Three ways to engage someone abroad

A US company with a person in another country usually chooses among three setups. It can employ the person itself, through a local entity or a direct registration as a foreign employer. It can use an employer of record (EOR), a third party that becomes the legal employer in that country so the company can hire without an entity of its own. Or it can engage the person as an independent contractor who runs their own business.

Direct registration is open in more places than many owners expect. In France, Urssaf runs a service that lets a foreign company with no establishment there declare and pay contributions for its staff. A company can run UK PAYE as an overseas employer in the UK, and a foreign employer registers with the Dutch tax administration before hiring in the Netherlands. Each route brings the full set of local employer duties with it, health contributions included.

With an employer of record, the EOR enrolls the employee

An EOR runs payroll and statutory contributions, so it is the EOR that enrolls the employee in the local scheme. Provider guides describe this in Japan, where the EOR enrolls the employee in Employees’ Health Insurance from the first day, and in the Philippines, where it registers them with PhilHealth, SSS and Pag-IBIG. For India, the same guides say the EOR registers employees for the provident fund and, where they qualify, ESI.

What an EOR adds above the statutory minimum varies. EOR guides for Hong Kong describe group medical insurance as an add-on to the base service rather than part of it, and in Canada an EOR can provide a group benefits plan. Ask what the service includes before deciding whether an international plan is needed. When you do add one, it generally sits on top of the cover the EOR enrolls the employee in, which is how it works in Germany.

Countries where the EOR model has limits

An EOR is not a universal answer. Singapore’s Ministry of Manpower states that an EOR may not apply for a work pass for a foreigner who would be based in Singapore while working for an overseas company. Hiring a foreign national in Singapore therefore generally means setting up a Singapore entity, and an EOR stays workable mainly for citizens and permanent residents, who are covered by MediShield Life.

Law firm guidance for Germany treats an EOR arrangement as employee leasing under the Temporary Agency Work Act: the provider needs a Federal Employment Agency licence, and a worker can generally be leased for no more than 18 months. Spain’s Workers’ Statute bans supplying workers to another company except through licensed temporary work agencies, and Spanish practitioners warn that a standard EOR can fall foul of that rule. In Mexico, law-firm commentary describes a 2021 labour reform that banned general subcontracting of personnel, and no official guidance we found addresses EOR structures directly. These are the places to check with a local employment adviser before you sign.

Contractors arrange their own cover

A genuine independent contractor sits outside the client’s payroll, and so outside the client’s health duties. A contractor in Japan joins National Health Insurance at their municipal office and pays their own premiums. In the Philippines, a self-earning contractor pays PhilHealth directly, and a self-employed citizen or permanent resident in Singapore contributes to their own MediSave account. In Hong Kong, the Employees’ Compensation Ordinance protects employees rather than contractors, and a contractor there arranges their own medical cover.

That separation is part of what makes the arrangement a contractor relationship. The IRS counts benefits among the signs it weighs in deciding whether someone is an employee, so paying for a contractor’s health plan the way you would for staff can blur the line the arrangement relies on.

Misclassification: the risk in general terms

Calling someone a contractor does not settle the question. In the US, the IRS asks whether the business has the right to control what work is done and how, grouping the evidence into behavioral control, financial control and the type of relationship. No single factor decides it, and a remote worker can still be an employee when the business controls the details. A business that treats an employee as a contractor without a reasonable basis can owe the employment taxes, and the IRS Voluntary Classification Settlement Program lets a business reclassify workers going forward with partial relief.

Other countries apply their own tests. Canada’s revenue agency can rule on whether a worker is an employee or self-employed. In Brazil, EOR provider guidance warns that engaging someone through their own company carries a high risk of reclassification as an employee, with back social contributions due. The UK’s off-payroll rules work differently when the client is wholly overseas: the contractor’s own company decides whether those rules apply. For the California version of the same question, read employees vs. independent contractors in California.

The insurance questions that follow the setup

The hiring route also reaches the commercial policies we request from insurers. An employment practices liability application asks whether you use independent contractors or leased workers, and EPLI forms differ on whether a claim from one of them falls within the policy’s definition of an employee. A health plan abroad is not work-injury cover either: a Hong Kong employer must carry employees’ compensation insurance, and an international health plan does not replace it.

Closer to home, California requires workers’ compensation once a business has a single employee, so a US-based hire who joins alongside staff abroad still needs a policy. Our guide to insurance changes for remote teams covers workers’ comp, EPLI and cyber for a spread-out team.

Getting an introduction to a benefits partner

Before you ask, settle which setup applies to each person: your own entity or registration, an EOR, or a contract. Then use the quote form on this page. Tell us where your team lives and how many people, along with how each one is engaged, and we will pass it to a benefits partner that handles international and remote-team health coverage.

If you already use an EOR, include what its service covers today, so the conversation starts from the gap rather than from scratch. Eligibility, plans and pricing are decided by the partner and the insurer. Our overview of international health insurance for remote employees links a page for each country, and the employee benefits hub gathers the rest of the section.

A few useful answers

Common questions

Who provides health coverage for an employee hired through an employer of record?

The EOR, as the legal employer, enrolls the employee in the country’s statutory scheme and pays the contributions. Extra cover, such as group medical in Hong Kong, is often an add-on, so ask what the base service includes.

Do contractors abroad need their own health cover?

Yes, a genuine contractor arranges their own. In Japan that means National Health Insurance through the municipal office, and in the Philippines direct PhilHealth payments. The IRS counts benefits among the signs of an employment relationship, which is worth keeping in mind.

Where does the employer of record model have limits?

Singapore, Germany and Spain are three examples. Singapore’s Ministry of Manpower bars an EOR from applying for a work pass for a foreigner working there for an overseas company, law-firm guidance says Germany generally treats EORs as licensed employee leasing, and Spain limits worker supply to licensed agencies.

How does the IRS decide whether a remote worker is an employee?

It looks at the whole relationship: behavioral control, financial control and the type of relationship. Either side can ask for a determination on Form SS-8, though an answer can take six months or more.

How do I get an introduction to a benefits partner?

Use the quote form and list where your team lives, how many people work in each country and how each person is engaged. We hand that to a benefits partner, and the partner works with the insurer on the plans and eligibility for each person.

Health Coverage for EOR Employees and Contractors Abroad