The IESS mess: Mass hysteria, surprisingly low expat participation and a failure to communicate

A recent post on an expat social media forum suggested that if Ecuador’s Social Security system (IESS) follows through with its rate hike for voluntary membership there will be a mass exodus of norte americanos from the country.

Well, it turns out that those leaving might fill up four or five rows on the first Tame prop jet leaving Cuenca for Guayaquil. For good measure, you could throw in a couple more rows of those protesting the new immigration law.

Despite what has sometimes amounted to mass hysteria among the expat community over the new method of calculating costs for IESS membership — which most foreign residents use for its health care benefits — it turns out that only a tiny minority are signed up and even fewer actually take advantage of it.

IESS Cuenca hospital

In Cuenca, 272 (out of about 5,000) expats have signed up and, of those, only 74 visited IESS facilities for health services in 2016. Through the first half of 2017, the number of visits totals 41. Nationally, IESS says 935 foreign residents (out of about 30,000) belong to IESS. Crunch the numbers and that works out to half of one percent in Cuenca and a third of one percent nationally.

The  numbers are important for context and to show the disproportionality of the uproar to the problem. On the other hand, the changes have a big impact on some people. I know because I’m one of them.

The latest (for those who haven’t heard)

On July 5, IESS national director of affiliate services Maria Angelica Vera, met with a small group of Cuenca expats specially selected to spread the word about the new voluntary membership fee.

Vera said the requirement that foreign resident members with 9-I visas (pensionado) pay a monthly fee equivalent to 17.6% of the income reported in their residency application is already in effect. Most of those members, however, continue to pay based on the national minimum wage of $375 because the system does not yet have access to their residency applications. Vera requests that members who have not updated their income declaration come by an IESS office and do it. Within two months, she says, IESS will have the immigration files and will increase fees for all those who do not report voluntarily.

As of July 5, Vera said that 72 foreign residents in the Cuenca IESS district had updated their income declarations.

Strangely, the new fee applies only to those with 9-I visas. Residents with other visas will continue to pay based on the minimum wage since the the government, according to Vera, cannot determine their income if it is earned outside of Ecuador. When Cuenca attorney Lina Ulloa pointed out the unfairness of raising fees for some but not other expats, Vera said her office might consider a blanket fee for all foreign residents based on the minimum $800 income required for residency. From what she said, this seems like a long-shot.

Needless-to-say, the government’s roll-out of IESS policy changes doesn’t pass the stink test.