[Below is a summary of how the ACA (Affordable Care Act, aka Obamacare) affects those of us living abroad (emphasis added by me). Our thanks go out to Democrats Abroad for preparing this.
Note that if you are inside the US more than parts of about 35 days/year, you MIGHT be subject to the penalty — which can be substantial — if you don’t have this insurance.
Note that the ACA insurance plans only pay for medical services in the US, just like Medicare. We highly recommend that all of you to have medical insurance that covers you here.
Summary Prepared by Sabrina Segal, Democrats Abroad Italy
- Generally, US citizens living in a foreign country who are considered bona fide residents of that country OR are physically present in that country or combination of countries for at least 330 full days during any period of 12 consecutive months are not required to get health insurance coverage under the ACA, as they are considered as having “minimum essential coverage.” The residential requirements are determined by using the IRS residency requirements for the Foreign Earned Income Exclusion and is discussed in detail in paragraphs 3 and 4 below.
- If you are living abroad and meet the IRS residency requirements for the Foreign Earned Income Exclusion, you are not required to pay the fee (this is also referred to as a penalty) that uninsured US citizens living in the US have to pay.
- According to the IRS, US citizens living abroad ARE subject to the fee/penalty; however, in general, individuals who qualify for a Foreign Earned Income Exclusion under section 911 of the Internal Revenue Code MAY not be subject to the fee/penalty. U.S. citizens who are not physically present in the United States for at least 330 full days within a 12-month period are treated as having minimum essential health insurance coverage for that 12-month period. In addition, U.S. citizens who are bona fide residents of a foreign country (or countries) for an entire taxable year are treated as having minimum essential health insurance coverage for that year. Individuals may qualify for this rule even if they cannot use the exclusion for all of their foreign earned income because, for example, they are employees of the United States. Individuals that qualify for this rule need take no further action to comply with the individual shared responsibility provision (fee/penalty) during the months when they qualify. See IRS Publication 54 for more information http://www.irs.gov/pub/irs-pdf/p54.pdf.
- U.S. citizens who meet neither the physical presence nor residency requirements will need to maintain health insurance coverage, qualify for an exemption to the requirement, or make a shared responsibility payment (fee/penalty) while they are not covered (there is a 90 day grace period where the fee/penalty is waived if you are in the process of securing health insurance). For this purpose, minimum essential coverage includes a group health plan provided by an overseas employer. One exemption that may be particularly relevant to U.S. citizens living abroad for a small part of a year is the exemption for a short coverage gap. This exemption provides that no shared responsibility payment will be due for a once-per-year gap in coverage that lasts less than three months.
- If you move back to the US and you no longer qualify as being an overseas resident you have 90 days to obtain coverage before the fee/penalty applies to you. Coverage includes Medicare, Medicaid, and some VA offerings.
- The fee/penalty in 2014 is calculated in one of two ways and you are required to pay whichever is higher: EITHER 1% of your yearly household income (the maximum penalty is the national average yearly premium for a bronze plan); OR $95.00 per person for the year; $47.50 per child under 18 (the maximum penalty per family using this method is $285.00).
- The fee/penalty increases every year. In 2015 it’s 2% of income or $325 per person. In 2016 and later years it’s 2.5% of income or $695 per person. After that it is adjusted for inflation.
- If you are uninsured for more than 90 days of the year you are required to pay a pro-rated amount to cover the months over the initial 90 days you are not covered using a 1/12 ratio. If you are insured for at least one day in a month you are considered to be covered for the entirety of the month.
- There are exceptions to the fee/penalty including hardship, religious objections to insurance, membership in a federally recognized Indian tribe, and others.
- There is a lot of great information on www.healthcare.gov. Everyone is encouraged to look at the website and figure out what applies to their individual situations.