A Bill that would grant foreign nationals a US visa in return for investing $500,000 in residential real estate has been introduced into the Senate as a means to pump up tourism and help rescue the foundering American housing market. Milan Korcok looks at the potential consequences for travel insurers
The visa would allow visitors to stay in the US for six months a year (180 days), except for Canadians who would be allowed eight months (240 days). Most foreign visitors from visa waiver countries are currently allowed to stay in the US up to 90 days and Canadians up to 182 days without visas. For international travel insurers, the prospect of a new US visa allowing foreign nationals to spend more time in the US is a mixed blessing.
For some nationals, being allowed to stay in the US for half the year might jeopardise their own residency requirements and their health insurance benefits: the best example being that of Canadians who, if they stay out of their province for more than 182 days per year (212 for residents of Ontario and 243 for residents of Newfoundland) can lose their provincially-funded health benefits. And without those benefits, they become ineligible for private travel insurance, which requires that all applicants have government healthcare. In order to be reinstated to provincial healthcare eligibility, they must remain in their province for three consecutive months, and be able to prove it. But during that time they would have to buy stop-gap private insurance, which is available from most travel insurers and might provide a bit of a boost in that market.
For other nationals, the prospect of spending half a year in the US would necessitate finding domestic American health insurance, which is exceedingly difficult or prohibitively expensive for a non-permanent resident. For example, all US private health insurance for Americans over 65 is predicated on their having a foundation of Medicare – the government sponsored programme for the elderly. But the visa provision being floated in Congress specifically prohibits Medicare eligibility for the visa holders.
Under the terms of the visa deal, of the $500,000 that would need to be invested in property, at least $250,000 must be spent on a primary home. Visa holders would be required to pay taxes to the IRS, just as American citizens do, but they would not be permitted to work, nor would they be entitled to Medicare, Medicaid or Social Security, and if they re-sell their properties they would lose their visas. The visas would also be renewable every three years and their benefits would extend to spouses and minor children. Purchasers would also have to pay cash for the properties (no mortgage or home equity loans allowed) and the properties would have to be bought for more than their appraised value.
Senator Lee, who introduced the Bill, said in a statement that Canadians who currently return to Canada after 180 days in the US during the winter are unable to take additional day trips across the border to northern states, and many would remain longer while it’s still cold north of the border. Supporters of the Bill admit the visa offer is aimed most directly at Canadians and Chinese, who already pump billions into the American real estate market.
Perhaps the biggest winners in this context might be the providers of international or expatriate health insurance plans designed for foreign nationals living in countries not their own. There are a good number of such policies in the US, Canada, Europe and Asia, and even though their benefits are not as extensive as are most domestic government-sponsored plans, they do have some coverage for non-emergency care and health maintenance provisions – unlike conventional travel insurance plans which are designed for medical emergencies only.
Whether the Act can pass both houses of Congress and be passed into law is uncertain, given the priorities Congress has to deal with before the November 2012 election.