Retiring abroad can be very expensive
The first months of the lockdown were an exceptional situation. Governments were forced into taking action. Many repatriated their nationals, which, while being a generous act, was not necessarily free of charge. Most of the 7255 Swiss nationals repatriated by their country had to pay the bill later. But for some retirees, the exception has become the norm. The Swiss Embassy recalled its limits, and according to Article 5 of the Swiss Abroad Act: "Every individual shall exercise personal responsibility when planning or undertaking a stay abroad or when working abroad." Switzerland only intervenes as a last resort.
Can a change in the host country's legislation impacts the lives of expat retirees and trigger the intervention of the home country? For example, since COVID, Thailand has required foreign retirees to have health insurance with basic coverage of at least $100,000, representing 103 to 206 dollars per month. Failing to abide by this rule implied a risk of deportation. This amount has been unaffordable for many retirees who have immigrated to Thailand. They mainly chose this country because of its lower cost of living compared to their country, where their retirement pension alone was never enough.
The Thai health system, which has been badly hit by the pandemic, has been taking significant steps to protect itself. While all countries are pushing for labor migration to boost their economies at no additional cost to the country, foreign retirees are piling up on the local population and adding more strain on the Thai healthcare system. This is why Thailand refused to bear the extra cost alone.
Should you take out private health insurance when retiring abroad?
Unfortunately, the pandemic has compelled many people to seek a better life overseas. This trend has been observed among both the active and the retired segments. In fact, most of them were seeking better environment and living conditions. At the end of the day, retired expats only want to make the most of their new life. For the most part, everything goes well. The retirement pension, which sometimes might not be enough to live on in the country of origin, can be more than enough in the host country. And most of the time, it is recommended that expats take out private health insurance. With age, however, health costs increase, and not all countries are equal when it comes to health care. COVID has shown that healthcare costs can be a major burden for retirees abroad.
Some of them are still unaware that when they move abroad, they are no longer affiliated with their country's health insurance system. For example, some French retirees who moved to Morocco believed they were still covered by the French health insurance system. Others usually rely on the tax treaty between the two countries to go back and forth for less than 3 months and get the necessary treatment in France. However, the convention specifies that one is considered a Moroccan resident when they spend more than 183 days per calendar year in Morocco, whether consecutively or not.
French law is quite clear on that matter: as soon as one leaves the country, health care expenses are no longer covered by the French health insurance system. The retirement pension can be paid if the person notifies the health insurance company of their situation. On the other hand, Moroccan law requires that one contributes to the country's health insurance. The amount of the contribution is calculated on the basis of the retirement pension. This health insurance is called "basic"; it is better to supplement it with private insurance.
What are the risks of retiring abroad to escape insecurity?
If something goes wrong, the country of origin will not take responsibility. Organizing emergency repatriation, for instance, will be an issue for those who have not taken out private insurance with a repatriation option. Such options drive up the cost of living for retirees abroad. However, they should be factored into the budget when one wants to understand how much they will benefit from living abroad.
The economic crisis and inflation also weigh on retirees' budgets. This is why more and more people choose to live abroad and simply escape the precariousness in their home country. However, this choice can turn out to be questionable when the host country decides to impose new rules.
Unfortunately, the country of origin is also impacted. Retirees who can no longer live in the foreign country may have to return to their homeland unless they move elsewhere. But when these people are no longer in a condition to do so, the problem becomes complex. Hence the warnings from governments about retiring abroad. So, yes to a comfortable life with better purchasing power, but not without considering as many aspects as possible.
