Basic Information on Americans Living Abroad and ACA Obamacare

October 24, 2013
Updated information on how to get an exemption from ACA / Obamacare for expats living abroad who travel back to the USA:

Exemptions from the ACA requirements and IRS payments

Under certain circumstances, you won’t have to make the individual responsibility payment. This is called an “exemption.”
You qualify for an exemption if:

  • You’re uninsured for less than 3 months of the year,
  • You have Medicare,  Medicaid, or some VA coverages, or
  • You have such low annual income that you are not required to file with the IRS:  see the  IRS Interactive Tax Assistant (ITA).

The first item (from the websites) seems to mean that you can go back to the USA for up to 3 months without getting health insurance.

  • You also qualify for an exemption to ACA / Obamacare if you are outside the USA at least 330 days per calendar year. (330 day “physical presence” rule)

What if I go back to the USA for more than 3 months?
You must either be exempt due to insufficient annual income (under IRS exemption to filing rules: ), or you must get qualifying health care insurance coverage.

Some travel insurance policies qualify.   See the list of essential benefits** (listed below) that must be covered by qualifying insurance.

When you arrive in your US state of residency, there are special rules allowing people to sign up for insurance protection under the exchanges, even outside the open enrollment periods.

The general public’s open enrollment period for ACA health coverage in 2014 closes on March 31, 2014, and does not reopen until 2015.

What if I live outside the USA and have health care coverage in the foreign country where I live?
~ If you do  not  return to the USA for more than 35 days per year (36 days in leap years), then you are exempt. (passing the 330 day “physical presence” test)
~ If you return to the USA for more than 35 days per year, but you have qualifying medical insurance coverage** (from your home country) that covers treatments while in the USA, then you are exempt from ACA/Obamacare.


What are the essential benefits that a qualifying foreign health care insurance program or travel health care insurance policy must cover?

**Essential health benefits must include items and services within at least the following 10 categories:

~ Ambulatory patient services (doctor’s office visits);

~ Emergency services (ER visits);

~ Hospitalization;

~ Maternity and newborn care (this is waived for men, and likely for clearly post menopausal women);

~ Mental health and substance use disorder services, including behavioral health treatment;

~ Prescription drugs;

~ Rehabilitative and habilitative services and devices;

~ Laboratory services;

~ Preventive and wellness services and chronic disease management; and

~ Pediatric services, including oral and vision care.…ial-health-benefits/

Note that if you return to the USA for more than 3 months,  your foreign health care plan must also cover these items for treatment in the USA.   e.g.  IMSS does not cover treatments in the USA.

I live abroad, but I want to participate in ACA / Obamacare:

According to an advanced expert on the Marketplace helpline, you must be a Resident of the state where you apply for healthcare coverage with a state exchange. There are some multi-state coverage plans (with reciprocity agreements) like the Kansas, Missouri, and Oklahoma group, but you still must be a resident of one of those states.

A specialist on the help line, who has special advanced training, researched the options for expats living abroad reports that:  They can use the US addresses of family members or friends in the state that they expect to reside in, to apply for ACA / Obamacare insurance coverage in that state’s exchange program,  making the application before they return to the USA.

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Readers who want more detailed information on Americans traveling or living abroad and the Affordable Care Act (ACA) / Obamacare can go here:  ACA – Obamacare’s Effects on American Expats Living Abroad

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Feel free to copy while giving proper attribution: YucaLandia/Surviving Yucatan.
©  Steven M. Fry

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33 Responses to Basic Information on Americans Living Abroad and ACA Obamacare

  1. Gary says:

    Good information. But, is IRS going to include something on their tax forms so that you can indicate that you live overseas and have overseas insurance?

    • yucalandia says:

      Hi Gary,
      When talking with an US govt. ACA expert today, they said that “We hope so.

      The 2014 IRS rules have not been written, and we don’t file until April 2015, so they have 14 months to work this out.
      Happy Trails,

  2. Hana says:

    … Or your legal US residence is in Texas

    • Hana says:

      and other states which did not subscribe to “Obamacare” … then I understand you are also exempt.

      • yucalandia says:

        Hi Hana,
        This rumor is not true at all.

        ACA / Obamacare is a federal law, that applies to all 50 US states.
        All US citizens must meet the requirements of Obamacare, by using an employer insurance program, or state exchanges, or private personal insurance, or they must qualify for exemptions – or pay an annual “fee” (fine?) to the IRS.

        Texas and other states chose to not accept federal funds to pay for insurance exchanges for their state citizens. By refusing the 90% reimbursement of federal money, and by choosing to not set up their own state insurance exchanges, Texans et al chose to have the federal government set up the Texas state insurance exchange. You pay for all of it, but you have no control – as your legislators chose to hand over their power and your power on ACA healthcare policies to the federal politicians.

        Texans et al chose that their citizens must do only what the federal government chooses for them, while Washington, Oregon, Colorado et al chose instead to let their citizens choose how and what to have for an insurance exchange program. Washington, Oregon, Colorado et al citizens get to choose what their program has and does.

        The southern states chose to have the Federal Government do their work, and chose for the fed’s to create Texas et al’s one-size-fits-all federal insurance exchange programs.

        In our view, if we have to pay in Federal taxes for ACA / Obamacare, I would like the people in my state to get some of my tax $$ back from Washington. Texas et al agreed to have their citizens pay the taxes, but denied their citizens the 90% subsidy $$ benefits for healthcare for their poor.

        Texas politicians and Texas news sources seem to have come up a little short on this deal, since they didn’t tell you the facts ???

        Maybe you should write a letter to your governor asking why he chose to have Washington set up the Texas program? I’m a State’s Rights guy, and I am glad that Colorado decided to set up their own program – keeping at least some of the power back home.

        Happy Trails,

    • Gary says:

      Steve’s information is spot-on, vis-a-vis, being exempt from penalty if you live abroad.
      You may maintain a “legal address” in the US even though you live in a foreign country.
      The exemption from having to have mandated insurance under ACA, will be decided by our friends at the IRS.
      Will the IRS simply accept the address on our tax return and grant us the exemption??? Maybe.
      The existing IRS routine is that in order to meet requirement as a “bona fide foreign resident” ,
      you must complete and qualify using IRS Form 2555.

      I hope that this is not the case. Since I do not trust anything the IRS does……. I am curious to see what happens. Good news is: if you are over 65, none of this has any effect on you. Medicare Part A qualifies you, and you are automatically exempt.

      • yucalandia says:

        Hi Gary,
        Good points about the IRS. The politicians really kluged things by merging IRS Foreign Income policies with ACA Obamacare rules.

        The Form 2555 is to apply to have foreign income exempted – nothing to do with qualifying for healthcare… So, it makes no sense to me to default to Form 2555, since most of us geezers living abroad are retired, snowbirds, etc – and we just don’t have anything close to the $97,000 per year of foreign income that Form 2555 is designed for.

        Fortunately, the IRS has 14 months to fix this mixed-up kluged set of ACA rules for determining eligibility.

        Me? I am going to shoot for visiting in the US for no more than 35 days a year in 2014, to meet the “physical presence test” limit.

        Happy Trials,

      • Gary says:

        Exactly. I saw the same thing. We are retirees with no income of importance to the IRS, foreign or otherwise. But, what bothered me was that it was at their “discretion” to decide if we were in fact “bona fide foreign residents”. I have no problem sending them copies of my Residente Temportal and IMSS card, as if they would know what it was. Why should I have to send them anything.

  3. Jerry Barker says:

    Live chat today:
    [2:28:58 pm]: Welcome! You’re now connected to Health Insurance Marketplace Live Chat.

    Thanks for contacting us. My name is Edgar. To protect your privacy, please don’t provide any personal information, like Social Security Number, or any other sensitive medical or personal information.
    [2:29:22 pm]: Edgar
    Hello and good afternoon, are you looking for information about health insurance in the state you live in, or a different state? Also can you please provide me with the name of that state?
    [2:31:22 pm]: Jerry
    [2:31:51 pm]: Jerry
    I live outside of the US
    [2:32:18 pm]: Edgar
    I can answer your questions about the Marketplace and how you can enroll. You can also use to find this information and what programs you may qualify for, as well as find and apply for coverage, compare plans, and enroll in a health insurance plan. You can apply now through the end of open enrollment. Open enrollment for health coverage in 2014 closes on March 31, 2014.
    [2:32:31 pm]: Jerry
    When I return in two years, what will I provide as proof so as to not be fined?
    [2:34:14 pm]: Edgar
    Thank you for your question today. It will take me just a moment to review and respond to your question.
    [2:34:50 pm]: Jerry
    [2:38:47 pm]: Edgar
    Thank you for your patience. I am still researching that information.
    [2:42:01 pm]: Edgar
    If you are a U.S. citizen living in a foreign country, you are not required to get health coverage under the Affordable Care Act. If you’re uninsured and living abroad, you don’t have to pay the fee that other uninsured U.S. citizens may have to pay. Generally, health coverage in the Marketplace covers health care provided by doctors, hospitals, and medical services within the United States. If you’re living abroad, it’s important to know this before you consider buying a Marketplace plan.
    [2:43:34 pm]: Edgar
    When you file your taxes, you can provide your proof of address so you can avoid paying the fee for not having coverage.
    [2:43:55 pm]: Jerry
    I have a US address for banking, insurance and investment purposes.
    [2:44:58 pm]: Edgar
    Since you are outside of the United States, you might have to provide your current address as proof to avoid paying the fee.
    [2:45:31 pm]: Jerry
    On our IRS Filing?
    [2:47:18 pm]: Edgar
    They will determine if you have to pay the fee or not. Since you will be out of the United States, they might need proof that you were actually outside of the US for the time in which you did not have health insurance.
    [2:48:29 pm]: Jerry
    Who are they?
    [2:48:51 pm]: Jerry
    Who will we provide the proof to?
    [2:49:20 pm]: Jerry
    Telephone, Utility bills, Rental contracts, etc. ?
    [2:50:41 pm]: Edgar
    The IRS is who you would provide the proof to. Every year, the fee for not having insurance rises.

    • yucalandia says:

      Hi Jerry,
      Fun stuff.

      But don’t believe all of it. I have finished 6 phone calls with the folks – and according to the official written law/rules, the tech you talked to only gave you a partial answer. You shared the comment(above):
      If you are a U.S. citizen living in a foreign country, you are not required to get health coverage under the Affordable Care Act. If you’re uninsured and living abroad, you don’t have to pay the fee that other uninsured U.S. citizens may have to pay.

      This is only part of the story, because he did not define what “living in a foreign country ” actually means in legal terms. In US Government-legal-speak: “Living in a foreign country ” means that you must meet the requirements of one of the 2 tests – as we described above:

      ~ You must be in the USA no more than 35 days in a year,
      ~ You must meet the IRS’s definition of a “bona fide resident” of a foreign country, as defined by Form 2555.

      To get a sense of why garden-variety (ordinary) ACA answer-techs do not know the ACA law or IRS rules for Americans living abroad, read the instructions for IRS Form 2555 and try to fill out Form 2555, and then read Publication 54 to get a sense of why the folks do NOT know the IRS rules, nor even the ACA / Obamacare rules for citizens living abroad.

      I wound up spending over an hour teaching the actual rules to 2 different ACA/ phone techs this past week – and after 6 calls, including talking with a supervisor and 40 minutes with “an advanced problem resolution expert”, the “expert” govt people I spoke with, ultimately confirmed everything we have researched and written on this.

      It’s complicated stuff, until you read about 11 different US Government publications. *grin*
      Happy Trails,

  4. CAS15 says:

    My son has lived in Africa for several years. The US accountant he consulted said he didn’t have to file US taxes. He has never received anything equivalent to a W-2, meets the 35 day rule and has been well under the IRS filing limits. He has international medical insurance, covering him in most countries and on an emergency-only basis in the US. They just dropped his “class”, non-renewing existing policies. Are there still US companies that provide this type of insurance privately, or are they all dropping young, single people thinking they’ll have to join the exchanges? Since he seems to qualify for an exemption, is this something he has to apply to get? THANK YOU for this information…the most informative site I’ve found yet for ex-pat Obamacare information.

    • yucalandia says:

      Hi CAS,
      He clearly is exempt from ACA / Obamacare. We have not tracked what insurance coverage US companies are currently offering, so you need to contact them. We do not know yet how the IRS will be handling the reporting of these exemptions, because the forms have not even been made. That happens for us in 2015, so the IRS has published nothing on this,… yet.
      Happy Trails,

  5. Peter says:

    thanks for the update, still very suspicious here.

  6. Peter says:

    The very best coverage they sell covers much less my existing policy,
    No prescription coverage,
    $4000 higher deductible,
    and it is $202/year higher cost!
    This would be a Huge step backwards for me.

    • Peter says:

      PS: I have Seguro Popular and am a bit too young for Medicare
      Question 1: will I be forced to buy/penalized?
      I live in Baja (full Inmigrado status but not naturalized) but my US “legal residence” is Az. (the last place I lived and worked was in Az.)
      The only reasonable US location for US Medical Care would be in California.
      Question 2: if I am forced to buy insurance what state?

      PPS: I do visit the US on occasion but will never return as a resident or go there for any medical treatments.

  7. Baja Bound Customer Service says:

    Hi Steven, I’m not sure if this reply address reaches you are not, I hope so. We would like to feature your article about Obamacare for expats in our newsletter. What are your repost rules?

    Ideally we would like to do this: 1. The article title and a bit of info is in our newsletter (usually this is less than a sentence due to space limitations) along with other featured articles. 2. They would click on the article link and go to our website where we feature your article and links to Yucalandia. If you would like, we could also do a couple sentences about you/Yucalandia at the end (we do this sometimes for our contributors who have websites, books, etc.) This would be a nice introduction to Yucalandia as well. If this is OK and you would like to see it before we run the newsletter, please let us know.

    We sell auto insurance for Mexico for tourists online and have customers all over Mexico. This could be an opportunity for fresh eyes on Yucalandia as well.

    Your blog is impeccable. We wish there was a blog on this side of Mexico as good!

    Please let us know your thoughts.

    Thank you!

    Jennifer Hill

    Baja Bound Insurance Services, Inc.

    888-552-2252 x301


    fax 619-702-7807

    CA Lic. 0D25373

    • yucalandia says:

      Hi Jen,
      Thank you for the kind words. Yes, we are glad for re-posts of information, with a simple attribution and links back to our site. A sentence or 2 about Yucalandia?

      Dr. Fry has been coming to Mexico since 1985, and moved here with his Yucatecan wife in 2006. At that time there was very little information on the web with accurate technical details about moving to Mexico. After slogging through lot’s of conflicting information on the web and resolving the conflicts by reading the regulations in the original Government Spanish just to find a few gems of reliable information, Dr. Fry decided to pay it forward by gathering together the best bits that fit his family’s move here.


  8. Jennifer Hill says:

    Hi Steve,
    Please contact me about your repost rules.

    Thank you,

  9. Dyan says:

    CORRECTION: Everyone who buys health insurance after January in the US will be paying for maternity, new born care, pediatric dental, pediactric vision, domestic abuse programs, lactation councilors, pre-natal care, new born care, fertility programs, and Well Baby care…..including men, children and post menopausal women. You cannot opt out of what the federal government has decided is an “Essential Health Benefit”. This includes smoking cessation classes, drug & substance abuse programs, transgender surgery (no age limit), along with the rest of the list you posted. EHB’s can be added at any time by the HHS Secretary.
    One other thing: Your policy has to be in place by March 31,and it takes at least 15 days to get a new policy issued. That means your REAL cut-off date to apply is Feb 15 in order to be in place by March 31st and avoid the IRS-imposed penalty.

    For ex-pats abroad, IMG writes very good medical plans.

  10. Katie says:

    For the 330 physical presence test, I wonder how that is calculated for thos of us who live in Tijuana and cross the border to the US to work? I cross in to the US three times a week, so approximately 160 days a year, but I never actual sleep in the US. Is this sufficient to put me over the physical presence limit? I have insurance in mexico that covers most required categories except for the substance abuse category.

    • yucalandia says:

      Hi Katie,
      See IRS publication 54 for the specifics on how they calculate days:
      The physical presence test is based on 330 “full days”, where the IRS defines a full day as: “ A full day is a period of 24 consecutive hours, beginning at midnight.

      This means you would have to revert to their “bona fide resident” qualification scheme, to prove that you are a resident of Mexico. That is also in Pub. 54 under the section “Bona Fide Residence Test”

      • Katie says:

        Yes. But it appears as though the bona fide resident qualification relies on filing Form 2555 which I would not qualify to file because my income is from the US. I think I am just going to continue to file my taxes claiming my Mexican residence and include my insurance card from Mexico. That way I am both a bona fide resident and covered by insurance any way. This is so ridiculous. As if taxes weren’t a big enough burden now they have to co-mingle with my insurance policy.
        Thanks for the input.

    • Gary says:

      I can’t answer that, but I can raise another question. I contacted an insurance company in the US, considering that I might pay for US insurance there to be used in case of serious illness. The agent told me that most insurance companies will not cover you under their policy unless you live at least six months out of the year in the US. Being a US citizen and paying the premiums isn’t good enough. It keeps getting better and better, doesn’t it? None of it makes sense to me.

      • Katie says:

        Sounds like catch 22 to me. You live in the US enough to be forced to buy insurance, but not enough to qualify for even the most basic policy. Huh? This is ridiculous.

      • yucalandia says:

        Hi Katie,
        From my perspective, it’s problem of 3 different groups making their own rules, without working together to create a product that works for the people they claim to serve. The Federal Government makes one set of overarching rules ~ guidelines – but they then give the States the right to create their own specific programs with additional state-specific rules – and then the private insurance companies have yet additional rights to offer yet different rules within the State and Federal guidelines.

        All of this seems to be generally accomplished without considering what works for ordinary people’s needs.

      • Gary says:

        Yep. My thought exactly.

  11. Steve, do you know anything about the law (I assume Patriot Act) or policy that is requiring US citizens to live in the US the majority of the year to qualify for a bank account? I was told this today by a Schwab representative. I’ve seen one other person have the same problem trying to open a CapitalOne360 account. I reviewed the Schwab terms and I found nothing indicating that requirement, but it did mention verification of identity from the Patriot Act.

    • yucalandia says:

      Hi Susan,
      Banks have recently been looking hard for new sources of revenues, like boosting their charges for using ATMs abroad. Schwab is one of the few financial firms/banks with a policy that they reimburse foreign ATM usage – which causes them to lose revenue in that area. As one of the few that reimburse fees, there has been a recent rush of Americans living abroad to move just enough money to Schwab to milk the free ATM option. (e.g. follow the months of BofA et al complaints on the internet by Americans living abroad.)

      The reaction you got from a Schwab rep may be Schwab’s response to the wave of new account applicants from Americans abroad.

      As a private company, Schwab et al can institute whatever policies they want in these areas – without resorting to using the Patriot Act. As big businesses, their interest is in building ever bigger profits – not serving clients. Individual Americans living abroad often do not represent a profitable revenue stream for them.

      Did you offer to transfer over $100,000 USD to Schwab?
      Many banks and investment firms offer special terms (like HSBC) to their customers abroad who deposit large sums into “Premier” accounts – lifting restrictions placed on customers who have smaller accounts.

      • Susan says:

        I set up the account in November and was “verified” and the restriction was lifted. I transferred cash to fund it initially and was planning to send more later, but not that large of a balance. I didn’t realize you needed a paper form to request an ATM so I completed it and mailed it at the beginning of February and added my spouse on to the account. I was contacted to be “verified” again and they restricted my account until I could go to a branch with two forms of identification. I told the representative that I could not do that until the summer. He knew the account was set up while I was in Mexico because of the IP address. He told me the account was for US residents and it sounded like I spent the majority of my time in Mexico. I asked him why I couldn’t be verified because I have a US address, drivers’ license, and passport. He said I could have all those things and live out of the US. I had them close the account and they sending me a check. Most of the banks will restrict your account if you don’t have any activity within a certain time (I know this from experience) and I was afraid waiting until July or August might be too long to have a restricted account and cause me more problems to get my money back. I also have a mailing service and had a US bank restrict my account because of that address. I called and they did lift it. I agree that the banks are looking for revenue, but I don’t see how this policy is helping them. I don’t see why they would make more money on me if I’m in the US 12 months than if I am spend part or most of my year overseas. I sent an email asking them why and if I would be eligible for an account if I go into a branch when I return and they responded for security reasons they could not answer and that I needed to call. I have looked recently at HSBC and Citibank as options. The announcement of no ATM fees by Santander is appealing too.

      • yucalandia says:

        Hi susan,
        Wow, that’s a tough row to hoe.

        Bank’s intent to restrict Americans who reside abroad is not so much because of revenue, but because of higher expenses from clients who use more services than they pay for. It is expensive for US banks to reimburse foreign banks for American’s ATM withdrawals in foreign countries. Since the US Fed has had years of extremely low interest rates (0% – 0.25%), the amount of income that banks can earn has been very restricted. Faced with smaller revenues, US banks are looking for ways to cut costs. Your relatively small balance and the likelihood of your causing them significant expenses by making foreign ATM withdrawals (relative to very little income generated by your small account) means your small account would likely lose them money. ???

        This is why I asked if you have deposited over $100,000 or more to create some “premium” or “premier” status: Banks can make enough money on your big balance to justify them paying for your foreign ATM withdrawals.

  12. Pingback: 2015 Open Enrollment Period Has Started for 2016 Obamacare | Surviving Yucatan

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