Retiring in Puerto Rico: Stay, French Pension, Taxes, Medicare and Retiree Health

The entry rules are those of the United States. France Diplomatie states that ESTA, valid for 2 years, allows a tourist or business stay of 90 days at most, with no professional activity or study, and that it is not a right of entry. A visa is needed for a stay of more than 90 days, with a medical examination for long-stay visas. The France Diplomatie page describes no visa category specific to retirees: the routes to a long-term move go through the federal categories linked to work, study, investment or family, presented by USCIS (US Citizenship and Immigration Services). Exceeding the authorised length of stay leads to refusal of entry and, as a rule, an entry ban of several years.

Repeated stays of several months under ESTA are left to the immigration officer’s judgement at each entry. A long-term residence project is therefore prepared with the Consulate General of France in Miami, which is competent for Puerto Rico, and with a lawyer specialising in immigration. Registering with the roll of French nationals living abroad is recommended as soon as you settle (see living in Puerto Rico).

The social security agreement between France and the United States, signed on 2 March 1987 and in force since 1 July 1988, expressly names the Commonwealth of Puerto Rico in its territorial scope. It coordinates three branches: disability, old age and survivors. Your French pension remains calculated and paid by your pension funds; the agreement organises relations between the two systems for people who have contributed in both countries.

On the US side, CLEISS (the French Centre for European and International Social Security Liaison) points out that the Social Security old-age pension requires 40 quarters of insurance, that is ten years of work; a quarter is credited from an earnings threshold revised each year. The full-rate age reaches 67 for people born from 1960, early retirement is possible from age 62 with a reduction of 0.5% per month of anticipation, and deferral up to age 70 increases the pension by 3% to 8% a year depending on the year of birth. A retiree who has never worked in the United States draws their income from their French rights, their savings and any private annuities.

The France-US tax treaty of 31 August 1994, amended by the protocols of 8 December 2004 and 13 January 2009, defines in its Article 3 the term “United States” as the United States of America, without Puerto Rico, the Virgin Islands, Guam or any other territory or possession (consolidated version published by the French tax administration). The rules on the allocation of taxing rights over pensions provided for US residents therefore cannot be taken for granted for a retiree settled in Puerto Rico, and their situation should be confirmed before departure with the French tax administration and those of Puerto Rico and the United States.

On the French side, the tax administration defines tax residence by the home or main place of stay, the main professional activity and the centre of economic interests; a single criterion is enough, and it recommends systematically contacting the local tax administration when living abroad. A French-source pension paid to a non-resident bears a withholding tax applied after a 10% allowance: the scale, revised each year, has rates of 0%, 12% and 20%, the 0% and 12% brackets being final and the 20% bracket creditable against the tax. If the retiree no longer has their tax residence in France, they pay no CSG, CRDS or Casa on their pension, and a health contribution of 3.2% (basic pension) or 4.2% (supplementary pension) may be deducted for as long as they remain attached to a French scheme (CLEISS).

On the Puerto Rican and federal side, IRS Publication 570 states that bona fide residents of Puerto Rico generally pay Puerto Rican tax on their worldwide income. Bona fide resident status requires sufficient presence (183 days or one of the alternatives provided), no tax home outside the territory and no closer connection to the United States or a foreign country. Income from outside Puerto Rico and the United States, such as a French pension, is of foreign source in both systems, and a foreign tax credit is generally provided to avoid double taxation. These rules are technical: French-US tax advice secures the arrangement before departure.

CLEISS specifies that the 1987 agreement contains no provision allowing reimbursement of care received in the United States under a French pension: the S1 form does not exist for Puerto Rico. For cover on site, two routes are offered: voluntary membership of the CFE for a French national, or private insurance. The CFE retiree offer is for holders of a pension from the French basic scheme with no professional activity, requires no health questionnaire whatever the age and has a contribution depending on the country, age and family make-up. It covers care received abroad; cover is immediate if joining takes place before departure or within three months, otherwise a waiting period of three months (under 44) or six months (from age 45) applies. See the glossary entry on the CFE retiree offer and the guide health insurance for retirees abroad.

For stays in France, a retiree’s care is covered if they receive a pension from a French basic scheme, do not work and can show at least 15 years of insurance in France; a hospital stay of more than a month requires prior recognition of the need to continue care, and an accompanying spouse is not covered (CLEISS). Worldwide international insurance completes the arrangement; see retirement insurance abroad.

Medicare covers people aged 65 and over. According to the Centers for Medicare & Medicaid Services (CMS), US citizens and qualified immigrants in legal residence with at least 40 quarters of contributions receive Part A, hospital insurance, with no premium. Without enough quarters, Part A can be bought: of the order of $300 per month for 30 to 39 quarters and of the order of $550 per month below 30 quarters. Part B (doctors) costs of the order of $200 per month, with an annual deductible revised each year, like the Part A hospital deductible. For Part B, permanent residents must show five years of residence.

A French retiree with neither a permanent resident card nor a contribution history therefore cannot count on Medicare on arrival and arranges cover through the CFE or private insurance. The Plan Vital, the Puerto Rican government’s health plan, is for people assessed as eligible by the Medicaid offices, with a five-year waiting period for many qualified immigrants: the page healthcare system in Puerto Rico details these schemes, and the page healthcare reimbursement in Puerto Rico compares the situations.

Benchmarks for the cost of living, housing and climate appear in the page living in Puerto Rico. Official sources do not rank cities by their appeal to retirees; they do document the hazards that matter when choosing an area: hurricane season from 1 June to 30 November, earthquakes, dengue and distance to a reference hospital. A retiree’s budget also includes health insurance, which is a significant item, and the cost of any medical repatriation.

• Choose the immigration route suited to the project, with a specialist lawyer and the Consulate General in Miami.
• Have the taxation of the pension estimated by a French-US adviser, without assuming that the treaty applies.
• Notify the pension fund, the Assurance Maladie, the CAF and the tax administration of the departure.
• Plan health cover from the day of arrival: CFE, private insurance, then Medicare if the conditions are met.
• Organise medical follow-up: medical file, ongoing treatments and care stays in France.
• Register with the roll of French nationals living abroad and keep proof of residence.

The United States page sets out the rules common to federal territory, and Expavy compares international health guarantees suited to retirees.