What American retirees in France need to know about CSM healthcare charges
Figuring out whether or not you will owe the CSM (PUMa) charge for healthcare in France can be challenging, especially for American retirees. The Local spoke with two experts to figure out who might be affected.
Each year in November, the French government sends out a bill to some people for a charge called 'cotisation subsidiaire maladie' (CSM).
It is not part of your annual tax bill, but rather a separate charge levied by URSSAF.
READ MORE: CSM: Why you might get an unexpected French health bill
For foreigners not expecting to owe the French government anything, it can come as quite a shock. It can be even more confusing to try to parse out who owes the charge and who does not, as its application may appear random when taken at face-value.
The CSM is a healthcare charge - but it's not related to whether or not you have used the French healthcare system in the past year, or even whether or not you are registered in the French system.
It is one of the prélèvements sociaux - social charges - which are technically not taxes, but are levied in a very similar fashion. People who are working in France have these deducted from their income along with their income tax.
But for those who are not working, the charge may come in the form of a separate bill every November.
Who gets charged?
The most common group of people who find themselves paying a cotisation subsidiaire maladie (CSM) are early retirees living off investment or real estate income, who have never worked in France.
The random aspect has to do with the fact that a number of people are automatically exempt from the CSM charge, including;
- The majority of full-time workers and many self-employed people
- People collecting EU/EEA/UK or French pensions
- Those who receive disability benefits (ie pension d’invalidité)
- People on unemployment benefits
- The partner, spouse or dependent child of any of the above groups
On top of that, you have to meet BOTH of the below requirements in order to be charged;
- earn less than 20 percent of the annual Social Security (PASS) ceiling in "income from professional activities carried out in France". This includes self-employed people.
- AND earn more than 50 percent of the annual Social Security ceiling in "global assets and capital" (ie investment income)
For 2024, this means that to be charged the CSM in 2024, you must have earned less than €9,273 from professional activity in France and more than €23,184 in investment income.
According to URSSAF, investment income consists of income from real estate, capital gains/ portfolio investments, capital gains on the sale of property or rights of any kind for valuable consideration, non-professional BICs (profits made through activities carried out on a non-professional basis).
Generally, it covers passive income generated from the assets you own, not from work. It should not include pensions.
You can read through our guide on CSM to calculate how much you would owe.
So what's the deal for American pensioners?
When it comes to American retirees, the situation is a grey area even for tax experts - mostly due to the big differences between who healthcare works in the US and how it works in Europe.
So EU citizens and Brits who have reached pension age are covered by the S1 system - which is basically a reciprocal agreement where the country where you worked continues to pay for your healthcare even while you live in France.
People with an S1 still register for a carte vitale and are reimbursed for the costs of their healthcare in France, but the money is reimbursed by their home country, rather than by France.
Anyone who has worked in France has their healthcare costs covered by France.
In contrast, there is no existing reciprocal agreement on state-funded healthcare with the United States, because the US does not have a state-funded health system.
Jonathan Hadida, from Hadida Tax Advisors, who offers tax consulting for Americans living in France to be tax compliant in both countries told The Local "I have called URSSAF, and I was told by the representative that [American pensioners] should be paying.
"But in practice, I have not seen many charged for it.
"It may be that French authorities see the pensioner status and they do not charge it, even though a US pensioner based on the law would be expected to pay."
Another confusing aspect is how American private pension plans are treated.
Anyone who is receiving a state pension ought to be exempt, but there is some debate over whether common types of American private pensions such as a 401(K) or IRA are treated as a pension (and therefore exempt from CSM) or as investment income (which can attract CSM charges).
Hadida told The Local: "Under the principle of equality amongst taxpayers, URSAAF has treated most US pensions/IRA distributions/401(k) distributions akin to a French/Swiss/European pension and have therefore exempted Americans with pension income."
However, American pensioners should wait before rejoicing. Hadida also warned that "this may not continue to be the case forever, but the gavel has not dropped."
READ MORE: Tax tips from Americans in France
"Will this administrative practice continue forever? No one can know. But at the present time, it appears that URSAAF has been treating US pensions/social security akin to the French/European/Swiss pensions. As an attorney colleague of mine said recently, 'this is a good thing'."
Hadida also stressed that US pensioners benefit from several other tax advantages in France, including the fact that the US-France tax treaty makes it so American pension income is not taxed in France, even though it must still be declared in a yearly return.
Can I contest or avoid the charge?
If you think you have been incorrectly billed based on the information above, you can contest the bill directly with URSSAF by sending a proof of your situation. They are supposed to assess your claim within 30 days.
In terms of avoiding the CSM, many believe that private insurance will protect them from paying it, but this does not mean you will avoid the charge. URSSAF's website is quite clear on this one: "If the conditions for eligibility are met, taking out private insurance does not exempt the person from paying the subsidiary health contribution."
The calculation is done based on your tax declarations, without reference to whether you are registered in the French health system.
That being said, there have been some reports of people with private policies contesting the charge successfully by demonstrating enrolment in a private plan.
"I tell most folks - prepare for it. In the worst case (for Americans), it is probably still a lot less than deductions you would pay in the United States," Hadida said.
If you want to contest the charge, Hadida added: "I often recommend that American retirees hold onto documents showing that they are registered with social security and medicare. They may be able to use this as proof."
The tax expert also said "I sometimes recommend that people switch onto the auto-entrepeneur status, that way they can earn a bit of money just above the minimum €9,273 per year." However, this may be easier said than done, especially considering the fact that people on the visitor visa would need to switch onto one that allows freelance work.
READ MORE: France's 'entrepreneur visa' and how to apply for it
Doesn't the US-France tax treaty protect me from this charge?
Not necessarily. All French residents, regardless of nationality, must file yearly tax returns and they must declare all global income.
Whether or not you are taxed by France depends on bilateral tax treaties, like the US-France tax treaty. For example, France does not tax American pension income, even though it must still be declared in a yearly return.
However, the CSM is a cotisation (social contribution) not an impôt (tax). They may feel like very much the same thing, but social charges are not counted as a 'tax' in France, so you may have to pay them even on income that is otherwise tax free.
That being said, it may be possible to get tax credits in your home country from 'social contributions' paid in France.
Bilingual attorney and tax expert Vincent Berthier De Bortoli, from VBDB Tax, whose firm specialises in assisting both US and UK citizens living in France, said: "When it comes to the social contribution category, on a domestic level France does not consider these to be taxes.
"However, when you apply international tax treaties, they are treated as tax. This means that Americans can get tax credits in the USA for social contributions paid in France."
Berthier De Bortoli referenced an example from 2019 - when the US and France reached an agreement on other types of social contributions (CSG and CRDS), allowing American taxpayers to claim foreign credits on them by using the US-French tax treaty.
However, the situation is less clear for the CSM.
"There is less of a case precedent," Hadida added. "I tell clients, if they are charged, we can try to use the tax treaty. If it works, mazel tov."
READ MORE: Ask the expert: What Americans in France need to know about 401(k) and other pensions
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Each year in November, the French government sends out a bill to some people for a charge called 'cotisation subsidiaire maladie' (CSM).
It is not part of your annual tax bill, but rather a separate charge levied by URSSAF.
READ MORE: CSM: Why you might get an unexpected French health bill
For foreigners not expecting to owe the French government anything, it can come as quite a shock. It can be even more confusing to try to parse out who owes the charge and who does not, as its application may appear random when taken at face-value.
The CSM is a healthcare charge - but it's not related to whether or not you have used the French healthcare system in the past year, or even whether or not you are registered in the French system.
It is one of the prélèvements sociaux - social charges - which are technically not taxes, but are levied in a very similar fashion. People who are working in France have these deducted from their income along with their income tax.
But for those who are not working, the charge may come in the form of a separate bill every November.
Who gets charged?
The most common group of people who find themselves paying a cotisation subsidiaire maladie (CSM) are early retirees living off investment or real estate income, who have never worked in France.
The random aspect has to do with the fact that a number of people are automatically exempt from the CSM charge, including;
- The majority of full-time workers and many self-employed people
- People collecting EU/EEA/UK or French pensions
- Those who receive disability benefits (ie pension d’invalidité)
- People on unemployment benefits
- The partner, spouse or dependent child of any of the above groups
On top of that, you have to meet BOTH of the below requirements in order to be charged;
- earn less than 20 percent of the annual Social Security (PASS) ceiling in "income from professional activities carried out in France". This includes self-employed people.
- AND earn more than 50 percent of the annual Social Security ceiling in "global assets and capital" (ie investment income)
For 2024, this means that to be charged the CSM in 2024, you must have earned less than €9,273 from professional activity in France and more than €23,184 in investment income.
According to URSSAF, investment income consists of income from real estate, capital gains/ portfolio investments, capital gains on the sale of property or rights of any kind for valuable consideration, non-professional BICs (profits made through activities carried out on a non-professional basis).
Generally, it covers passive income generated from the assets you own, not from work. It should not include pensions.
You can read through our guide on CSM to calculate how much you would owe.
So what's the deal for American pensioners?
When it comes to American retirees, the situation is a grey area even for tax experts - mostly due to the big differences between who healthcare works in the US and how it works in Europe.
So EU citizens and Brits who have reached pension age are covered by the S1 system - which is basically a reciprocal agreement where the country where you worked continues to pay for your healthcare even while you live in France.
People with an S1 still register for a carte vitale and are reimbursed for the costs of their healthcare in France, but the money is reimbursed by their home country, rather than by France.
Anyone who has worked in France has their healthcare costs covered by France.
In contrast, there is no existing reciprocal agreement on state-funded healthcare with the United States, because the US does not have a state-funded health system.
Jonathan Hadida, from Hadida Tax Advisors, who offers tax consulting for Americans living in France to be tax compliant in both countries told The Local "I have called URSSAF, and I was told by the representative that [American pensioners] should be paying.
"But in practice, I have not seen many charged for it.
"It may be that French authorities see the pensioner status and they do not charge it, even though a US pensioner based on the law would be expected to pay."
Another confusing aspect is how American private pension plans are treated.
Anyone who is receiving a state pension ought to be exempt, but there is some debate over whether common types of American private pensions such as a 401(K) or IRA are treated as a pension (and therefore exempt from CSM) or as investment income (which can attract CSM charges).
Hadida told The Local: "Under the principle of equality amongst taxpayers, URSAAF has treated most US pensions/IRA distributions/401(k) distributions akin to a French/Swiss/European pension and have therefore exempted Americans with pension income."
However, American pensioners should wait before rejoicing. Hadida also warned that "this may not continue to be the case forever, but the gavel has not dropped."
READ MORE: Tax tips from Americans in France
"Will this administrative practice continue forever? No one can know. But at the present time, it appears that URSAAF has been treating US pensions/social security akin to the French/European/Swiss pensions. As an attorney colleague of mine said recently, 'this is a good thing'."
Hadida also stressed that US pensioners benefit from several other tax advantages in France, including the fact that the US-France tax treaty makes it so American pension income is not taxed in France, even though it must still be declared in a yearly return.
Can I contest or avoid the charge?
If you think you have been incorrectly billed based on the information above, you can contest the bill directly with URSSAF by sending a proof of your situation. They are supposed to assess your claim within 30 days.
In terms of avoiding the CSM, many believe that private insurance will protect them from paying it, but this does not mean you will avoid the charge. URSSAF's website is quite clear on this one: "If the conditions for eligibility are met, taking out private insurance does not exempt the person from paying the subsidiary health contribution."
The calculation is done based on your tax declarations, without reference to whether you are registered in the French health system.
That being said, there have been some reports of people with private policies contesting the charge successfully by demonstrating enrolment in a private plan.
"I tell most folks - prepare for it. In the worst case (for Americans), it is probably still a lot less than deductions you would pay in the United States," Hadida said.
If you want to contest the charge, Hadida added: "I often recommend that American retirees hold onto documents showing that they are registered with social security and medicare. They may be able to use this as proof."
The tax expert also said "I sometimes recommend that people switch onto the auto-entrepeneur status, that way they can earn a bit of money just above the minimum €9,273 per year." However, this may be easier said than done, especially considering the fact that people on the visitor visa would need to switch onto one that allows freelance work.
READ MORE: France's 'entrepreneur visa' and how to apply for it
Doesn't the US-France tax treaty protect me from this charge?
Not necessarily. All French residents, regardless of nationality, must file yearly tax returns and they must declare all global income.
Whether or not you are taxed by France depends on bilateral tax treaties, like the US-France tax treaty. For example, France does not tax American pension income, even though it must still be declared in a yearly return.
However, the CSM is a cotisation (social contribution) not an impôt (tax). They may feel like very much the same thing, but social charges are not counted as a 'tax' in France, so you may have to pay them even on income that is otherwise tax free.
That being said, it may be possible to get tax credits in your home country from 'social contributions' paid in France.
Bilingual attorney and tax expert Vincent Berthier De Bortoli, from VBDB Tax, whose firm specialises in assisting both US and UK citizens living in France, said: "When it comes to the social contribution category, on a domestic level France does not consider these to be taxes.
"However, when you apply international tax treaties, they are treated as tax. This means that Americans can get tax credits in the USA for social contributions paid in France."
Berthier De Bortoli referenced an example from 2019 - when the US and France reached an agreement on other types of social contributions (CSG and CRDS), allowing American taxpayers to claim foreign credits on them by using the US-French tax treaty.
However, the situation is less clear for the CSM.
"There is less of a case precedent," Hadida added. "I tell clients, if they are charged, we can try to use the tax treaty. If it works, mazel tov."
READ MORE: Ask the expert: What Americans in France need to know about 401(k) and other pensions
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