401(K) for foreigner with Green Card and working in U.S.

[Coearth]

Hi,

I am curious about 401(K) and if there is compulsory life insurance (if any) in U.S, for a Green Card holder.

1. For a foreigner with U.S. Green Card who work as employee in U.S., will this person have compulsory regular contribution to a 401(K) or similar?

2. Will this Green Card holder have to signed up for some kind of compulsory insurance plans if he/she contribute to 401(k)?

Thanks.

[MediumTex]

No to both.

[D1984]

Hi,

I am curious about 401(K) and if there is compulsory life insurance (if any) in U.S, for a Green Card holder.

1. For a foreigner with U.S. Green Card who work as employee in U.S., will this person have compulsory regular contribution to a 401(K) or similar?

2. Will this Green Card holder have to signed up for some kind of compulsory insurance plans if he/she contribute to 401(k)?

Thanks.

In reply to #1:
401K contributions in the US are not compulsory by law. With that said, some (perhaps most?) employers will automatically enroll you into contributing into a 401K if they provide one but you can choose to opt out if you notify them that you wish to do so.

In reply to #2:
Insurance (by which I presume you mean health insurance) is totally separate from retirement plans here in the US. You will not be required by law to have health insurance (until 2014 when Obamacare kicks in but even then the health insurance requirement is a totally separate law from the one allowing contributions to tax-sheltered retirement plans like 401Ks). With that said, some employers DO require you (again, as employer policy and not actual law...i.e. while you cannot be arrested or fined for not signing up you most certainly can lose your job if you refuse) to sign up for the company provided health insurance unless you can prove you have your own health insurance or are insured under a spouse's plan.

Another thing about health insurance here: IIRC you are from Singapore. You (or someone else if your post is in reference to another person coming here on a Green Card and not yourself) will be in for quite a sticker shock when it comes to health insurance prices. If your employer doesn't pick up most of the cost (most employers who provide health coverage do, some pick up only a little, and some make employees pay the full cost) for major medical insurance coverage you could find yourself paying more every two weeks for health insurance coverage than you paid all year for Medishield.

As regards life insurance: No, it is not compulsory by law either. Some employers will pay for a small life insurance policy under what is known as "group term life insurance coverage" and that is usually up to about twice what your annual wages are (i.e. if you made $50,000 a year the policy would pay your dependents $100,000 if you died). Not all employers do this and even if they do the premium won't come out of your wages directly; the employer will pay it themselves and you'll get a line on your W-2 and pay stub showing how much life insurance the employer paid for on your behalf.

If you want any more life insurance than that you will have to buy a fully underwritten policy from an agent but no one will MAKE you buy some unless you choose to.

Is life insurance compulsory in your country?

[Coearth]

Thanks for your replies. I was thinking answer was no to both...

@D1984: When a Singapore permanent resident or citizen makes first contribution to CPF (retirement account), he/she is automatically enrolled in an optional term life insurance for S$46k payable by CPF. Premium starts from S$48/yr.http://ask-us.cpf.gov.sg/efa/index.htm? ... 4100003910

[smurff]

Before coming to the USA, find out if there are any Singapore insurance companies that provide health insurance for Singaporeans moving temporarily to the USA.  This sort of insurance varies from country to country, and status to status.  Some insurance companies offer it, some don't.  Some companies offering it will only cover those with tourist status; others may cover those who will be temporary but longer term residents in the host country (for example, students studying abroad, traveling ministers on missions, traveling business persons).  Sometimes they will cover for periods of time up to a year for any citizen, regardless of status or purpose of travel.  But it depends on the country of citizenship/residence, the host country you plan to travel to or live in, etc. 

This kind of insurance can be useful, even if your move is not intended to be temporary.

The USA is probably the worst country in the world when it comes to the expenses of medical care and the complexity of an individual financing it. A minor incident that requires a trip to the emergency room can cost you thousands of dollars if you have no insurance coverage, or hundreds of dollars if you have some coverage.

[Pointedstick]

A minor incident that requires a trip to the emergency room can cost you thousands of dollars if you have no insurance coverage, or hundreds of dollars if you have some coverage.

Or sometimes the opposite! I had to visit an urgent care clinic while traveling, and to my surprise, they actually posted a price for the visit: $125. I paid with insurance rather than cash and just received my statement of benefits in the mail; they billed my insurance company $200. Makes perfect sense: if the insurance company is paying, why not simply charge more? No wonder insurance premiums are constantly rising.

[D1984]

A minor incident that requires a trip to the emergency room can cost you thousands of dollars if you have no insurance coverage, or hundreds of dollars if you have some coverage.

Or sometimes the opposite! I had to visit an urgent care clinic while traveling, and to my surprise, they actually posted a price for the visit: $125. I paid with insurance rather than cash and just received my statement of benefits in the mail; they billed my insurance company $200. Makes perfect sense: if the insurance company is paying, why not simply charge more? No wonder insurance premiums are constantly rising.

They billed the insurer $200 but did the insurer pay $200? Maybe so, but what typically happens in such a situation is that they can bill whatever they want (assuming they are not in the insurer's network....if so, they can only bill the contractually agreed upon price which theoretically could be $200 but probably would be less) but the insurer will only PAY whatever is "reasonable and customary" and you may or may not get balance billed for the rest (if it's only a few dozen dollars or so and you're already back in another state they may just let it go).

The situation you described is actually pretty unique; many of the health care horror stories about the uninsured are about how they get charged much more (sometimes tens of times more) than the hospital or clinic would accept as full payment from an insurer or from Medicare. TrueCostOfHealthcare made some good points about this as did a report a few years ago by SEIU called "Twice The Price - What The Uninsured Pay For Healthcare."

[Pointedstick]

They billed the insurer $200 and the insurer paid $185. I paid $15. So I successfully shifted this plannable cost onto my insurer, who paid more than I would have. The thing about this situation was that it wasn't life-threatening or anything. Most of those humongous multi-thousand dollar bills arise from uninsured people who check into the emergency room and get billed the rate that insurers typically negotiate down.