TAX

Health Care Insurance – Home Coverage or Dutch Coverage?

Since a couple of years, everyone who lives or works in the Netherlands has the obligation to participate in the Zorgverzekeringswet, or Health Care Act. Particularly in international situations, the question arises whether this obligation also applies to the expat and his family – because in many cases the home country health care insurance is continued while the expat is here.

In this article, I will go into how it is determined whether the act applies and into whether or not the international insurance can be continued.

The following situations can arise:
1. insurance in the Netherlands is obligatory
2. obligatory insurance abroad takes place pursuant to a social insurance treaty that arranges foreign (legal) coverage of medical expenses.

Coverage in the Netherlands
Obligatory coverage in the Netherlands applies to anyone who is a resident of the Netherlands. If you have been entered in the municipal registry of a Dutch municipality, then you are a resident, which is usually the case if you are residing in this country legally. However, non-residents are also under obligatory coverage if they carry out work in employment in the Netherlands and wage taxes are paid over the generated income.

The Health Care Act states that there is not only an insurance obligation, but also an ‘acceptance’ obligation. If you are under obligatory insurance in the Netherlands, then within four months after this has become the case, you must have approached an insurance company here, which, in turn, has the obligation to accept you. Keep in mind that, if fail to do this on time, you will be subject to a fine!

Aside from the Health Care Act, if you and your family reside here legally, you are covered by the Exceptional Medical Expenses Act (AWBZ). This covers care aimed at avoiding illness, as well as medical care, nursing, or other types of care, such as retaining, recovering or improving your ability to work, or improving your living circumstances.

It follows from all this that if you legally reside in the Netherlands, then you will likely be under obligatory coverage of the Health Care Act and the Exceptional Medical Expenses Act.

Treaty
Expats often try to recover their expenses via their (legal) health care insurance in their country of origin. If this is the case, a distinction has to be made between ‘treaty countries’ – allowing the employee to invoke a bilateral treaty between the Netherlands and the country in question – and non-treaty countries.

For the purpose of assigning an applicable social insurance legislation, the Netherlands has entered into a bilateral social insurance treaty with the following countries: Australia, Bosnia-Herzegovina, Canada, Quebec, Chile, Cyprus, Egypt, Israel, Japan, Cape Verde, Croatia, Macedonia, Morocco, New Zeeland, Serbia-Montenegro, Tunisia, Turkey, the US, and South Korea. In separate treaties it is then decided to whom the treaty applies. Some treaties only apply to citizens of the countries that are a party to the treaty, some apply to non-citizens who are legally insured in one of the treaty countries.

If you intend to invoke a bilateral social insurance treaty, then you should keep in mind that the premise in these treaties is that the employee is insured in the country in which the work is carried out. This is called the ‘principle of the country of employment’. However, there are also exceptions to this principle, allowing you and your family to continue the social insurance of your home country. In order to be allowed to do this, you must meet the requirements listed in the treaties under the heading ‘applicable legislation’.

The continuation of the social Insurance legislation in the country of origin means that the Dutch legislation is not applicable – nor the obligatory coverage by the Health Care Act or the Exceptional Medical Expenses Act.

Conditions
One of the conditions is that the employment relationship with the employer in the country of origin must be continued and that the work that is carried out in the Netherlands must be of a temporary nature. This means that if you are sent to the Netherlands (for instance, to fill a position within a group of companies), you can be exempted from the insurance obligation pursuant to a treaty under the condition that you do not enter into an employment contract with the Dutch branch, but that you retain your employment relationship with the company that is sending you abroad.

The premise is that the social insurance legislation of the other country can continue to apply for a maximum of five years. I you wish to continue working here after these five years have passed then the Dutch social insurance legislation will become applicable and you will be under obligatory coverage of, among others, the Health Care Act.

You can show that a treaty applies to you by means of what is referred to as Form 101. If you remain covered abroad, then this usually includes legal insurance against medical expenses. However, the legal system in other countries can be quite different. It is important to be aware of the fact that most countries that have entered into a treaty have agreed that the employee will make use of the medical facilities of the country in which he or she resides, but that the costs will be borne by the country in which this person remains insured. This is different in the treaty with the US and with South Korea. Medical expenses are not covered by the treaty, so that, consequently, there is no legal regulation on the coverage of medical expenses. Yet, the treaty does imply that the country of employment (in this case, the Netherlands) may not apply the rules on obligatory coverage. The apparent consequence is that the employee is not covered by the legislation of either country.

No Treaty
If your country has not entered into a social Insurance treaty then you cannot invoke the coverage of the social Insurance of your country of origin. In that case, you will be covered by the social insurance legislation of the Netherlands, and will have to arrange insurance here.

In short, it is of great importance to determine whether you are under obligatory coverage of the Dutch Health Care Act. And you should be aware of the fact that, though you may have continued your home country health insurance, you might still be under obligatory insurance in the Netherlands as well.

Nico van Dijk works as a tax advisor for Loyens & Loeff, www.loyensloeff.com. He can be reached via 010 - 224 63 45 or nico.van.dijk@loyensloeff.com

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