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Dec
27
2011

10 things to surprise you when you move to United States from India

 

Healthcare and Insurance

In US you pay insurance premiums on monthly basis (not on annual basis like in India). This means for essential insurances such as Health and Automobile people pay on monthly basis. But unlike India even for smallest treatments such as doctor visits or routine medicines the health insurance will cover everything after a certain amount of your share as per type of the policy. Similarly for car insurance all kinds of damage (not just major accidents) will be taken care by your automobile insurance.

On average people pay about $ 125 per month for car insurance and about $ 125 for a decent health insurance (per head). However for health insurance, there are government assistance programs offered for poor income class and senior citizens.

The tricky part is virtually everyone owns some kind of health insurance so the whole healthcare industry became so expensive because every healthcare provider tries to charge the insurance to the fullest extent possible. So it might feel like people end up paying the fair value for a healthcare service which is almost equal to their actual share they pay with their insurance (called as Co-Pay and Deductible). Also as a result the health insurance companies end up in increasing their premiums frequently for the consumers. It’s a bad cycle!

 


Prescription Drugs

Unlike India one cannot just like that walk to a pharmacy and get any medicines they need with a chit of paper. The healthcare is very well regulated at US. Simple medicines used for cold, fever etc will be available to buy over the counter, all other medicines available only with the appropriate prescription from a doctor. The doctors will place the order on behalf of their patients through a centralized network. The patient can visit their choice of pharmacy and use their health insurance card to get the medicines after paying their share. The system is very transparent and well regulated. The only drawback here could be the about the price of the prescription drugs, they are very expensive in general!

 

Personal Taxation

Some complain about the higher taxation enforced at the salary class at India. But the reality is the middle salary income group at India ends up paying only about 10-15% of their income after making use of all the tax breaks and tax exemptions available. But in US the salary income class ends up paying on an average of 25-30% from their monthly salary due to federal taxation structure. At the end of the day your paycheck will be way lower than your actual salary! Unlike India there will be very little options available at US to reduce your tax.

 

Interest Rates

US suffered a lot with the recent recession times, so to encourage the consumer spending the Federal Reserve (Federal Reserve is like RBI in India) keeping the interest rates at record low levels. This means one can get a car loan for the interest rate of just about 2% and home loan for about 4% if they own some decent credit history. Where as in India people pay the interest rate of about 12-18% for a car loan and about 10-13% interest rate for a home loan despite of any credit history!

In fact it’s a reverse scenario in India where the consumer demand is very high, so to keep the inflation at control the Reserve Bank of India maintains the interest rates at record high levels.

 


Housing Market

After the recent housing bubble at US the housing market left with very little(brave) buyers. So the demand is way low that kept housing prices at lower levels since the start of recession. As result people could buy a pretty decent house at tier-1, tier-2 cities and sub-urban areas of metro cities almost equal or cheaper than the tier-2/3 cities price of India. I am not talking about a 900 Sq.ft standard houses (what builders in India refer as super-luxury!). People at US rather can buy a very spacious two storey houses with decent facilities (e.g. wooden floorings) at affordable prices. However the houses are mostly bought in US for living purpose, after such a recession people still not brave enough to invest on houses much!

 


Bank Accounts

In India parking your money in savings account of a bank pays you anywhere between 3.5-6% interest just like that. But due to low loan interest rates the banks at US can’t pay any interest to their customers. The usual bank account one can open with US banks are called ‘Checking Account.’ A checking account does not earn any interest one will just get the very basic benefits of such as debit cards. People will have to pay even to get the check books!

Banks at US do offer savings account but they will pay the interest of less than 1% (1% considered as a superior rate to be honest!). The worst part is both savings and checking accounts attract monthly maintenance charges, to skip such charges people have to maintain a hefty bank balances (for virtually no interest of course!).

So people end up in losses when they try to save (park!) the money at the US bank accounts. How? If you keep about $1000 in a US bank account all over year in a 10% inflation scenario, at the end of the year its worth of only $900 after adjusting against inflation. So savings or checking accounts actually erode your wealth on the long run. This might be one of the reasons that people at US rather try to park all their savings at the stock markets!

 


Cheap Credit

Since the interest rates are so low for any type of consumer purchase, many people at US tend to spend more because they are able to get the cheap finance for anything they need. ‘Buy now pay later habit’ is not unusual at all. At the end of the day many of them end up getting a lot of stuffs beyond they can afford and left with very little or no savings from their income. Where as in India people are very spending conscious and on average an Indian saves about 30% of their take home (rather a proud factor!).

 


Owning a Car

Unless one lives in metro cities like NewYork, Car is a must have to survive in US. If you own a car you will be surprised to know that you will have to renew its registration every year. Whereas in India cars come with life term registration, only the owners change. This might be a way to increase their Federal revenue, because every time you renew your registration you will have to pay them some money! The sales tax is applicable even for used cars transaction. So if one wants to buy a used car for about $10,000 then they will have to pay about 6% of it ($600) as tax.


Meat is cheaper than vegetables!

(Almost) All the locals at US are non-vegetarians. Meat is essential portion of their food. So the meat is often available at a cheap price than vegetables. As controversy to India, pure vegetarians will end up spending more money for food while living in US!

 

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Travel

In US, The long distance trains are as expensive as flight tickets. The flights won’t carry your baggage for free! Most flight carriers make easy money by charging passengers for check-in baggage. You will be also surprised to see that the luggage carts at the major airports are not free! Passengers have to pay to use them (how sad!)

 

 

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