If you’re taking operations across the pond, you should begin familiarizing yourself with the UK healthcare system and how it relates to your expats and employees. The National Health Service (NHS) is the only true example of socialized healthcare in the world. It has its positives and negatives, which are related to both political opinion and quality of care.For employers and employees alike, healthcare is confusing. To help, we compiled important information about the NHS and how it relates to your business operations in the UK. We look at the differences between healthcare for expats and local nationals, along with a general overview of the system.
A Quick Overview of UK Healthcare
Before Affordable Care Act started in the United States, conservative politicians used the NHS as their prime example of the dangers surrounding government-run healthcare. It’s not up to us to promote or discourage the politics behind socialized healthcare. We will simply focus on the structure of the NHS and how it affects international employers.
Developed in the wake of World War II, the NHS was created as a single-payer healthcare system funded by taxpayers. The UK government is the single payer. Because the NHS is paid with tax dollars, all appointments and treatments are free to the patient as are most prescription drugs. The maximum cost of any prescribed drug is $12.
The World Health Organization (WHO) ranks the UK 18th in its list of the world’s top health systems. To give you an idea for comparison, the US ranks 37th on this list. In fact, Great Britain tops America in life expectancy and infant mortality while spending less on healthcare.
Common complaints of the NHS include long wait times, understaffing, specialists restrictions, and inferior cancer care. Also, because UK healthcare is managed by the government, it is reliant on the passage of levies. Increased levies lead to higher tax responsibilities for the citizens of Great Britain.
However, the NHS isn’t the only healthcare option in the UK. Employers may opt to provide private healthcare options to their employees. Private healthcare gives employees the freedom to see the specialist of their choosing and receive quicker treatment.
Differences Between an Expat and a Local National
UK healthcare is available to all taxpayers in the UK. There are restrictions for coverage of expatriates compared to a fully-covered local national, which we will dive into soon. First, let’s look at the differences between an expat and a local national.
An expat is an employee tasked with temporarily working for his or her company outside of their permanent residence. For example, if you have a team member working locally, you can relocate them to your new country as an expat. An expat is also commonly referred to as a parent-country national.
Local nationals, also known as host-country nationals, are employees hired for jobs in their own country. Any UK citizen employed by a UK-based subsidiary of a larger global company is a local national. You can hire local nationals by establishing a legal presence through Foreign Subsidiary as a Service (FSaaS) or International PEO. You can learn more about these two options in our previous post.
Employee Classification & its Impact on UK Healthcare
If you choose to hire local nationals, which is typically a requirement when starting up operations abroad, they are automatically entitled to UK healthcare. Coverage is managed through your company’s payroll. Employers withhold taxes along with pension funds, social security, etc.
It’s advisable to use one of the services mentioned above or outsource international payroll to a trusted advisor to ensure that your company is remaining compliant.
Expats are trickier when it comes to UK healthcare. While they are entitled to emergency treatment at NHS hospitals, expats are typically liable for out-of-pocket payments covering dental work and in-patient treatments. This is all dependent upon their native country. For example, citizens of Australia, New Zealand and members of the EU are exempt from payments.
For both of your local nationals and expats, it’s a good practice to offer employees supplemental healthcare. Coverage that takes care of employees and their families is a wonderful benefit that can help you entice the best talent to join your international team. Supplemental health benefits expedite services and give those covered options for higher quality service.