Expatriate Compensation

Required Benefits

In expatriate compensation, there are typically no special benefit plans separate from the home country plan. However, adaptations and changes to domestic plans are made to accommodate the assignment.

This section examines the basic benefit areas including required and discretionary benefits, medical plans, holidays, and vacation.

U.S.-required benefits

U.S. expatriates are subject to all U.S. federal laws but may not be covered by state laws covering benefits, particularly if the employee breaks state residency at the request of the tax accountants. In this instance, expatriates pay U.S. Social Security, but they may not be covered by unemployment or workers compensation insurance.

Worker's compensation insurance should be reviewed to determine if expatriate employees are covered. It may be appropriate to take out special workers compensation insurance to cover expatriates.

Host country-required benefits

Expatriates may be subject to the required benefits of the host country. These benefits may vary from much less to much more than home country benefits.

For a description of required benefits by country, visit the International Social Security Association (ISSA) website.

Almost all countries have social security programs and expatriates may find themselves unnecessarily paying into both countries’ programs. This normally can be avoided as many countries have signed treaties to ensure international assignees avoid paying double social security payments. At present, the United States has agreements with 30 countries which will accept the U.S. Certification of Coverage.

It is important to file for a U.S. Certificate of Coverage prior to the foreign assignment, which verifies U.S. social security coverage to avoid double payment in both the home and host countries.

Some of these treaty agreements can be found on the Social Security Administration's International Programs website.

Health and Welfare Benefits

Retirement plans

Retirement plans typically do not need to be adapted for expatriates. Occasionally, a career internationally mobile employee may be better managed from an international retirement plan, which can be purchased in the marketplace.

Health care plans

Medical, dental, and vision plans may need to be changed or adapted for expatriates.

Some medical plans - especially Health Maintenance Organizations (HMOs) in the U.S. - are limited in the geographical region where they offer coverage. It is important to ensure the U.S. expatriate's medical plan provides for appropriate coverage while on assignment. On occasion, a special medical plan needs to be procured to cover expatriates and their families while in the host location.

Required in other countries?

Some countries may require enrollment in a retirement and health care benefit plan. For instance, a “superannuation” (retirement) plan is required for all employees in Australia. There is a national health plan in many countries.