Navigating social security benefits for Expats

By Alix Rassel

AMCHAM Chairman Paul Schoenberg opened Tuesday's seminar by commenting that "Social Security benefits were not usually the most entertaining of topics up for discussion."

However, with over 80 people in attendance, the presentation given by Marielle Stevenot, Partner at MNKS, and Alexandre Pirotte, Manager Belgium and Luxembourg at Fragomen, was proof that the topic is of great interest to many.

As this was an AMCHAM event, the presentation focused on two areas of Social Security regulations; The bilateral Social Security treaty between USA and Luxembourg and EU Regulations 883/2204 and 1408/78 which may apply to U.S citizens hired on a local Luxembourg contract.

Marielle explained that the Luxembourg/U.S.A treaty was quite limited in terms of scope providing only Retirement, Disability and Survivors benefits. The treaty, which covers those on Secondment (work placement) to Luxembourg and not on a Luxembourg employment contract, provides no health care benefits, so individuals would need to obtain private healthcare before moving to the EU.

US-Lux treaty workings

Marielle and Alexandre used a 'case scenario' of Steve and Mary to explain how the US-Lux treaty works. The case scenario explained that Steve and Mary would not be entitled to healthcare or family benefits whilst residing in Luxembourg but that if Steve was offered a local contract in Luxembourg following his secondment, he would not lose any pension rights obtained from the U.S.A. 

Indeed, Marielle pointed out that the "Totalisation rule" is extremely important and ensures that all social security benefits, such as pension rights are taken into account when qualifying for a Luxembourg pension, even if Steve is locally employed in Luxembourg for less than 10 years.

For U.S citizens locally hired in Luxembourg, current EU regulations covering social security benefits are usually applied. The EU regulations coordinate member states and those in the EEA and provide benefits in the country of residence. In Luxembourg these include:

• Sickness, maternity and Paternity benefits;
• Pensions and pre- retirement invalidity;
• Survivors benefits;
• Unemployment benefits;
• Family benefits;
• Benefits in respect of accidents at work and occupational diseases.

Secondment vs local contract

Alexandre and Marielle used several case scenarios to explain that for locally hired individuals, healthcare applies even when vacationing in another European country and that maternity benefits accumulated in one EU/EEA country would be exported to Luxembourg.

A key point to mention was that if the husband/wife moves to Luxembourg on a local contract but his/her family remain for a time in another EU/EEA country an S1 form requires to be completed to ensure the remaining family receive benefits from the country they currently reside in. 

In short, the presentation highlighted the benefits of being hired on a local Luxembourg contract rather than opting for secondment.

For those individuals where secondment is the only available option, it would be wise to ensure that adequate private health care and other benefits are provided by the employer before committing to move.

Marielle and Alexandre's presentation was extremely detailed and covered many other aspects of social security benefits for expats.

For a complete overview visit AMCHAM's event archive at www.amcham.lu/events where the complete presentation will be available shortly.

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