The “what ifs”: 3 things to plan for when arriving in the United States
For most new residents in the United States, starting a new American adventure can be exciting and full of new, spontaneous experiences. But some thoughtful planning about possible, realistic emergencies can also help make the transition successful.
Do you understand well what a PPO (Preferred Provider Organization) or HMO (Health Maintenance Organization) does and how it covers you and your family’s healthcare needs here and when you travel back home?
Thinking of this may not be an immediate reflex, since your country of origin may have a system in place that covers healthcare expenses with limited or no out-of-pocket participation. Please make sure to understand terms like “copay,” “deductible,” and “maximum out of pocket” participation limits when planning your stay in the U.S. A misunderstanding may trigger a high financial burden.
If your coverage is based on an extension of your country’s health care program for expatriates, please make sure to verify if costs and reimbursements accurately consider U.S. prescription, medical, and hospital prices. Healthcare services in the U.S. are among the most expensive in the world.
If you return home, make sure that your coverage starts upon arrival. In some countries, it may take several days to have health care coverage, even if you have a Social Security number and are a citizen of that country. That will also depend on your ability to find an employer upon arrival (See this sample of information for France.)“What if I lose my job?”
In many countries, when a reorganization or downsizing happens and layoffs result, you are entitled to a “social cushion”. Thus you could get several days’ notice, several weeks or months of pay as indemnity or severance (based on seniority) paid by the former employer, and finally a percentage of your previous salary for a full year or more, in your country of origin, paid by the government’s unemployment insurance.
This is not the case in the U.S. and may differ by state.
It’s always good to check with your employer on how layoffs might affect:
1. Your work visa
2. Your 401(K)
3. Your healthcare coverage
4. Other company benefits
I always recommend building an emergency fund to cover the time it would take you to find another position. A good target: Six to 10 months’ worth of expenses (or income, if you spend all that you earn). This may vary based on your specialization, market demand for your specific skillset, and if your visa expires soon after employment termination.“What if I die?”
When you are employed by a firm that offers employee benefits, you may receive life insurance with a death benefit that is a multiple of your salary. For example, if you make $100,000 a year, your coverage may be 2 times your annual income, hence $200,000. This means that your spouse (if you listed him/her as your beneficiary) would receive $200,000 upon your death, free of income taxes*. It’s important to verify that you fill out the beneficiary section well and select the coverage options that you desire.
If you have children and are starting to acquire assets in the United States, consider talking to your banker regarding POD/TOD accounts (Pay/Transfer on Death) and contacting an Estate Attorney (called “notary” in other countries) to discuss the use of revocable living trusts. Not only will it help preserve personal assets, but the latter may also set medical directives in the event that you find yourself in a vegetative state or want your children carrying out wishes fulfilled through a legally binding document.
While it’s not always pleasant to ask these “what if” scenarios, the preparation you may gain from considering them may help boost your peace of mind in the long run.
Visit our site to learn more about Bank of the West’s services for expatriates.
*Note: Please consult a tax professional for more information.