Relocation package/benefits
 

Hi there. First of all I'd like to say thank you to BE - as I've been making notes on all the great advice given and when my OH's company recently sent him his package - I had a list of points to fire back at them which needed expanding/clarifying (some of which I'd never thought of myself). We are planning to come with our 2 kids on an L-1A/L2 visa in the summer (to California). I've been sent through a document detailing the package (I don't really understand a word of it - it's all so complicated). Just wanted to know if you could please help me on a couple of things:

1. As part of the relo package, they've offered $10k gross relocation lump sum allowance for incidentals and $20K maximum in household goods move/storage. Will we only get taxed on the $10K? It doesn't leave us with much ($6k??) to buy stuff with really. I'm guessing that the $20k for shipping/storage will be sufficient?

2. Looking at the healthcare options. The monthly employee costs for UHC EPO & VSP Vision is £245 for the family; and the UHC PPO & VSP Vision is $325 for the family. In your experience, is it worth paying the extra $80 each month? Or there's the Kaiser HMO & VSP Vision for $215. (we'll be based in the SF South Bay area).

They have confirmed other details including severance pay, repatriation, tax assistance, GC sponsorship, Life Insurance, pension contributions, holiday allowance, etc and so I think we have most things covered... I hope!

Am sure I'll have more questions (so apologies in advance!)

Thanks

Re: Relocation package/benefits
 

1. Since the company is paying for shipping, I think it is expensed to the company and not considered income since the move is more than about 100 miles. The $10K is taxable but keep receipts since you may possibly be able to offset that income for non reimbursed expenses (hotels, etc.) above a certain amount. Even if both are considered income, you should be able to have receipts from the $10K that meets the deductible that allows you to offset the entire $20K moving expense as a deductible expense.

2. Kaiser is considered a very good HMO but has it own hospitals and clinics and you have to be treated at those hospitals and clinics except in an emergency or if you are not in an area that they have hospitals or clinics. If not treated in a Kaiser facility, there will be additional co-pays and Kaiser may want you transferred to their hospital if your condition is serious and you are stabilized. A disadvantage of HMOs is that you must see your primary care physician and they will recommend a specialist (you can't see a specialist without first being recommended by your primary care physician). EPOs have not been very common in the past. See the following link that describes some of the differences between an EPO and PPO. Generally PPOs give the greatest amount of flexibility especially if they have a large provider list (check their web site to determine if they have providers everywhere). A PPO has in network providers and if used, the co-pay is lower but an out of network provider can be used at a higher co-pay. Therefore you can see any specialist in or out of network without approval.

http://www.ehow.com/info_7772875_dif...alifornia.html

Re: Relocation package/benefits
 

What Michael said about the moving expenses etc. Regarding the Healthcare, I believe the major difference between an EPO and a PPO is going to be the co-pay costs. For example an EPO is usually a HMO type setup which covers everything for all participants covered in the family except for small co-pays and prescription charges. This probably a plan most similar to the NHS. Some people consider the disadvantages to be that you are limited in choice of providers but if your coming from the NHS there is no real issue imho.

A PPO allows you greater flexibility and choice, hence the greater cost. Always more worrying to me is the % covered. This can vary and I don't know your plan but please check carefully. If its 100% coverage paid by them then fine and dandy, if not consider the option which pays 100% apart from the small copays for doctors visits and prescriptions.. Often the PPOS cover say 70 or 80% which leaves you paying the remainder. That might seem reasonable before an occurrence but I personally think I don't want to be liable to pay 20 - 25% of any medical bills given the astronomical costs associated with medical care here in the US. Thats a fast road to bankruptcy, especially with kids. Simple emergency room visits can amount to thousands of dollars. A regular arm stitching episode in a local urgent care could easily be a $5000 experience and 20% of that is a $1000. Make that a minor operation and your into $50,000 and now your 20% copay is $10,000!!

True some have caps on the total amount you have to pay in a year, but some don't! Why gamble? Just for a little extra choice? After all there are all called Doctor or MD and rarely do you interview your doctor and ask them what their class grade point average was?

For some reason Americans are sold on this idea of a PPO and choice? I personally would take the full coverage option every time. And have for 17 years with no problems. I have never had issues with choice or quality doctors.

My advice and its what I do is plumb for the plan that covers the most $$ which is likely to be the HMO = EPO plan, if I understand your descriptions.

Re: Relocation package/benefits
 

If they're paying directly the moving costs, you shouldn't get hit with a tax bill, but you could potentially for the lot, all depends how it is done.

As for health, well it's a risk tolerance thing. What might help is knowing how decent and how far out the in/out of network of doctors/hospitals extend and if you're likely to travel much out of that area.

For us, we have a option for a very cheap medical HMO, but it's worthless as the in-network is basically the local hospital and everything else is out of network and out of state isn't covered except in an emergency. The plan we have, whilst still HMO, at least has a nationwide list of in/out network facilities and as we're up in Maine a fair bit and have a couple of kids, we thought it worth it to us.

Just need to look into the details and see what the co-pays, deductibles and levels of coverage are for them and see what you're comfortable with.

Re: Relocation package/benefits
 

In my opinion, probably one of the most important things for a PPO or as a matter of fact for any insurance policy is the maximum annual out of pocket expense. If that is low ($2,000-$5,000), you or a family member could end with the half million dollar hospital bill and never have to pay more than that amount.

Re: Relocation package/benefits
 

Thanks everyone for your answers so far. Judging from the snapshot of costs/coverage (i had to chop some stuff off the image as it wouldn't fit on the page), my choice is either Choice EPO (this plan allows you to self-refer to any provider within the Choice EPO Network. Should you decide to go out of the Choice EPO network of physicians or hospitals, you will not have any coverage, except in a life- or limb threatening emergency. You are not required to select a primary care physician. Or Choice Plus PPO Network (gives you the option to remain In-Network and go to a physician or hospital on the preferred provider list to receive improved benefits, or go outside the Network to non-preferred physicians or hospitals and receive a reduced level of benefit. This is your choice and you make that choice at the time of any sickness or injury. You and your family have the complete flexibility to choose the type of care you wish at any time during your coverage under the plan). I can't afford the risk of the other option - Choice Plus PPO Non-Network.

Do they look like good packages?


I've always been privately insured here and if ever something's wrong that can't be dealt with by the GP, I always get referred to the top consultants/specialists (why not, it's free after all and they are local to me in London. I like to be better safe than sorry).

Re: Relocation package/benefits
 

We had Kaiser for many years, I had two children while we had Kaiser. It was the first health insurance we had.
Now we have a PPO Blue cross, it's like night and day, if I had a choice (we do as the company has choices) I'd never go back to Kaiser, we didn't have any problems as such with Kaiser, but find the PPO so much easier to deal with, easier to get appointments, just a better overall feel to it and a choice of going pretty much anywhere we want for treatment.
We only have a small deductible and that is paid with our first doctor visit usually, so it costs us very little each year.

Re: Relocation package/benefits
 

If you want to be covered while on vacation overseas or possibly even in the US, a PPO plan is the best. The doctor doesn't have to bill the insurance company directly for a PPO plan but you should get reimbursed for any medical bill that you incur. If the EPO plan has providers exclusive to only your area, the bills could add up when out of area even for minor illnesses and the cost does not go toward your maximum out of pocket expense.

Re: Relocation package/benefits
 

When I was relocated back to the US from the UK (don't ask...) my company covered the taxes on a similar amount (on both the UK and the US side). Might be worth checking if they do. Certainly keep receipts for everything however.

Re: Relocation package/benefits
 

I've always argued that "grossing up" a relocation package so that taxes are effectively covered is one of the most important aspects of a relocation package.

Re: Relocation package/benefits
 

I disagree. From a post I wrote a while back:

http://britishexpats.com/forum/showp...2&postcount=31

Re: Relocation package/benefits
 

The "up to" $20k allowance for shipping/storage is through the company's provider so I guess that means they'll pay it directly (but I'll double check that). I'll see if we can get the $10k grossed up.

Would the one month car rental and corporate housing be taxable? Don't want to be charged tax on that too.

Re income tax - state/federal and all the other bits - should I use 40% as my rough guideline (and if it's any less, it'll be a nice surprise)?

Re: Relocation package/benefits
 

They would be taxable. Here's a link to the IRS publication for what is deductible as a moving expense:

http://www.irs.gov/publications/p521...link1000203497

Re: Relocation package/benefits
 

Thanks, that's so helpful. It mentions
You can include any lodging expenses you had in the area of your former home within one day after you could no longer live in your former home because your furniture had been moved.

But doesn't mention lodgings in the US whilst awaiting for shipment of my stuff. I also didn't see any mention of car rental. Am i therefore right in understanding that those will both be subject to tax in addition to the $10k but not the cost of actually moving/storing my stuff?

Re: Relocation package/benefits
 

This area's so vague. I mean, I agree that technically it's taxable but in reality it could be argued as a marketing expense if client meetings are organized some of it depends in the way in which it is expensed.

Re: Relocation package/benefits
 

Correct. This is another example of why it's so important to get an employer to cover the tax liability of a relocation package.

Re: Relocation package/benefits
 

Sorry, really dumb question(s). Am trying to get a rough estimate of the salary package after deducting amounts for difference in holiday allowance (based on a rate of 1/260th of UK base salary per day of difference) and deducting healthcare costs which we obviously don't pay in the UK.

Am doing this so that I can try to compare his UK and US salaries like-for-like and see how much extra we'll have each month for cost of living adjustment.

Am struggling though. Let's say the salary is $100k (a nice round figure). Does this calculation attached sound right in terms of income tax? How would I then factor in medicare/ss, etc?

I used this site to calculate it (if anyone wants to use it for themselves)
http://www.tax-rates.org/income-tax-calculator

Re: Relocation package/benefits
 

You will also need to allow for local taxes (town/county) if you are buying a home. Here in Westchester a 3 bed home could have a town tax bill in one town of approx $45K per year (the best school districts are usually in the towns with the highest town taxes) and in another $8K per year.

Re: Relocation package/benefits
 

Ok, using my original calculations above, based on the "$100k salary", in addition to the state and federal taxes, would I also deduct SS (@ 4.2% = $4200) plus Medicare (@ 1.45% = $1450)??

Obviously I've allowed no deductions for anything as that's all too complicated.


Property tax scares me even more than the extortionate monthly rentals! :ohmy:

Re: Relocation package/benefits
 

You do pay healthcare costs in the UK...they are rolled into income taxes.

If you are renting...property taxes are included in the cost of the rent.

Re: Relocation package/benefits
 

As Jerseygirl stated, you only directly pay property tax if you buy, not if you rent.
Plus property tax can be used to reduce your income taxes (it can help reduce your adjusted gross income which is the amount you actually pay tax on).

Tax here is not as straightforward as the calculators would lead you to believe. There are many deductions you can take depending on your precise circumstances.

Re: Relocation package/benefits
 

Hi,

We are also moving in May on an L1A visa. You may want to double check the situation regarding FICA/Medicare/US social security. On the HMRC website there is a section for working overseas and paying NI. I think that if you are going for 5 years or less, your company has to still pay class 1 NI payments in the UK and not US social security. There is a treaty between the UK/US so that you don't pay into both. Here is the link:http://www.dwp.gov.uk/international/...agreement/#usa

Re: Relocation package/benefits
 

From doing a quick quote on tax rates dot org of my income tax in MA compared to the UK, i'm paying pretty much exactly the same amount of tax. Yet, I don't get healthcare included for free.

What am I doing wrong in my tax-rates.org calculations, or is an income tax rate parity to be expected? (I am a UK higher rate tax payer).

Re: Relocation package/benefits
 

Thanks everyone for your help so far. I've abandoned trying to work out net figures. Too much of a headache.

We are now in the middle of writing an exec summary type thing to present our case as to why we need more money than has been offered (never done this before so don't know where to start). I think that they have underestimated the difference between where we live and where we're going.

Aside from healthcare, rent and car insurance - are there any other significant cost of living adjustments I'm overlooking (or does everything else combined pretty much wash its face?)

Re: Relocation package/benefits
 

Amanda - one thing to consider is the price of services such as cell phones, tv, & internet. A cell phone contract is MINIMUM $100 in the US on Verizon or AT&T. Cable TV / Internet is another ~$100.

These service pricing are far in excess of anything we pay in the UK. I'm still in shock at how ripped off Americans are over it to be honest.

One quick thing, can I ask if you're being transferred to a USA contract or are you keeping the T&C's of your current UK contract? What type of PTO allowance have you negotiated?

Re: Relocation package/benefits
 

MA is a expensive state, but generally, tax rates will be pretty similar.

It's all about working your tax credits and deductions, most of which come to home owners with a mortgage and people with little kids.

Re: Relocation package/benefits
 

Yeah, you've got sod all US credit history and driving history. It means everything will be more expensive for a couple of years and you'll have much higher start up costs compared to someone moving from one area of the US to another, because of needing deposits for things and getting less favourable rates on your insurance/loans.

Re: Relocation package/benefits
 

Bob, he speaketh the truth!! :amen:

Seriously though, it makes a massive difference. As a guide, I support my toddler and wife and own my house and the difference between my income and my adjusted income (which I pay tax on) was about 25% last year. That clearly made a big difference to the amount of tax I paid. Most of that deduction is due to mortgage interest and property tax deductions.

Re: Relocation package/benefits
 

Amanda, SS tax is back up to 6.2% in 2013 (although I think you've wisely abandoned the numbers by now).

Not sure how much of this has been mentioned. I think you said CA for where you're going, and it's likely to be expensive. For rent on anywhere, expect to pay a deposit of at least a month's rent when you move in, and sometimes you even have to pay "first and last" so that could be the equivalent of paying three months' rent as you move in. Depends where you are in CA but $2500 or more per month is likely if you have family.

When we moved the employer paid up to four weeks for us to stay at a residential hotel (the ones where you treat it a bit like an apartment). If your employer can do that (and ideally they expense it) that would be a big help and give you time to find a place to rent.

Yep on the previous post: $100 per month for phone, $100 or more for internet plus tv, electric/gas will vary across the year but could be $150 when it gets hot. Utilities may expect a deposit of $200 each because you won't have credit history. We pay a little more for groceries than we did back home, particularly if you eat healthily your costs are more. You may find your commute is long - a 15 mile commute each way will cost you about $60 every two or so weeks. You might need two cars instead of one, especially with kids.

Re: Relocation package/benefits
 

Just using a round figure like $100K only tells part of the story since there are marginal tax rate brackets. Therefore when bonuses are paid or stock options are exercised, those are taxed at your highest marginal tax rate or possibly even higher if the income for those puts you into a higher marginal tax bracket. For example in your example, a taxable income of $72,900 for married filing jointly had $72,500 taxed on the federal level at 10% or 15% and only the last $400 was taxed at the 25% marginal tax bracket. Therefore any income added to that taxable income will be taxed at the 25% or higher marginal tax rate. However capital gains and qualified dividends are not taxed at a rate higher than 15% unless your income exceeds $450,000.

http://taxes.about.com/od/Federal-In...3-Tax-Year.htm

California also has marginal tax rate brackets and income above the $72,900 taxable income will be taxed at the percentage at or above your highest marginal tax bracket. However California does not calculate the standard deduction in the way that the federal government does so the taxable income will be different for California than the federal government.

http://www.tax-brackets.org/californiataxtable

Therefore any extra income (excluding capital gains and qualified dividends) above a taxable income of $72,900 would likely be taxed at 33% or higher combined federal and state income taxes.

Once your salary gets beyond a certain level, it no longer makes much sense to rent since there are large tax advantages in buying a home since mortgage interest, property taxes, state income taxes (federal deduction only), car registration taxes, and other deductions can be deducted from your income and if the total deductions exceeds you standard deduction, you will likely save at least 33% in taxes on the amount that exceeds your standard deduction.

For example if your taxable income was $100K if the standard deduction was used but if you had $35K of mortgage interest, property taxes, state income taxes, and other deductions, then about an additional $27.5K of that ($35K - $7.5K) would reduce your taxable income to about $72.5K saving you about 33% in taxes on that $27.5K. Therefore your monthly mortgage payment including property taxes could significantly exceed your monthly rent and the cost to you could possibly be less than the rent due to the tax savings. As an example, my son who is single recently purchased his first home in California and his monthly mortgage payment (principle, interest, property taxes, PMI, and hazard insurance) was about $700 per month higher than his rent on his apartment but after calculating his tax savings (about $600 per month), the cost difference to him was only about $100 per month and in 5 years he will have paid off about $50K of the principle and gained in any equity increase at an approximate additional effective cost to him of about $6,000 during the 5 years and he is living in a home about twice the size of his apartment.

Re: Relocation package/benefits
 

That's really helpful, thank you. We would be looking to sell out UK home and buy in the Us after about 2 years, once we get the GC and have a feel for whether want to stay. So those points about the impact on tax is really interesting.

I agree that the example of $100k probably wasn't very helpful and as a result I've abandoned trying to work it out and instead we are just focussing on net figures when drafting the exec summary on how much extra we need to make it work. It's hard as we don't want to miss anything out but at the same time we don't want to appear petty or seem like we're taking advantage.

Re: Relocation package/benefits
 

Looking to move to the South Bay and am budgeting $4500 a month for rent (tiny 3 bed). They will put us up in corporate housing for 1 month and car rental for 1 month. Unfortunately (or should that be fortunately?) the difference between our current mortgage and our projected rent is quite significant (despite our house being 2.5 x larger than what we'll be looking at in Ca), hence why we now need to draft a response to justify how much extra we need. Yikes.

Re: Relocation package/benefits
 

If you eventually plan to sell your home in the UK, there is a $500K exclusion on capital gains for married filing jointly ($250K for single) if the home was your primary residence for 2 of the past 5 years. Therefore if you decide to sell and buy in the US, make sure you sell within 3 years after you started renting to get that exclusion otherwise the you will have to pay capital gains tax when the home is sold.

Also the process of buying a home in the US is different than the UK. The following link starting at post #12 should give you an idea of the process.

http://britishexpats.com/forum/showthread.php?t=789973

Re: Relocation package/benefits
 

Thanks - so helpful! I've added that to my "Future Notes" doc that I've been compiling based on lots of great advice on this forum!

Re: Relocation package/benefits
 

I suspect you have already decided on the area you would like to live but depending on where your husband will be working, there are certain parts of Fremont that are very nice. The city (including the canyons and east hillsides) is physically about the size of San Jose with less than about 1/4th the population so there is plenty of open space. I lived there for about 18 years before moving about 5 years ago. For me it was about a 20 minute drive to where I worked in San Jose and 30 minutes to Sunnyvale so it was convenient.

There are two areas of Fremont that are very nice, the Mission San Jose district and the North Warms Springs district with very good area schools (all ranked 10 out of 10) even though the schools are in the Fremont school district which is overall average. Much of the area is hilly, is within walking distance to the east hills, and the homes and yards are larger, and less expensive than the other side of the bay. The pictures at the bottom were taken from my townhouse living room deck and on a clear day, I could see San Francisco (second picture is San Francisco and Oakland on the horizon but not visible on the day of the picture due to the clouds/fog). The Mission San Jose district includes a village with one of the original missions and churches built by the Spanish in the early 19th century. The North Warm Springs District was originally owned by Stanford and made the decision to place Stanford University on the other side of the bay instead of in Warm Springs. In the area there are some very large houses up to 15,000 sf. Since much of the area is hilly, it gets a nice afternoon breeze and is within 3-4 miles from the bay so gets cooled by the summer overnight fog. The is also another district called Niles which is where the Charlie Chaplin movies were made as well as the silent westerns before everything moved to Hollywood.

The area that I am referring to is where the dark blue symbols (schools ranking 10 in the district) on the following map on Mission Blvd and Paseo Padre Parkway.

http://schoolperformancemaps.com/ca/...2%2C12%2C1%2C2

Re: Relocation package/benefits
 

As far as the medical plans go, when you compare the numbers you gave, the PPO is really charging you significantly more for the ability to have free choice in which doctors you can see. Since, for most conditions, there will be multiple in-network choices for who to see, and Kaiser is big enough to give you in-network coverage in most of the country, I'd call the PPO plan a poor value.

Typically you can change the plan you're on at one specific time every year, so you're likely not locking yourself into the original selection for more than one year.

Re: Relocation package/benefits
 

Sorry - really dumb question - if i went for the Choice Plus Network PPO - would the max i spend in a year be my deductibles ($800) + out of pocket expenses ($3000) + UHC PPO & VSP Vision @ $325 per month (so $3900?) plus Atena PPO Dental @ $39 per month (so $468)? (Totalling $8168)?

Sorry, I'm guessing that the clue is in the title "Monthly Employee Cost" but am just double checking that I do pay that on top of the deductibles and out of pockets!!! Thanks:o

Re: Relocation package/benefits
 

You pay the first $400 per person up to $800, then you pay your copays or percentages, depending on the service, and when that costs you more than $1500 for an individual or $3000 (including deductibles) for the family in the year then you are covered 100% for the individual/family. So, $3000 per year is max, but through normal health stuff for most families you probably won't reach that.

So your max is $3000 in health care costs plus ($329+39)x12 premiums. $7416.

Re: Relocation package/benefits
 

That looks right as long as you stay within the network but if you go out of network, the deductible and maximum out of pocket expenses can be totally separate from the in network deductible and maximum out of pocket expenses. As an example, you could pay the deductible and reach the maximum out of pocket expenses for in network care and then go out of network to be treated and your deductible could start from $0 and your maximum out of pocket expenses could be for out of network care could be the maximum amount in addition to what you paid for in network care. Also remember that some services such as doctors visits do not have a deductible so on your first visit to the doctor, you will pay 20% of his charges. I don't think you have the details of the full plan since co-pays for lab work and other services should be indicated.

Vision care is not included in those deductibles and does not have the maximum out of pocket expense. Normally vision care allows for eye tests once a year and glasses or contacts every two years. Normally the plan may pay a maximum amount for glasses and if you want something that is more than that, you pay the difference. Just about everything else to do with the eye is covered under your medical policy.

Also most plans do not include prescription drug benefits in the deductible and maximum out of pocket expenses.

Contact your HR department concerning the fine details of the plan.

Re: Relocation package/benefits
 

Thanks Michael, i guess without knowing what hospitals are included "in network" (not that i know anything about the hospitals/specialists in the area to determine whether they are good or not) I don't know whether it's worth paying the extra to go out of network. Decisions decisions