your energy bills for 6. I suggest you investigate, because energy costs will skyrocket as there is less demand since many people are generating their own energy. I read somewhere that Australia has over 1 million rooftop solar installations.

Petrol is expensive everywhere. In France you'd pay the same numbers price as in Oz but in Euros instead, so 40% more.

26

Won't you automatically get registered when you buy or rent a property as you'll be responsible for the taxe d'habitation ?

27

You are right, the cost would be horrific in the US. We have been here 5 years with 3 hospitalizations between. We have had excellent care and virtually no costs other than a fairly small amount on a hospital stay that was before we signed up for a mutuelle.

28

Harriet,

You are correct, however, we are exempt/exonerated (not sure the right word) because we entered the French system via a retiree S1 from the UK–husband worked in UK for 30+ years. In effect, the UK pays for our healthcare here. On our French tax return each year we enter a statement which says our healthcare is paid by virtue of a UK retiree S1 and so far have not had to pay cotisations on our US or UK pensions, SSI or private. We have had to pay French income tax on our UK income. I would say we end up paying what we would in the States or UK, so fair enough.

I think you have a reasonable argument about cotisations but you could also look at it as an annual health insurance premium if you haven’t paid into the French system or into a health system in a country with which France has a reciprocal agreement. I have heard some people on high-ish incomes find it cheaper to buy private insurance than pay cotisations, but have not met anyone doing that.

For what it’s worth, I’ve written our Congressman about the fact that after paying into Medicare, in my case for many, many years and husband for 10, we have no coverage outside the US. Standard staff reply of course. Ex-pats, even though we can vote in our home state, are not a high priority!

29

am I understanding this correctly - we are 50 & 54 ex civil servants on early and ill health retirement pensions. We do not intend to work. This money will continue to be taxed in UK if we move to France.

If this is our only world wide income we wouldn't need to do a tax return in France?

If we had ISAs for example in UK, we would complete a french tax return but because of the double tax treaty, it would be zero tax in France and UK taxed at source?

is it really so simple???

(I don't mention state pension as we will be 70 before we receive this so not an issue!!!! yes, the gvt does intend to keep moving it forwards!!)

31

We do not pay the Medicare as we never intend to return to live in the US and merely take out travel insurance when we go. My husband just underwent a meniscectomy on his knee. The total bills for everything including private room, doctors, anesthesiologiste, etc. was under 1000€ which was covered in full by the Carte Vitale and our mutuelle with Swiss Life. We had a Secteur II orthopaedic surgeon who enjoys an excellent reputation in the Perpignan area. Do you want to even guess what that surgery would have cost in the US?

32

If you are covered by a Carte Vitale, all of your US pensions and US social security benefits and other income will be charged social charges. There and two and I believe that they total 7.1%. When we did our French return in May, I wrote an extensive argument why our US pensions should not be subject to the social charges as the tax on those pensions is an income tax. If we didn't have those pensions, we would not be charged the tax for social charges. I won't know until next month whether they bought my argument which was basically, a rose is a rose is a rose and therefore not allowed under the US-French tax treaty on those pensions.

33

Hi - the UK gvt has just changed the regs on healthcare, as I understand it, only those who have worked and paid NI contribs in the last 2 years will get health cover for up to a max of 2 years (depending on the NI contribs) after that you are on your own. No one else will receive any refund/reimbursement as used to be the case.

In the recent elections all of those who voted, voted for the Front Nationale, we lived here for 7 yrs as a maison secondaire our village has changed, the older people will still chat and spend the time of day, (60+) but not 1 of the under 40's acknowledge our existance any longer. (we are 50 and 54).

Affordability? Our d'habitation and fonciere were advertised when we purchased at 100 euros per year. HOWEVER we didn't know that the system takes the opportunity to re evaluate when a property is sold and although the house is exactly the same it went to 600 euros. When we queried it we were told that 'its cheaper than what you pay in the UK, what's your problem' - just don't budget to the last penny is what I'm saying here!

Food prices we find are exactly the same as in the UK and they don't really do offers, where you win is depending on where you live, you can grow heaps of fruit and veg, change your diet a little, learn to preserve and cook (if you need to) keep a few hens for eggs and hey presto food for free! (ish) we spend around 200 euros a month on a supermarket shop, alcohol, meat and fish isn't in this price, when we go over. We pay 48 euros per month for electricity , but remember we are only there for less than 6 months of the year. This doesn't include any heating costs. Basic Internet seems to be around 30 euros a month and telecom phone line rental about 18 euros per month. (google for packages) We have wood fired central heating and a chord of wood is 150 euros, we would use around 3-4 chords over the year. Water is metered and average for us would be around 100 euros per year. We have a longere farmhouse 4 beds.

Everyones household spend will be different - we live very frugally, I don't buy convenience foods, I will not be cold at any time of the year! We use the cheaper night time elec rates for washing and dishwasher and charging anything, we don't eat out, I don't drink at all and I am veggie. We are very careful with water useage, have led bulbs everywhere and if a light is left on inadvertantly, our neighbour will knock on the door to tell us so we can switch it off!

AND WE LOVE IT! Its like living in the 1950's - a very relaxed, tranquil place! My biggest worries are health and dental care costs. This is stopping us moving over full time. I have health conditions and wouldn't get private insurance. I can't risk not being accepted into the french system, (we have no UK benefits!!!) only our small pensions.

Well, that's our experience, I hope it helps in some small way!

34

Hi Catherine we go across a couple of times per year from Australia and stay for about 2 weeks each time. We are still working full time so have to fit it in with annual leave, etc. We usually go April/May and then at the end of the year either October or December/January. We do love the Dordogne it is very pretty. Would you be retiring or would you need to get work. Dordogne is regional France as I am sure you know and I don't think it is easy for an "outsider" to get work especially if your French is not up to scratch (which is the case for us). Where do you live just now? Cheers Jo

35

Mike,

We have Fidelity put any IRA withdrawals into a US checking account and transfer to France if needed. We elect witholding depending on estimated tax liability for the year.

The reciprocal tax treaty does relieve you of paying French income tax on US income. If you are a permanent French resident you have to REPORT worldwide income, but you minus out that reported in the US.

Healthcare is another issue. We qualified for the French health system as retirees when my husband turned 65. This was due to the reciprocal agreement between France and the UK. He spent 30+ years working in the UK and has dual citizenship. You’d have to check with Ireland but I don’t think they will sponsor your healthcare.

Before he turned 65 we had reasonable cover from my former US employer. If we had had to go on the open market for cover, I think we would have opted for a high deductible policy as day to day costs in France are quite low but cost of hospital stays can quickly mount. Of course, this is an individual decision. I believe after 5 years’ residency you can enter the French system, paying cotisations on reported income. I don’t know what income is taken into account to figure cotisations.

Another issue we faced was whether or not to pay for Medicare Part B. We will most likely move back to the US at some point. You probably know that unless you are covered by an employer, the premium goes up by 10% each year over age 65. We decided to pay it and probably the right decision, I have some health issues and because we were going to be in the States on holiday, I had several appointments and many tests which were covered by Part B.

36

Fidelity, the holders of our 401K and 403B seemed to indicate that if the disbursement checks were going to a foreign country (non US) that they were obliged to with hold. Not a problem as I would want to have the withholding taken as we get payouts. Not sure about SSI- though, if I'm going to owe on April 15, I'd just as soon pay as we get the checks. But the bigger question, as I understand it is that being required to pay US taxes on these payments, relieves us of that tax burden in the french system.

One question that I have is if we are liable for a tax on these earnings in the French social security system and if so, are we then eligible for French healthcare? Do you or any of our other members have any idea? We will both ikely enter France on our Irish passports and avoid the Visa issue that our US passports would require. We both have duel US/Irish citizenship. Having never worked in Ireland, we were never a part of their healthcare and so don't get the reciprocal Irish coverage. If anyone else can help us with this we'd be most appreciative.

37

Mike,

No US income tax payments are witheld from SSI payments unless you elect to have them witheld. Similarly, withdrawals from an IRA do not trigger taxes witheld at the time of withdrawal. Your financial institution which holds the IRA will suggest a 10% witholding but ime you do not have to elect to do this.

However, when April 15 rolls around and you owe much more tax than was witheld, you could be subject to a penalty. We opt to make voluntary quarterly payments against estimated tax liability. You can actually do this up to January 31 to offset previous year’s taxes. Very simple form to fill out.

US income from all sources has to be declared on the French income tax form but there is then a section on the form where you show the same amount as having been declared on your US income tax, so it’s a wash.

38

Hi Catherine,

No, my understanding that you will have witholdings taking from your payouts by the US IRS or actually whichever institution is paying you on behalf of the IRS. THose withdrawals are taxable by the US govt. Per the bilateral treaty on double taxation between the US and France, US SSI and individual pension savings plans recognized by the US tax codes such as a 401K, 403B, Roth IRA's and Kehoe plans are taxed by the US upon withdrawal of funds but are exempt from French taxes. The treaty is published on line but it is really thick reading. There are several "interpretations" of it also that can be found on line. Hope that helps.

From what I'm reading, we will be paying a lower tax rate to the US govt than if we were being taxed by the French govt.

Mike

39

I can recall that when Sarkozy was President, he wanted to raise the retirement age from 60, because there were massive demonstrations and maybe strikes about this.

Incidentally, I read recently that, despite his conservative credentials, Sarkozy introduced 20 new taxes. It looks like Hollande is merely carrying on the 'good work'.

The same article quoted the new prime minister Valls as having told the party faithful that France must "reform or die". I'm not sure what that means, except 'watch out'

40

Doreen, Perhaps it's 62 for women. I thought it was 60 for men of my age but when I looked at the small print, I discovered that yes you can retire at 60, provided you've paid contributions for 40 years, otherwise you only get 75% of the pension. Wait until 65 and you get 100%.