AFFORDABLE CARE ACT – WHAT IS IT? 

What you need to know about PPACA if you are an expat

The Affordable Care Act (ACA is a United States federal statute that was signed by President Barack Obama on March 23, 2010 and is widely know as Obamacare. It was a huge and controversial overhaul of the medical & health insurance system that had far reaching impacts on employers, American residents and certain expats. The PPACA was meant to reduce the number of uninsured in the country by increasing the number of people covered and decrease the health costs by including mandates for people to obtain the coverage along with insurance exchanges and some subsidies. A key feature of the law was that insurers had to accept people, provide a certain level of cover and cover pre-existing conditions. There has been quite a bit of controversy surrounding Obamacare and the recent premium increases in some states in 2016 has even impacted the 2016 US election race.

Here are three things every expat should know about the Affordable Care Act:

1. Which expats need to get an ACA expat policy?

It really depends on your situation and you should talk to a legal and tax advisory, but here are some general tips and it really is up to the individual if they want to get an ACA expat health plan or not. If you are a non-US citizen living in the USA and paying taxes there, you may want to get an ACA plan. If you are an American living overseas and your tax adviser says you will be paying a fee if you are not covered by a compliant plan, then you may want to look at an expat ACAP plan from Cigna. There are also many other circumstances, so please contact us to discuss your situation.

2. How does an expat claim the PPACA exemption? 

It is not too difficult to be exempted from Obamacare if you are an expatriate. You should talk to your tax adviser and ask him or her about the tax form 8965. The law applies to American citizens, resident alients, non-resident aliens and legal US residents required to file tax forms unless they meet an existing exemption such as:

  • Hardship exemption
  • Some student visas
  • Certain diplomatic visa
  • Out of the USA for more than 330 days in a tax year
  • Bona fide foreign resident for a full tax year

Many group expat health plans will give the employer the ability to grant the plan as compliant – contact your HR manager for more information. You should also see IRS publication 54 for more info on the Bona Fide Foreign residence test, physical resident test and Foreign Earned Income Exclusion. It can be complicated, so make sure you talk to a tax adviser who knows expat tax issues.

3. What is the current penalty for 2016? 

The current Individually Shared Responsibility fee for not having any insurance is $695 per adult and $347.50 per child (up to just over $2K for a family) or its 2.5% of household income over the tax-filing threshold – whichever is greater. More information can be obtained from your tax adviser and HealthCare.gov

4. If I am not exempt from the PPACA as an expat, what can I do? 

Well, you could either pay the tax and get an international health policy to cover you and your family abroad. Or you can purchase an Obamacare plan in the USA and get a separate global health plan excluding the USA. The best and third option is to get a global Cigna ACA compliant health plan via Expat Financial.

Of course, also keep in mind that with the recent Donald Trump presidential win in 2016, parts of Obamacare and the PPACA act may be changed or the entire law might be repealed. So this may have a significant impact on some expats.

 

Important Notice: We are not tax or legal professionals and are just noting some widely know information. You should always talk to your legal and tax adviser first regarding the PPACA and how it might impact you and your family.