Social security coordination and healthcare arrangements

What does the Trade Agreement say?

The Free Trade Agreement broadly replicates the existing rules on social security coordination, which is good for business because social security payments will only be due in one state at a time. It will, in general terms, still be possible for mobile workers to remain insured in their home country while working temporarily in the UK (or insured in the UK when working in the EU, as applicable), although possibly not for as long as provided for while the UK was a member of the EU. Benefit coordination provisions (old age pension, sickness benefits, etc.) are provided for in some detail in the FTA, again largely mirroring current arrangements.

The FTA includes provisions regarding reciprocal healthcare arrangements, largely mirroring current arrangements under the existing social security coordination rules. Individuals travelling on business from the UK visiting an EU member state, or vice versa, should still be covered and able to access emergency or necessary public healthcare during their trip under their existing European Health Insurance Card (EHIC), or equivalent such as a Provisional Replacement Certificate (PRC). There may be some practicalities and arrangements may change over time - e.g., the UK government has indicated it plans to phase out UK-issued EHICs over time as current EHICs expire and gradually replace them with a UK Global Health Insurance Card (GHIC).

The FTA allows the UK and EU member states to charge a health fee for individuals from an EU member state applying for a permit to enter, stay, work or reside in the UK, and vice versa. Under the reciprocal healthcare arrangements, reimbursement of the health fee paid should be available where the individual resides in the UK, but remains insured paying social security contributions in an EU member state, and vice-versa.

How does this compare to what was expected?

The main area where the FTA appears to diverge from the expected outcome is regarding the continuing home-country social security coverage for detached workers. EU member states appear to have an opt out, whereby they can choose to dis-apply this provision. This would result in UK assignees to those countries becoming liable to host country social security, and EU assignees coming to the UK becoming liable to National Insurance.

In addition, family benefits are unexpectedly excluded from the FTA, which could lead to a financial loss for some detached workers from the UK leaving to work temporarily in the EU.

Generally, however, the level of co-operation in this area is more comprehensive than some feared which will be welcome news to businesses and individuals engaged in cross border work.

What are the actions for business?

Given the impact of the opt out on businesses with mobile employees (their employers would become liable to foreign social security), it would be surprising if any EU state chooses to exercise this opt out, either before the entry into force of the FTA, or subsequently.

For now, and certainly until the EU publishes the list of opt outs, businesses should operate on the basis the current rules (enabling home country coverage) apply, and should be able to reassure cross-border workers that entitlements to benefits should remain unchanged.

Although reciprocal healthcare arrangements under/mirroring the EHIC arrangements have been agreed, current advice from the UK government is that individuals should ensure they have travel insurance with healthcare cover for trips from the UK to the EU, and vice versa. Employers should therefore review corporate travel insurance policies and ensure they include adequate healthcare coverage provisions in their policies for business travellers. Similarly, employers should consider the approach they take to internationally mobile employees with children to assess the extent to which any loss of child benefit should be made good.

To discuss specific support with your Brexit preparations based on this latest development contact: Deloitte Brexit Insights.