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Can an Employee on Assignment in Paraguay Opt Out of Local Medical Service (LMS)?

One of our clients is a global brewing company with operations in Paraguay, where they send expat employees on assignment to support business activity in that market.  One of those assigned employees is the Country Manager for Paraguay, whose main role is to increase sales and promote the company brand among consumers in that country. 

Because he must be inside the country to be effective, his employer engaged Shield GEO to provide a local employer of record, and take care of all the Paraguay employment, immigration and payroll requirements.

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One of the questions that came up is whether the employee can choose to opt out of the Paraguay Local Medical Service (LMS), and not have that amount deducted from his pay.   This is a natural question from expats, where local health coverage is inadequate or poor and they want to make a different choice or already have private medical coverage.

However, in Paraguay the LMS is statutory medical insurance under the mandatory social security payment withheld from payroll.  It is not possible to elect to ‘opt out’ as the LMS is required by law.  The payment must be made whether the LMS is used or not, and fulfilling this mandate is one aspect of Shield GEO’ service to our clients, to ensure full compliance with all statutory employment and payroll deductions for employees on assignment. 

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