Shanghai Expat Medical Insurance: Typical Premiums & Fees

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  • #4512
    Anonymous
    Guest

    Health insurance for expats living in Shanghai can get very expensive very fast. Let’s look at a few numbers.

    Let’s say you are a family of 4 living in Shanghai, and you want to buy some comprehensive medical insurance that covers both inpatient and outpatient services. One leading international insurance provider offers coverage to Shanghai expats at 3 levels of service.

    The mid-priced package provides hospitalization, outpatient services, health checks, emergency medical evacuation, and a variety of other features that expat families in Shanghai would care about. It does NOT cover the US, except for emergencies.

    How much can you expect to pay for this kind of coverage?

    If you were a single 34 year old living in Shanghai, your annual premiums would be just a bit over US $1500 (as of November 2012).

    You first child would cost you an extra $700 or so, and your second child would add another $ 550.

    So for the whole family, you can expect to shell out around US$ 4,250 for a year’s worth of comprehensive medical insurance in Shanghai. (Being in Shanghai will cost you around 10% more.) It’s worth it to have piece of mind – but even better if you can get your company to foot at least part of the bill!

    BUT, you can lower your premiums significantly by opting for a “deductible” or “excess”. (US providers say deductible, UK and international say excess. Same thing.)

    If you select a $100 deductible, then the first $100 in medical expenses each year are your responsibility, and you must pay out of your own pocket.

    In the case of this fictional company, a $100 excess will save you around 5%, a $400 excess will cut your premium by 15%, and a $1,600 excess will save you 30%.

    Every company is different, and you will have to sit down with an advisor to get the facts for your unique situation. But expats and international Chinese in Shanghai can expect to see these kinds of premiums for high-quality comprehensive medical insurance.

    #4793
    Anonymous
    Guest

    Health insurance for expats living in Shanghai can get very expensive very fast. Let’s look at a few numbers.

    Let’s say you are a family of 4 living in Shanghai, and you want to buy some comprehensive medical insurance that covers both inpatient and outpatient services. One leading international insurance provider offers coverage to Shanghai expats at 3 levels of service.

    The mid-priced package provides hospitalization, outpatient services, health checks, emergency medical evacuation, and a variety of other features that expat families in Shanghai would care about. It does NOT cover the US, except for emergencies.

    How much can you expect to pay for this kind of coverage?

    If you were a single 34 year old living in Shanghai, your annual premiums would be just a bit over US $1500 (as of November 2012).

    You first child would cost you an extra $700 or so, and your second child would add another $ 550.

    So for the whole family, you can expect to shell out around US$ 4,250 for a year’s worth of comprehensive medical insurance in Shanghai. (Being in Shanghai will cost you around 10% more.) It’s worth it to have piece of mind – but even better if you can get your company to foot at least part of the bill!

    BUT, you can lower your premiums significantly by opting for a “deductible” or “excess”. (US providers say deductible, UK and international say excess. Same thing.)

    If you select a $100 deductible, then the first $100 in medical expenses each year are your responsibility, and you must pay out of your own pocket.

    In the case of this fictional company, a $100 excess will save you around 5%, a $400 excess will cut your premium by 15%, and a $1,600 excess will save you 30%.

    Every company is different, and you will have to sit down with an advisor to get the facts for your unique situation. But expats and international Chinese in Shanghai can expect to see these kinds of premiums for high-quality comprehensive medical insurance.

    #5468
    Anonymous
    Guest

    A friend of my who’s an US citizen is working in China for almost 5 yrs now on a valid work visa. She draws her salary in US$ from a company with an office in the US. She’s already paying US income tax, but the company is telling her that she also needs to pay taxes in China. Any truth to that?

    She has an option to get paid here in RMB, which means she’ll have to pay local taxes for sure, and possibly US taxes. In this case, can she deduct Chinese taxes in her US income tax filing?

    #5469
    Anonymous
    Guest

    If she makes over some small amount, she should have been paying Chinese taxes for all 5 years. (and, I’m not completely sure, but even if your wages are below a certain amount, they still need to be declared locally. The process has changed a lot in the last 2 or 3 years too.)

    US citizens are required to pay tax on ALL income, in this case, regardless of if the actual pay is in RMB.

    Chinese taxes can be claimed on US tax forms, consult the IRS and state tax publications for details. The net effect is noticeably higher taxes though, so, most ‘decent’ US companies offer a tax equalization benefit; they pay this difference.

    Once expat package benefits are included in both tax systems, the tax calculations can get complicated, and, managing things like the difference between the company paying her rent vs. her paying for it and getting reimbursed, or not reimbursed at all, can affect how much tax is paid.

    And, after 5 years, with various caveats, she’ll need to pay more in local taxes.

    If she has the means, and her company is not helping her directly, it’s probably valuable to her to get a tax/accounting firm involved.

    #5470
    Anonymous
    Guest

     

     

    A couple of thoughts:

    Your friend should not have to pay US federal tax if she meets the requirements for “working abroad” and does not make more than a certain amount (somewhere around USD 90,000, I think). State level income tax is another story. However, as I happen to live in a state that has no income tax, I don’t know enough to comment.

    She should be paying taxes in China. That she hasn’t after 5 years speaks volumes about the PRC tax authority. Still they are not to be messed with. Given that your friend has a valid work permit, it would not be difficult for the authorities to figure out that she is/has been working in China.

    Generally speaking, if you work abroad, are required to pay US federal income tax, and pay tax in the foreign country where you live, you can deduct the amount paid abroad from your US tax obligation. Thus, if she chooses to be paid in RMB and is taxed in China and the US, she should get credit for taxes paid in the PRC.

    This can be a very complicated matter and is often a central issue of most expat packages.

    Your friend should seek the advice of a quality tax firm (e.g., PWC) to sort this out. She may owe back taxes to the PRC, but she may also be entitled to a substantial refund from the IRS.

     

    #5471
    Anonymous
    Guest

    Check the forums, US taxes have been addressed several times.

    For US Fed taxes, foreign income exclusion is 87K USD.

    However, she still is required to pay Chinese Income Tax, so there would be an additional credit allowed.

    She should also enquire about receiving allowances (10-20% to reduce gross salary) for calculating Chinese Income Tax – but will need to provide fapiaos.

    There are pro and cons to every expat package, one size does not fit all.

    As it has been stated, a good accounting firm can sort it out for her – don’t know if her firm will foot the bill though.

    #5472
    Anonymous
    Guest

    Large multinational U.S. employers usually offer a tax assistance package that includes paying for U.S. and foreign income tax preparation fees. Many smaller employers will do this as well if they consider the employee a valuable asset and are asked to do so. U.S. expatriate employees should also see if their employer has a tax protection or tax equalisation policy where the employer will pay any income tax over that which the employee would have paid in the U.S. on base salary if not assigned abroad.

    U.S. taxpayers who qualify under IRC Section 911 can exclude foreign sourced compensation of up to $87,600 in 2008 and $91,400 in 2009. If they pay foreign income tax it can be deducted, or taken as a foreign tax credit against U.S. tax on foreign sourced income but only to the extent that the taxes are attributable to income that is not excluded or to deductions against foreign sourced income.

    There is a catch. If a U.S. taxpayer files a tax return and elects out of the FEI exclusion it cannot be claimed for 5 years. Therefore a U.S. taxpayer with foreign sourced compensation who files a tax return without electing the FEI exclusion can be deemed to have made an election not to claim the Section 911 benefits.

    Also, if a U.S. taxpayer files a statement with a foreign government stating that they are not responsible for paying foreign income tax otherwise due, and as a result they are exempted from paying foreign income tax, they can be denied using the Bona Fide residence test for Sec. 911.

    Final point. It does not matter where the compensation is paid to get the exclusion. What matters is where the services are performed that determines foreign or U.S. sourcing. Also, IRC Section 61 states that all income from all sources are included in income, which is why the exclusion determined on Form 2555 is carried over to line 26 of Form 1040 as a negative number to reduce all of the income reported on Form 1040 above that line.

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