Further thoughts on Plan B (and swine flu)

  NOTE: The Warden at the US embassy in Amsterdam has issued a bulletin reminding US citizens living in the Netherlands that “In case the need arises for antiviral medications, to access these antivirals without delay in The Netherlands, you MUST have registered with a “huisarts” (family/general practitioner physician) for everyone in your family.”

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I’ve written twice in the last year about the importance of good “Plan B” thinking: expatriate workers are guests in the Netherlands, and if the primary justification for residency becomes invalid, then contingency plans have to be ready.  In one post, I covered things to consider when moving off the expatriate agreement, in the other, items to take care of when moving within the country.

While it may not come to pass, I am now confronted with the likelihood of substantial change to my expatriate assignment, or the possibility of losing it altogether.  One appropriate response could be to wrap up the assignment gracefully and move on to a new assignment back in the US or elsewhere.  That may happen although, as I wrote earlier, the push and pull of current and future assignments hasn’t yet led back across the pond.

Another option for me is to move to local contract.  Many of the same considerations apply as in generally coming off of the expat agreement: there are substantial costs that have to be considered in exchange for continuing to live in the Netherlands.  I’ve found a few additional considerations that are worth adding to the growing list:

• Health insurance: I have been covered under US Blue Cross insurance, which protects me worldwide.  However, all workers in the Netherlands are required to have local health insurance unless they meet very narrow exclusions: covered by a US health insurance policy while on short-duration overseas assignment with a firm that has access to the exclusion.  If you assume that you qualify for the exclusion but don’t, then you may be liable for a fine equivalent to the amount of Dutch health insurance premiums across the period that you were working in the Netherlands.
• Social Security:  Once on local contract, you cease to be making social security payments.  This freezes your benefits, now pegged to your last US paychecks and the years you’ve worked,  rather than to your further earnings and additional service in the Netherlands.  There is a Dutch equivalent, but you need many years of work to qualify for benefits.
• 401(k) / IRA:  The US-based employee contribution and matching programs for retirement are no longer available.  While you can still make IRA contributions, both the qualification and computation are more complicated, based on Foreign Earned Income Exclusion.  Check this source for guidance, then see a tax expert.
• Credit Reports: There can be an immediate impact to your credit rating if you change jobs, including going to local contract, or become self-employed.  This can significantly affect your ability to get a loan and the rates you will pay.  Also, when your income, banking, and tax records all move off-shore, that may have further impacts on whether your financial records are even available to US rating companies.

I’m sure there will be more: I’m still asking and learning…