Americans Helping Americans Abroad

Under French law, health coverage is universal and obligatory and everybody must contribute to the costs as a function of means.

What is PUMA?

PUMA (protection universelle maladie) became law on January 1, 2016. As the name implies, it is meant to ensure that all legal residents in France have medical insurance even if they are not, as was previously required, in the labor market. According to the Code of Social Security (CSS), you are considered to be covered automatically after three months' legal residence in France. (CSS Art. L. 160-1). Although the coverage is automatic, you still have to apply for a medical insurance account (ouverture des droits) at your local social security office (CPAM) before you can claim reimbursements or subscribe to complementary or mutuelle coverage for what French social security does not pay.

Exceptions to PUMA

Expatriate workers who are sent to work in France by their US employers are ineligible for the PUMA for up to 5 years, and people self-employed in the US who come to work in France are ineligible for up to 2 years.

During those periods, they will need to purchase private insurance. Certain people already covered for health costs are also ineligible; such as, retirees of international organizations, diplomats, people with pensions from EU countries. (CSS Art. L. 160-6)

Paying for PUMA

People whose earnings from employment or professional activity are more than about 8200€/year are considered to have contributed sufficiently to the national health system via payroll deductions paid by them and their employers, or by direct charges. They are not concerned by the PUMA.

On the other hand, people whose earnings from employment or professional activity are less than about 8200€/year will have their medical costs reimbursed by the PUMA and, as a quid pro quo, they may have to contribute to the costs of their care (CSS Art. L. 380-2). The premium is called the cotisation subsidiaire maladie (CSM). Again, it applies to people do not make a sufficient contribution based upon work or professional activity; that is, who earn less than 8200€/yr. Instead, the CSM of 6.5% is levied against their worldwide* investment income, minus an abatement (about 20,500€ in 2020 and indexed for inflation).

Americans resident in France are not notified of their status as beneficiaries of PUMA. It is when they file their French income tax declaration that they are “discovered” by the French tax authorities (the “fisc”). The fisc examines tax declarations to measure the criteria of earnings and investment income that subject the resident to the CSM. The names of those who must pay the CSM are sent to Urssaf, the social security collection agency. Urssaf sends a bill for the CSM at the end of November in the year following each year of coverage. In other words, if you attain three months of legal residency in 2020, you will be covered from that moment, but your first official notification will be when you receive a bill for 2020 medical insurance at the end of November 2021. It will be pro-rated for your first year of residence.

You must pay the total or arrange payments in three equal portions or contest the bill within 30 days. Note that the 30 days run through the December holiday season, so you should anticipate this if you plan travel.

You are not alone in not being told you have national medical coverage. The Sécurité sociale (Sécu), which manages the health system, does not know either! The Sécu only learns it has a newly affiliated member when that person files a request for “affiliation” (ouverture des droits) at a local office, the CPAM.

The approval can take months, depending upon the workload of the département where you live. In the meantime, if you need health care you must ask the provider for a feuille de soins, which shows what was done medically and how much you paid. You can later submit these documents to the CPAM for reimbursement.

When your application is approved, the Sécu will issue an attestation de droits that tells any medical provider of your enrolled status. You will be able to apply for a health card, the Carte Vitale, and for complementary insurance. You will receive a permanent social security number.

Calculation of the CSM

If earnings are less than 20% of the PASS and worldwide* investment income is greater than 50% of the PASS, the CSM (premium) is 6.5% of the passive income above the 50% abatement. In tabular form:

Criterion

Calculation

Wages or professional earnings

Threshold: 20% of PASS, about €8200

Worldwide* investment income

Abatement: 50% of PASS, about €20,500

Payment rate

6.5% of amount over €20,500

Income ceiling subject to CSM

8x PASS, ie, you pay on up to about €325,000

PASS (Plafond Annuel de la Sécurité Sociale) is the earnings ceiling for social security contributions, about €41,000/yr, inflation-adjusted annually. There is also a digressive calculation for people with 0-€8200 professional income, not treated here.

France's Constitutional Council has ruled that the CSM is not a “tax” (impôt de toute nature), but a quid pro quo. Therefore, ask your tax adviser if it is deductible as a foreign tax credit on your US return.

CSS Art. L. 380-2 says that people who receive a pension are exonerated from the CSM and, so far, that seems to be respected. To our knowledge, the exoneration has been applied not only to French pensions, but to US Social Security and other pensions as well. We cannot now confirm this as an absolute or assert that the applicable law, regulations or interpretation will not change.

French medical insurance has generally been a family affair. If one person of a family was employed, the whole family was covered. This is the concept of the ayant droit, a right derived from a familial link to the direct beneficiary. PUMA abolishes the status of the ayant droit by according a social security number and account to each individual, but the rights do not change. So, in the case of a couple, whether married or PACSed, if one partner earns more than the PASS threshold, 8200€, neither partner is subject to the CSM. If one partner is exonerated because of a pension, neither is subject to the CSM. In the case of a couple in which both partners are subject to the CSM, the abatement of 50% of the PASS is applied to each.

Private Medical Insurance

In France, private health insurance cannot substitute for obligations to the national health system!!

People covered by the PUMA who also have 1st euro (non-deductible) private insurance are, in effect, paying for redundant coverage and could consider the advantages and disadvantages of switching to complementary private insurance.

Those who subscribe to the 1st euro plan AARO offers through MSH have certain advantages, such as a much higher reimbursement rate (generally, up to 400% of the official French tarifs) than the Sécu's (usually around 70% of official French tarifs), without having to also subscribe to a complementary policy or to a mutuelle.

There may be coverage when traveling outside France, including to the US. The MSH plan is portable for people who change their country of residence. When there are problems, service is in English.

While the private insurance will likely imply redundant coverage, those not subject to the CSM because of income levels or the exemptions described above will pay a premium only for the MSH coverage. On the other hand, those who have to pay the CSM in addition to the MSH premium might consider using PUMA as primary and changing to the MSH complementary version. This will retain the high reimbursement rates that a different complementary or mutuelle cannot provide.

*IMPORTANT Even though your income from investments in the United States may not be taxable by France under the bilateral tax treaty, this income is counted when calculating the CSM. The CSM is not a tax; it is a quid pro quo: health care in exchange for a contribution to medical costs.


DISCLAIMER AND CAVEATS
These comments are not legal or professional advice from AARO. They are observations, whose sources and texts you may want to verify, that you may wish to consider if you plan to ask questions of URSSAF and/or to contest the bill for a cotisation subsidiaire that you have received. AARO declines responsibility for any consequences should the information provided prove to be inaccurate or incomplete.