Cigna
Insights for Global Employers
Volume 3 of 5
we know expats
An employer's guide to a successful assignment
we know expats
An employer's guide to a successful assignment
LET'S TALK
ABOUT MONEY
Help employees keep their finances in order while working overseas
The opportunity to work in the United States is one many employees will eagerly seek. But often, once they arrive they come up against unexpected financial challenges. The 2013 Expat Trends Study found that 25% of assignees in North America felt that their Assignment Benefits Package did not meet their expectations. Having facts will help immensely from the outset.
The Cost of Living

It’s a given that there will be price differences on everything from a dozen eggs to a bottle of ibuprofen. But there are other day-to-day considerations to keep in mind as well. For example, almost all service professionals in the United States, from waiters to cab drivers and hair stylists, expect to be tipped - 15 - 20 percent is recommended.

Sales tax is another hurdle for inpats, and can be complicated by differing rates in neighboring cities and counties. Research state, county and city sales tax info online, and prepare accordingly — in some states the total is almost 10 percent and that additional amount is tallied at the cash register, not reflected on the price tag.

Health Care

Simply finding a primary care physician can be one of the biggest hurdles for a worker new to the U.S. healthcare system. Because there is no national health care in the United States, your employee will need to find a physician who accepts the insurance coverage provided (or that the employee has purchased), and many expenses may have to be paid up front and then reimbursed vs. being covered by the insurer at the time of treatment.

Education

If the employee is taking his or her family, the issue of education will be high on the list of things to settle before departing. In the United States, “public” schools are those provided by the city or county of residence, and are free. “Private” schools are those operated by religious groups and other entities, and often come with steep tuitions.

The employee should research both options well in advance of the assignment, especially if the child or children involved have any special needs. The employer should be willing to consider the cost of private school as an incentive or cost of living, depending on the employee’s children's needs.

Existing Bank Accounts

No matter how long the assignment, the employee will eventually return home. For that reason, he or she should keep all current bank accounts open, especially those used for auto-draft payments of mortgages and other recurring monthly expenses.

The employee may wish to have funds deposited in the U.S. bank account he or she opens for the duration of the assignment, as well as in his or her existing accounts. Make sure your payroll operations are able to meet this request so the employee doesn’t have to wire-transfer funds every pay period.

that is a ideal, as it will help eliminate currency transfer issues. Further, international accounts can be held alongside domestic accounts.

Establishing Credit

Offer your assignee a 3-5 day preassignment trip to their destination before the job begins. If possible, provide that trip to the family as well, especially when there are schoolage children involved. This gives the assignee a chance to experience the culture, the people, and the feel of being in their new home city.

Even if your employee has spotless credit in his or her native country, that will not be enough to establish credit in the United States. That can make it difficult to rent an apartment or house, and set up utilities.

If your business has any kind of reciprocal agreement with a U.S.-based bank, credit-card issuer or credit union, connect the employee with the local branch well in advance of the assignment so accounts can be set up. Another option would be to contract with a destination services firm specializing in relocation issues such as these.

It may also be advisable to perform some functions, such as home or auto rental, in the company’s name, with the employee designated as the user as opposed to the responsible party. That way billing, etc., will be a company concern.

Tax Burden

The employee will be a resident of one country, earning income in another — and responsible for taxes in both. Many countries offer double-tax agreements, which break down which country has taxing rights on specific sources of income, but many others do not.

The employee should consult a tax professional before departing to see what options are available, and should also seek similar advice once in the country of assignment.

Investments

If the employee’s assignment is only for a few months, he or she would be well advised to leave financial investments, portfolios, etc., intact during his or her absence. If the assignment is longer, he or she should consult with their brokerage professional in the country of origin regarding investment options in the country of assignment. Often investment fees are higher for non-citizens.

As the United States continues to be a primary destination for globally mobile employees, it's increasingly important for multinational employers to remain cognizant of the many challenges for their employees embarking on an assignment here. While a U.S.-based assignment represents an exciting opportunity for most, often, complexities that can potentially compromise success are overlooked.

It is widely recognized that the U.S. healthcare system is among the most complex in the world. Health care reform has added to that complexity significantly and contributes to difficulties for employees to understand the choices available to them, and how to achieve better healthcare outcomes for themselves and their families. Global mobility managers need to be as nimble as possible to help their employees on assignment in the United States navigate this increasingly complicated healthcare landscape.

Better understanding the key issues and anticipating the evolving needs of their companies' most highly valued assets will enable global mobility managers to protect the considerable investment they make toward expatriate assignments.
David Maltby
President, Cigna Global Health Benefits