Oct. 24, 2013 Update:
This article is for all the Americans traveling or living abroad who have, so far, avoided learning about the Affordable Care Act (ACA). With the currentg Oct. 1, 2013 – March 31, 2014 enrollment period, for ACA – Obamacare, there are bundles of questions that arise affecting US citizens who are outside the USA.
Are US citizens outside the US covered / protected by the ACA?
Are we exempt?
Is coverage only offered within the US (like Medicare), requiring citizens outside the US to travel for care?
Are expats forced to pay for a US insurance plan, even if they cannot receive care under the plan outside the US?
What fines (a.k.a. “taxes” in US Supreme Court lingo), must be paid for not enrolling in a US health plan?
Much of Obamacare has already been implemented, but the significant parts of Obamacare do not take affect until Jan. 1 2014.
After 2013, there are the penalties (“taxes” assessed by the IRS) for not enrolling in an US approved plan.
Americans who are NOT residents of the USA, do NOT have to participate if you meet the requirements of being a resident of another country (or if you are outside the USA for 330 days or more per year). You can find more details below on Exemptions to ACA and how to qualify as a Non-Resident US citizen at:
https://www.healthcare.gov/exemptions/
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Here’s a list buttons that take you to KEY TOPICS:
~ Click ~ to jump to that Topic:
~ Exemptions from the ACA requirements and IRS payments
~ What if I go back to the USA for more than 35 days Cumulative during a year?
~ What if I return to live in the USA during the year?
~ ACA and NON Residents of the USA: Excluded or Not Excluded?
~ 3 month “Short Coverage Gap” Rule
~ IRS fees Owed if you are a US citizen without Qualifying Health Insurance Protection
~ ACA – Obamacare Rules Governing Non-Residents: “Maintenance of Minimum Essential Coverage”
~ Details of US Federal Rules Governing Who Qualifies as a Non-Resident
~ “Minimum Essential Coverage” versus “Minimum Essential Health Benefits”
~ I live abroad, but I want to participate in ACA / Obamacare
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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 are outside the USA for more than 330 days that year, or
- You’re uninsured for less than 3 months of the year, or
- 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 second item (from the Healthcare.gov websites) seems to mean that you can go back to the USA for up to 3 months without getting health insurance, but that is overruled by:
- You 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) http://www.irs.gov/pub/irs-pdf/p54.pdf
What if I go back to the USA for more than 35 days cumulative during a year? 330 day “Physical Presence Rule”
You must either be exempt due to insufficient annual income (under IRS exemption to filing rules: http://www.irs.gov/uac/Newsroom/Who-Should-File-a-2012-Tax-Return%3F ), or you must get qualifying health care insurance coverage.
Some travel insurance policies qualify – but you would need 9 months of coverage*. See the list of “Essential Health Benefits** (listed below: ~ “Essential Health Benefits”) that must be covered by qualifying insurance.
*NOTICE that there is a catch to having “travel insurance, called the ~ 3 month “Short Coverage Gap” Rule ~ . The IRS does not want us sneaking back to the USA for govt. subsidized expensive health care treatments, after we have previously avoided joining and avoided paying into the ACA healthcare system. They want us to “pay” if we want to “play”.
This means that if you are NOT exempt from ACA requirements (using the IRS rules on residency), then you MUST have 9 months of ACA qualifying health care coverage, or pay the 1% IRS fee in April 2015 (and higher percentages in the future).
What if I return to live in the USA during the year?
When you arrive in your US state of residency, there are special rules allowing people to sign up for insurance protection under the subsidized state insurance exchanges, even outside the open enrollment periods – where moving back to the USA is a “qualifying event” that allows you to enroll in your State Exchange within 30 days(?) of returning to your home state of residency in the USA.
The general public’s open enrollment period for ACA health coverage in 2014 closes on March 31, 2014, and does not reopen until 2015.
When you qualify as a Resident of the United States, then:
~ If you have no current medical insurance coverage, you can either enroll with a private insurance company, and pay your own premiums.
or
~ You can qualify for having minimum medical insurance by having Medicare (receiving SS retirement benefits), Medicaid, CHIP or other qualifying policies (like some VA coverages). (See Below**)
or
~ You can enroll in “State Insurance Exchanges” – insurance pools for each US state that cover people who either cannot afford or cannot get medical insurance coverage. 
Special Exemptions to Participating in the ACA / Obacare Program
There are exemptions if you are a member of an approved religious sect (rejecting medical care on conscientious grounds), member of an Indian tribe, a convict, or have “annual household income lower than the amount specified section 1412(b)(1)(B) of the Patient Protection Affordable Care Act is less than the amount of gross income specified in section 6012(a)(1) ”
Specifically, if you are not required to file a tax return with the IRS, then you have NO responsibilities under the ACA / Obamacare. To find out if you are required to file a federal tax return, use the IRS Interactive Tax Assistant (ITA).
http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision Item 6.5.
Note: If you are a part of a qualifying plan, like Medicare, Medicaid, CHP etc., then you do not have to enroll with a state exchange.
State Medicaid programs are projected to increase under the current ACA law, but many many physicians refuse to take Medicaid patients because Medicaid does not pay enough to support the average $250,000 a year salary for most physicians. “State Exchanges” are expected to pick up much of the slack. Contact your State Exchange to find out their current details and offerings.
The ACA law offers to reimburse the States 100% of the costs of these exchanges for 2014 – 2016, and then the Federal Govt is supposed to pay the States 90% of the costs, which made forming State exchanges tasty to many Governors – which explains why states like Colorado, Oregon, and Washington found they could represent their own citizens better and make better health care decisions for their state, than turning over all the power and choices to the Federal government.
ACA and NON Residents of the USA: Excluded or Not Excluded?
Specifically the ACA website says:
“U.S. citizens living outside the U.S.
U.S. citizens living in a foreign country are not required to get health insurance 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.
To meet this requirement/exemption, you must meet either the IRS “330 day Physical Presence Test” (outside the USA for 330 or more days a year) or meet the IRS “bona fide” residence test requirements. For details on these 2 rules/exemptions, keep reading.* href=”http://www.irs.gov/pub/irs-pdf/p54.pdf”>http://www.irs.gov/pub/irs-pdf/p54.pdf
Generally, health insurance 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 Marketplace insurance.
Questions? Call 1-800-318-2596, 24 hours a day, 7 days a week. (TTY: 1-855-889-4325) ”
https://www.healthcare.gov/am-i-eligible-for-coverage-in-the-marketplace/
How does the IRS determine whether we actually live outside the USA?
The US Govt. determines if we officially “live outside the USA” in one of 2 ways. In the simplest case, to qualify for the ACA Foreign exclusion:
*~ We can be outside of the the USA for at least 330 days in a calendar year to qualify. This is known as the “Physical Presence Test” – to prove that we are NOT residents of the USA for IRS and ACA purposes.
or
*~ We must qualify under IRS requirements to be a “bona fide resident” (permanent resident) of a foreign country. http://www.irs.gov/pub/irs-pdf/f2555.pdf
Key parts of meeting the IRS requirements for qualifying as a “bona fide resident” of another country, are covered by IRS Form 2555, Question 13:
“13 a. Have you submitted a statement to the authorities of the foreign country where you claim bona fide residence that you are not a resident of that country? See instructions. Yes or No
(13) b. Are you required to pay income tax to the country where you claim bona fide residence? See instructions. Yes or No
If you answered “Yes” to 13a and “No” to 13b, you do not qualify as a bona fide resident. Do not complete the rest of this part. ”
For more details, see: http://www.irs.gov/pub/irs-pdf/p54.pdf and http://www.irs.gov/publications/p54/ch01.html
As we can see, we must be residents of another country to qualify – which points to Residente Temporal and Residente Permanentes only qualify for the EXEMPTION if they are out of the USA more than 330 days, in this year or past years….. while VISITORS on 6 month visas – who are not required to pay income taxes in Mexico – owe for ACA insurance coverage or pay the IRS penalty. 
for those with TIP cars and Visitors/visitante visas.
3 month “Short Coverage Gap” Rule
One Additional Twist: Under the Short coverage gap rule, you are formally exempted from ACA requirements if you “went without coverage for less than three consecutive months during the year.” http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision
IRS fees Owed if you are a US citizen without qualifying health insurance protection:
If you are a US citizen and a Resident, without a medical coverage plan, then you will have to pay the following “Taxes” / “fees”(?) / penalties(?) on your TY 2014 Federal income tax return (filed by April, 2015):
~2014 TY: Families: $285 per family or 1 percent of total household income, whichever is greater.
Individual adults pay the greater of $95 each or 1%.
~ 2015 TY: Families: $975 per family or 2 percent of income, whichever is greater.
Individual adults pay the greater of $325 each or 2%.
~ 2016 TY: Families––$2,085 or 2.5 percent of income, whichever is greater.
Individual adults pay the greater of $695 each or 2.5%.
These rules directly affect between 5-10 million US citizens living outside of the US, unless you can prove that you are not a US Resident.** ~
Official ACA – Obamacare description of the rules governing Non-Residents:
“CHAPTER 48—MAINTENANCE OF MINIMUM ESSENTIAL COVERAGE
(a) Requirement to maintain minimum essential coverage
An applicable individual shall for each month beginning after 2013 ensure that the individual, and any dependent of the individual who is an applicable individual, is covered under minimum essential coverage for such month.
. . .
(f) Minimum essential coverage
For purposes of this section
(1) In general
The term “minimum essential coverage” means any of the following:
(Medicare, Medicaid, CHIP programs, some VA medical coverages)**
. . .
(4) Individuals residing outside United States or residents of territories.
Any applicable individual shall be treated as having minimum essential coverage for any month —
~ (A) if such month occurs during any period described in subparagraph (A) or (B) of section 911(d)(1) which is applicable to the individual, or
~ (B) if such individual is a bona fide resident of any possession of the United States (as determined under section 937(a)) for such month. (then they must get medical coverage.)
U.S.C. Title 26 – INTERNAL REVENUE CODE
**Details of US Federal Rules Governing Who Qualifies as a Non-Resident:
The current government regulation for determining who qualifies as a Non-Resident US Citizen is Section 911 of the IRS code. Until further notice, the US Govt. uses the current standard IRS definitions for “tax home”, “bona fide residence”, “physical presence”, etc to determine if a taxpayer qualifies for the foreign income exclusion and hence being exempt from ACA – Obamacare’s provisions. In typical government fashion, one step involves proving a negative: You have to prove that you are not a “bona fide resident” of the USA or any of it’s possessions.
IRS Section 911 Rules:
” (d) Definitions and special rules
For purposes of this section—
(1) Qualified individual
The term “qualified individual” means an individual whose tax home is in a foreign country and who is—
(A) a citizen of the United States and establishes to the satisfaction of the Secretary that he has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or
(B) a citizen or resident of the United States and who, during any period of 12 consecutive months, is present in a foreign country or countries during at least 330 full days in such period. ”
From: 26 USC § 911 – Citizens or residents of the United States living abroad | LII / Legal Information Institute
Based on Section 911, qualifying Non-Residents must prove that they are are not a “bona fide resident” of the USA nor do they have a “tax home” inside the United States. Typical retirees currently living full-time in Mexico can use their Mexican address for all IRS filings to meet some of the qualifications as a Non-Resident.
The “Tax home” and “Physical presence” burdens of proof are more complicated. See:
~ Foreign Earned Income Exclusion – Bona Fide Residence Test,
~ Foreign Earned Income Exclusion – Tax Home in Foreign Country, and
~ Foreign Earned Income Exclusion – Physical Presence Test
in the official IRS publications for details.
For details go to:
~ http://www.irs.gov/pub/irs-pdf/p54.pdf ~ and ~ http://www.irs.gov/publications/p54/ch01.htmlhttp://www.irs.gov/pub/irs-pdf/p54.pdf ~ and ~ and ~ http://www.irs.gov/businesses/small/international/article/0,,id=96817,00.html ~
~ ~ ~ ~ ~ ~ ~ ~ ~ ~
“Minimum Essential Coverage” versus “Essential Health Benefits“
Hint: Don’t confuse them…
Minimum Essential Coverage describes what plans are acceptable (Medicare, Medicaid, etc), while “Essential Health Benefits” describe what specific items a qualifying plan must cover (prescription drugs, Emergency Services, etc). See our Essential Health Benefits section for more details below.***
**The term “minimum essential coverage” specifically means:
“~ (1) In general
The term “minimum essential coverage” means any of the
following:
~ (A) Government sponsored programs
Coverage under –
~ (i) the Medicare program under part A of title XVIII of the Social Security Act,
~ (ii) the Medicaid program under title XIX of the Social Security Act,
~ (iii) the CHIP program under title XXI of the Social Security Act,
~ (iv) medical coverage under chapter 55 of title 10, United States Code, including coverage under the TRICARE program;
~ (v) a health care program under chapter 17 or 18 of title 38, United States Code, as determined by the Secretary of Veterans Affairs, in coordination with the Secretary of Health and Human Services and the Secretary,
~ (vi) a health plan under section 2504(e) of title 22, United States Code (relating to Peace Corps volunteers); or
~ (vii) the Nonappropriated Fund Health Benefits Program of the Department of Defense, established under section 349 of the National Defense Authorization Act for Fiscal Year 1995 (Public Law 103-337; 10 U.S.C. 1587 note).
~ (B) Employer-sponsored plan
Coverage under an eligible employer-sponsored plan.
~ (C) Plans in the individual market
Coverage under a health plan offered in the individual market within a State.
~ (D) Grandfathered health plan
Coverage under a grandfathered health plan.
~ (E) Other coverage
Such other health benefits coverage, such as a State health benefits risk pool, as the Secretary of Health and Human Services, in coordination with the Secretary, recognizes for purposes of this subsection.
~ (2) Eligible employer-sponsored plan
The term “eligible employer-sponsored plan” means, with respect to any employee, a group health plan or group health insurance coverage offered by an employer to the employee which is
~ (A) a governmental plan (within the meaning of section 2791(d)(8) of the Public Health Service Act), or
~ (B) any other plan or coverage offered in the small or large group market within a State.
Such term shall include a grandfathered health plan described in paragraph (1)(D) offered in a group market.”
If you want to join an insurance exchange and want coverage starting Jan. 1, 2014, you must enroll by Dec. 15, 2014. Open enrollment for health coverage in 2014 closes on March 31, 2014 .
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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.
https://www.healthcare.gov/…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 from Mexico does not cover treatments in the USA.
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I live abroad, but I want to participate in ACA / Obamacare:
In this case, you are may return to the USA for expensive medical care, and you want to be a part of a big insurance pool – and get government subsidies to help pay for your insurance protection in the one state I plan to reside in.
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 (that allow you to get treatment in more than one state), but you still must be a resident of one of those states.
A specialist on the Healthcare.gov 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.
~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Please Continue to Make Comments and Replies to Help Keep This Information Current!
Disclaimer: This information is not meant as legal advice. It is for educational and informational purposes only. Government policies vary between States and offices, and Mexican Government officials have broad discretion in how they individually enforce policies, so, your personal experiences may vary. See a professional for advice on important issues.
* * * *
Feel free to copy while giving proper attribution: YucaLandia/Surviving Yucatan.
Dr. Steven M. Fry
Read on MacDuff!
Surviving Yucatan 
Pingback: ACA – Obamacare’s Effects on American Expats Living Abroad | Surviving Yucatan
Thanks Dr. Fry for the timely information.
John Casper (Channi)
Hey John,
I have been stalling on digging into the details of what the ACA means for me and the missus, hoping that the Supreme Court decision would clarify things.
The rules are clear, and should not change** for expats who live full-time in Mexico, and have been filing Non-Resident tax returns with the IRS. (**No changes expected, unless Congress repeals the ACA.)
For expats who go back to visit in the US:
By rubber-stamping the current ACA law, we are no closer to actually knowing what options will be on the table for expats who return part-time or even as visitors. Poor expats may qualify for free coverage by State exchanges??? Maybe the US insurance companies will recognize a new market, and create short-term medical policies to cover US Non-Residents who visit the US, like the short term car insurance policies ???
Will some States choose to expand Medicaid – or severely cut it back? How will the State Exchanges work? Will every State even set up Insurance Exchanges? Will Mitt be elected, along with a bunch of Republicans in the Senate, who will then repeal Obamacare before the expensive provisions kick-in ?
Lots of stuff still up in the air, before the rubber meets the road in 2014,
Dr. Steve Fry
I can only echo Dr. Fry’s comments, above. I am a long-term resident of Japan, working full-time here, and yet I am concerned enough about the possibility of needing long-term care for some as-yet unrealized condition that I’ve purchased health care insurance in addition to the national coverage that is mandatory in Japan.
My reasoning is that, if I become afflicted by some kind of debilitating condition, I am likely to wish to return to the US to be with my extended family, so that I might receive care in an environment where I can communicate more easily with others around me than I can in Japan. My Japanese national insurance will not be of any assistance in such a case. But insuring against this contingency adds just over $10k in expenses for me each year, on top of the Japanese national health insurance I am already paying for.
But, if buying from an exchange is an avenue for reducing this cost without sacrificing the needed coverage, I surely can’t figure out which exchange to use (I don’t have a US home) and none of the websites run by the US Government tell me a thing about how to resolve this issue.
Kurt
The “silver care” levels of coverage on typical state exchange programs (out of “Platinum, Gold, Silver, & Bronze” coverage packages) are reported to offer much lower costs than current private insurer policies (70% of current retail costs), but they are basically catastrophic safety net coverages, typically with => modestly high deductibles ($5,000 per year) and 30% co-pays.
Call your state exchange (using the 1-800 number) and find out the details of what is offered by your state.
If you have no state of residency, we hopefully will have more information in 2 business days, as an expert agent with “advanced training” will be responding to our questions from last Thursday and from Monday… addressing specifically this issue (and others that affect US citizens living abroad).
steve
Death to the United States. All expats should burn their blue passports and start anew.
Umar,
You are almost as articulate, (but not nearly as impressive), as mobs of illiterate destitute Pakistani village men waving their shoes and chanting “Death to …”, all for the benefit of Western Media cameras.
4:79, 80 (Say to everyone of them,) ‘Whatever good betides you is from God and whatever evil betides you is from your own self ”
steve
Dr. Fry,
I am a 21 year veteran of the US Navy living in Ecuador with my wife who was borne and raised in Quito. The whole health care, and tax issue is really giving me a head ache.. I have my cedula to work here but I am currently not working. I receive my pension from the military which goes to Wells Fargo. My wife has an MBA, and works as Human Resources Manager, we do have insurance here with Humana. I do at this time still have insurance with Tricare, which is of no use here. What I am trying to understand is; can or should I drop Tricare? I have no residence in the US, and use my mothers address in AZ to receive important mail, could this be a problem in the future? In my situation is there anything you can think of that I should be doing or keeping an eye on?
Thanks for your time,
Jim m.
GMC(SW) US Navy Retired
Hi Jim,
You could check out Arizona’s residency requirements – maybe you could qualify using your mom’s address, but the Arizona insurance exchange would need to offer medical coverage that works for your situation. We don’t know enough about Tricare to say what the advantages & disadvantages are to keeping or dropping coverage.
I’d like to help more, but that’s the extent of my understanding,
steve
For my wife and I it will be a plus. We spend 5 months a year at our home in Mexico and are currently spending around $10,000 a year of our $35,000 to $40,000 annual income on insurance premiums, and we get no tax deduction for it. If I have researched it correctly my health insurance costs will drop to $3,000 to $4,000 a year. It has been rough having a quarter of our income go to paying health insurance and having to still count it as income for taxes. Insurance through employers is an untaxed benefit so it seems unfair we were taxed on that expense. It will be a big help for us.
Looks to me like the big losers in this may be businesses with more than 50 full time year round employees who weren’t offering any insurance benefits. Then again maybe they should have been offering some sort of assistance with health care.
Hey Bill,
Good to hear from you again!
We’re glad that the ACA will work out for you.
I am seriously concerned about where the $$ monies will come to pay for covering the 40 million uninsured & reducing bills for people like you and I, while there are no real reforms to reduce our already 2X too high actual medical costs, and no reforms to actually improve patient care. I see our grandchildren getting mediocre and even some poor quality medical care, along with very large “past due bills” for today’s borrowing to pay for our generation’s existing $16 trillion of adult-overspending, plus the overload from the anticipated $17 trillion of new deficits by 2030 – more than doubling the current out of control public debt up to $33 trillion for our generation.
~ We inherited just $0.3 trillion of Debt from our forbears -=> 100X increase for just the Baby Boomers. ~
I prefer reforms that significantly improve patient care, reduce the costs for all medical procedures to the 2X – 5X lower levels paid in every single other developed nation, and cover all citizens, without doubling the already massive debt, just to pay for our lifestyles.
When’s the next time you are coming down?
steve
Back down this December through April 2013.
Reforms that cut the cost of healthcare may not be a possibility in the US. Too much power entrenched with doctors and insurance companies and too much big money to fight. I preferred a govt. plan as an option but that failed. Mostly view the bill as a start that can be modified in the future. No real reform will come though until the “corporations are people” ruling is done away with by legislation or an amendment.
Thanks for this article! Just a quick question:
You wrote, “After 2013, there are the penalties ( “taxes” assessed by the IRS)…” but I thought that didn’t come into affect until 1/1/2014?
Also, I have a situation that I’m wondering if you might know about. Next year, I’ll be going aboard to China for the next 2 years and during that time I won’t have any income (since I’m going as a student).
But does that mean I still have to prove I’m a qualified Non-Resident by filing zero taxes with the IRS?
Thanks for any guidance 🙂
Jessica,
It is all a matter of symantics: “After 2013” means that ACA-Obamacare’s requires you to get insurance in 2014. Further, if you do not get insurance for 2014, then you owe “taxes” (penalties) for 2014. The “taxes”/penalties come due April 15, 2015.
Regarding your student abroad exempt status for 2014: You still must demonstrate to the IRS (by filing) that you meet their ~ “bona fide resident” with a “tax home” outside the United States ~ and income exclusion requirements when you file your 2014TY Federal IRS tax return by April 15, 2015, to get the insurance exemption.
Clear as mud? ,
steve
Heehee, thanks for your reply!
And I can’t believe how complicated things are getting… sigh…
I have been living outside the u.s for over 7yrs now and have temporay residency, I will not become a resident until next year so I will have dual citizenship then, I have insurance through my husband in the country he is from, will I still be required to have insurance from the u.s? I do not file income taxes since I do not work and my husband is not from the u.s. Thank you for your time and a great article really explained it.
Jenn,
Just to confirm my understanding of your circumstances: You live in the USA now. You will be a citizen of the USA on or before 1-1-2014. You expect that in 2014 your husband’s insurance will offer the specific medical coverages required by the US government (ACA) requirements. You will live in the US as a Resident for the substantial part of 2014. You will not have a job and you will not have US insurance protection during 2014. Did I get close on the guesses?
If all of these things are correct, and if the ACA is not overturned, then you may have to file a 1040 tax return with the IRS, showing no US income, reporting your international bank accounts over $10,000, report any FATCA required information, and … provide documentation ~ proof ~ that you have medical insurance coverage that meets ACA requirements – all to qualify to NOT have to pay the “tax” for being uninsured. Because there are US State specific requirements and programs that must be worked out and put in place between now and 2014, and because IRS requirements change annually, there may be additional requirements that pop-up in the meantime.
Your thoughts?
steve
hello what is a tax home
Hi Steve,
I aplogize I am a u.s citizen living outside the u.s, my husband is not a u.s citizen and I have insurance through him in his country. I do not file taxes since I am not employed. Thank you for your time and your reply.
Hi Steve, my wife and I have been living in Mexico for 4 years with FM3 visitors permits. We do not have health insurance and pay as we go in Mexico since the cost is so inexpensive. You might say we self insure by banking insurance premiums in a personal healthcare account. We file tax returns primarily because we have unearned income from brokerage accounts in the USA. We use our Mexican address on our tax filing since we do not have a residence in the USA. We make return visits to the USA to visit family once a year for about a week. Otherwise, we are living exclusively in Mexico. Obviously, we take our chances when in the U.S. because we are not insured and any medical treatement would be extremely expensive. When ACA goes into effect, will I have to pay the penalty since I have no intention of buying medical insurance in the future? It seems unreasonable for me to have to pay for medical insurance in the USA when I am only in the country about 7 days a week and the coverage will not cover me when I am in Mexico living as a full time resident.
I am retired but not yet collecting social security.
Hi Stephen,
(As mentioned in the article), have you read the IRS requirements for you to meet the following?
~ Foreign Earned Income Exclusion – Bona Fide Residence Test,
~ Foreign Earned Income Exclusion – Tax Home in Foreign Country, and
~ Foreign Earned Income Exclusion – Physical Presence Test
in the official IRS publications for details.
e.g. Go to:
http://www.irs.gov/businesses/small/international/article/0,,id=96817,00.html
If you can meet all the requirements, then you will not owe any penalties.
steve
That IRS link is not working. Do you have an updated location for that IRS publication?
Hi Greg,
Which link? There are 5 or 6 IRS links in the article. I checked them and they are working. Maybe it was an issue with the IRS website?
The IRS Pub 54 link? http://www.irs.gov/pub/irs-pdf/p54.pdf ?
steve
An excellent article–thanks! You did not cover the related Obamacare tax, to begin in 2013, of an additional 3.8 percent surtax on investment income for higher earners (above $200,000 for singles, above $250,000 for couples). My question is whether that surtax (for those liable) also qualifies for offset via foreign tax credits. Thanks for any insights on this matter.
OK… My wife, myself, and our two boys have been living outside the US for the past three years. But out of the fear that I may have hard time getting an insurance when I get back to the states, I kept my medical insurance all along by making the monthly premiums. You know, once you have discontinued your policy then they make it very difficult for one to buy one later? This was my fear.
Now, if someone can please answer this quesiton, with all the new policies of Obamacare being effective looming, is there a certified expert or professionals that can answer my questions? I certainly don’t want to reply on the insurance companies’ representatives. Thank you in advance for sharing your input.
Brian
Hi! I wonder if you can help me with a question. I am a US Citizen who lives in Tijuana, Mexico on an FM-3, and commute to work every day in San Diego, California. I do not have employer provided health insurance. Under California law, I am not a resident and therefore no insurance company in California will sell insurance to me. I purchase a pretty good health insurance policy in Mexico from Grupo Inbursa, which covers me for accidents in the US. Since my income is earned in the US, I am not eligible to file either IRS Form 2555 or 1116.
HOW can I comply with Obamacare? Will I be penalized if it cannot comply?
Hmmmm… Fortunately we have until 2014 to figure this out…
Q “HOW can I comply with Obamacare?”
A Pay
Q Will I be penalized if it cannot comply?
A Yes. You enter the US everyday so do not qualify under the 330 day rule explained above. Since you have a full time job, you are likely not excluded based on low-income. You should plan on signing up or forking over the 1% of your income at tax time.
Hi Jerry,
Aaron’s answer is very general, and leaves out important facts. You originally wrote almost 1 year ago, and things have changed since then.
Aaron says “pay“, I suggest you instead check the section above with links on IRS qualifications for being a “bona fide resident” of Mexico. If you qualify as a “bona fide resident” of Mexico, then you are exempt from ACA/Obamacare.
Second, if you are not exempt, then you would need to buy insurance protection – getting you finite benefits for your $$. If you chose to not get insurance coverage, you would pay the $95 dollar “fee” to IRS in 2015 – which is a far cry from 1% of your income.
Sidelight: I asked an expert on the ACA marketplace helpline who has “advanced training” about Americans living abroad with no US residence, about where to apply for an lower cost insurance exchange policy – and they will answer today.
steve
I’m in the same situations as you Jerry Bourbon, I live in Tijuana and work in San Diego, Ca. I do rent a Po Box, for my credit card bills, I don’t know what to do? I need serious advice..!
A woman on the Healthcare.gov helpline said to use the address of a friend or relative in the state in which you want to apply, and (aka the state in which you expect to your medical treatments). She specifically checked to see if California allows this, and the answer was: “yes”.
Happy Trails,
steve
Hi, Great article and thank you! I have lived outside of the U.S. for 5 years. I have an Immigration Card issued to me every year. I also pay mandatory international insurance in order to live here (but this intl insurance does NOT cover the U.S.)
I am retired; I have no income for 5 years and was told by my CPA that I do not have to file with the IRS anymore unless I start receiving an income again. I just started receiving s.s. payments a year ago.
My girlfriend allows me to use her U.S. address for any mail from my U.S. Bank Account that I use primarily to receive s.s. payments.
I can prove that I have lived here for 5 years via my Immigration Cards as well as having a PPS number (which is like our S.S. Number) but of course, have not ever used it.
Do I have to file with the IRS and when would that be? This coming year or in 2014? My income is under $20.000. Will I have to pay anything would you know? And HOW will I know?
I’m frightened to realize that most likely the IRS will be contacting me, huh? I was sooo excited to think that I was finally through with that horrible organization. What a nightmare. Appreciate any advice.
Nancy
Hi Nancy,
Based on our current knowledge of a law that has MANY areas that will be defined during 2013:
As you read in the article above, if you remain a Non Resident, living in Mexico, and
you are over 65
then you are covered by Medicare
which meets the ACA Chapter 48 Maintenance of Minimum Coverage requirements,
with special focus on Items f.1 and f.4
As long as you have Medicare coverage, then you are OK.
If you somehow lose Medicare coverage, then you have to meet the IRS rules (until further notice), and the current standard IRS definitions for “tax home”, “bona fide residence”, “physical presence”, etc to determine if a taxpayer qualifies for the foreign income exclusion (proving Foreign Residency) and hence being exempt from ACA – Obamacare’s provisions.
In typical government fashion, one step of the proof involves proving a negative:
You have to prove that you are not a “bona fide resident” of the USA or any of it’s possessions.
This gunk is only triggered if you do NOT have medicare coverage.
Don’t worry, it will all work out fine.
steve
Ah, thank you, Steve! You’ve made my day, but I’m so so sorry for everyone else! Thanks for such a rapid and very understandable response!
Nancy
Ah, I live in Europe (not Mexico); does that matter?
Nancy,
You qualify either way because you are over 65 and on Medicare.
Good question, though. Europe is fine to qualify for Non Resident status under IRS rule (since IRS rules govern both your tax status and ACA-Obamacare status).
IF you lived in a US territory, like the Virgin Islands, AND you did not have Medicare, then you would not qualify as a Non Resident.
still a little confused about the insurance requirements. i live in tijuana but dont a visa to stay you dont need one so close to the border. My daughter and I are american born citizens. I work in san Diego but dont have a residence there. (cant afford it on single income). Anyways we are unable to get medicare because we dont have a home in san diego. Since im not considered a resident of california, do we still have to buy health insurance? Also why do I still have to pay taxes if I dont qualify for any asistance? Please email me Thanks. cketch86@gmail.com
done
We are planning a year-long sailing trip out of the country from Sept 2013-August 2014. We will be losing our employee insurance during this period so we are purchasing an individual plan for the 2 months we will be in the U.S. and then a much cheaper international travel medical plan while we’re out of the country. The issue I’m wondering about is getting covered on an individual health insurance plan when we are back in the U.S. in June 2014. I have been told that the only time we can apply for U.S. insurance is during open enrollment and that we will be required to carry a (very expensive and not-travel-friendly) plan starting in January 2014 even though we wouldn’t need it until June. Is this true? Are there any exceptions for long-term travelers who are not working out of the U.S.? Wouldn’t “snowbirds” face some of the same issues? I’m having a really hard time finding accurate info about this and would really appreciate any help you can offer.
Hi Bethany,
Great question.
My head hurts just thinking about it… There are enough parts of Obamacare that will not be worked-out until this coming November, with 18(?) States announcing updates on individual state Health Exchanges in the meantime, and the US Govt working out (cobbling together a patchwork of) their 32-state Health Exchange plan, that I hesitate to make any broad pronouncements. I’ll do some research in the meantime, and let’s hope that some other snow-bird reader knows an answer.
.. e.g. Is it cheaper to pay the 2014 tax penalty of $95 per person to the IRS on your filing (in April 2015), than to pay for 6 months of coverage you do not use???
Is your state defaulting to the (totally undefined, totally undetermined) US Federal Health Exchange program? or Is your state going-it-alone, like Washington and Colorado et al ? If you are a Washington resident, the State of Washington has worked out large parts their Health Exchange program – and maybe they allow mid-year entries…
If you live in a State that passed the buck to the Feds, then the completely undetermined Federal Health Exchange may control your ultimate options. Note that Obama has publicly announced that they are still trying to figure out details, and that they may NOT have anything resolved by the October 2013 deadline…
arrrrgh,
steve
Thanks. My head hurts too. It likely is cheaper to pay the penalty but we would still be left in the lurch without insurance from June (when we need to be out of Mexico thanks to hurricane season) to the time my husband can get benefits through an employer again. He’s a software consultant and his company will likely hire him back on our return, but there are no guarantees. And in the meantime (June to August at the least) we’d be completely uninsured. It’s hard to believe that we’d be penalized even though we are willing to pay for coverage and that we wouldn’t be allowed to buy insurance at that point. Hard to believe, that is, until I watch Congress at work.
OK…after a little more research, the Oregon Health Exchange is just about up and running. Hopefully soon we’ll be able to find out from them if there will be mid-year enrollment. If not, we may qualify for Medicaid thanks to our complete lack of income as of September. If you find out anything else though, send it my way. And thanks!
Hi Bethany,
Perfect. I had read that Washington had their program almost finished, so, it is good to hear that your state, Oregon, is also close to announcing their completed program.
Re Medicaid: I thought some of the 18 independent States were doing some combining of State Medicaid programs with their new State Health Exchanges. Please write back with your summary and your decisions when they roll out the Oregon Health Exchange rules.
For the other 32 states whose leaders chose to stay under the wing of the Federal Government, their residents may not know until November or December of 2013, at the last moment, before Jan. 1, 2014 Obamacare’s big changes take effect: forcing 16 million previously uninsured Americans – like me – onto some kind of medical insurance coverage.
oh boy, am I excited,
steve
Hello!
I’m so glad to have come upon this article and this blog. Thanks!
If you are still available for feedback, I have a related question…
I am a 30-year-old mom of two. My family and I live in Nicaragua, with my Salvadoran husband. My children and I are all U.S. citizens. We spend about 40 days/year in the States. I work in Nicaragua in an international school, and am paid here. For TY2012, I proved residency in Nicaragua, and showed only non-taxable income, all $23,000 earned on foreign soil.
I would LOVE to qualify for U.S. health care, and believe that my children and I might qualify for Medicaid in the state that we visit, and maintain an address, Maryland. The address is my mother’s house. What I am not clear on is whether or not I can prove residency in Maryland, and file taxes this year with my MD address, even though I proved Nica residency for TY2012. How does the fact that my husband lives with us and earns income factor? He is self-employed, and our combined income does not exceed $40,000.
I have a dual citizenship and and 100% full coverage German travel health insurance with coverage anywhere in the world …. if I am forced to insure myself in US I will have double insurance with any US insurance being grossly substandard ( and most likely more expensive ) to what I have now … how they will be resolving these situations of dual citizens from Europeans countries with their insurances from there ???
Hi pete,
Show proof of your 100% worldwide full coverage German travel health insurance. That is sufficient to meet the requirements.
steve
I do not understand this fully. My situation is that me and my wife are us citizens and currently living aboard in japan for the past 2 years. We have heath insurance in japan but not the us. We are planning to move back to the states of march of 2014. When do we need to get insurance in the states. If it is the day we land do we have a time limit to get it. ie (like when u buy a car u got 30 days to get tag and insurance transferred to the car)
Very happy to find this blog post! What I have been hoping is that I actually can buy insurance under the ACA even though I live in Germany and return to the U.S. for 20+ days per year — if I can get the insurance, I will spend more time in the U.S. (Insurance available to freelancing ex-pats is not good in Germany.) The post suggests (indirectly) that it will be possible for interested ex-pats to get insurance in the U.S. Can you confirm or deny? I am about to start paying German taxes (have lived there three years so far), but would that disqualify me?
Hi Marian,
Based on good quality past internet reports from reliable expats, they described how their US insurance company had some options that allowed them to have insurance coverage on both sides of the border, but I would have to go search Mexconnect.com forums or http://www.chapala.com/webboard/index.php?showforum=1 . (My plate / cart is currently a bit to full to do research in the next few days – but if you find nothing or get no answers, I should have some time to research the details next week.)
steve
I will write more on the upcoming mess of the Federal Insurance Exchange program – that ironically all Red States chose to vote to join, to trust, and to fund… while the (wise) voters and (wise) state legislators of Colorado, Oregon, and Washington (et al?) already have their own independent state Insurance Exchange programs in place.
It does seem odd to me that Red Staters would choose to trust a NEW their fates and their citizens $$$ to a non-existant new Federal program , and to make this non-existent Federal program their only option, especially when the Federal Insurance Exchange program’s principles have NOT yet been defined, let alone the details.
Further the non-existent Federal Insurance Exchange program is so far behind in being written, that Obama announced that they may not know what it is or how it works until November or December – at the last moment before people must sign-up on Jan. 1 2014.
Personally, I am very glad to be “on paper” a resident of Colorado – who has their plan available for their citizens to learn about and to make good personal choices, and make job-choices and insurance choices, well before the deadline.
steve
Hola! Thank you so much for this blog post. I’m not surprised to find some many folks with questions. I’m a lawyer, but still a bit confused. I understand pretty clearly that for now, my ex-pat friend won’t have either buy coverage or pay a penalty. But, what if he WANTED to buy coverage, even if it meant having to return to the US for the care to be covered? The insurance product he had is being withdrawn from the market, and he has a pre-existing condition. Coverage purchased through the Exchange/Marketplace of one of the States he visits one or more times a year anyway, would be welcome. Will that be allowed? I’m not sure it will. What do you think? Perhaps my question is virtually the same as Marian’s. Thanks!!
Hi Meg,
Since only 3 states have done their own State Insurance Exchanges, all the others have to wait until early winter for the Feds to tell them what the policies and details will be – since Washington has decided to leave it all unresolved until Nov. or Dec. 2013.
We really know nothing NEW in the meantime, unless you live in Colorado, Oregon, or Washington, so far.
NEW? vs OLD?
Old => All health insurance companies MUST offer coverage for pre-existing conditions as of Jan 1 2014 – but we understand that the insurance companies will try to recoup any associated expenses/costs, by charging heavy premiums.
steve
Update: I spoke to an agent at Healthcare.gov via live chat, who told me I would be able to enroll. Of course, services will only be covered (or “mostly,” she actually said) if they take place in the U.S. This is good news for me; now let’s see what the financial details of the plans will be.
Thank you,
for coming back to report your good and helpful update,
steve
Thank you for the informative article. I have a question:
My husband and I live and work in Austria for 8 months out of the year where we are covered 100% by our e-card insurance. Is there a way to either pay for a temporary coverage over the summer, or pay out of pocket and avoid the penalties by proving coverage in another country? Thank you!
I think it is clear, Kellie, that you would be treated as having qualifying coverage and would be spared the penalty on your taxes – there is already written guidance at irs.gov on which ex-pats qualify for the presumption of qualifying coverage. The more murky question is, can you purchase coverage for just the time you are back in the US, if you want to? That depends upon the State you plan to come back to and the coverage offered there – I know that if you were to buy coverage in Oregon for the year, and were willing to return to Oregon for care to be covered, you could indeed purchase coverage. Hope this is a little help.
Good points.
We are all waiting to see what happens with the US Federal govt. choices on how they are seting up the overall Federal Insurance Exchange for people living in the 27 states that decided to NOT create their own “state exchanges”. No one in the public has seen what the Feds are considering, and Obama’s last report said that they were behind in setting up the rules… These rules are due out before the program kicks-in Oct. 1, 2013….
Unless you are in Washington, Oregon, California, or Colorado – the 4 states who have published your plans, people in the other 27 states relying on the Federal govt, and the remaining 19 states who are still trying to develop plans… it is a mess.
Even Washington, Oregon, California, and Colorado officials are saying that they will NOT have their systems go live on-line, on Oct. 1, 2013 for registering for the exchanges, unless the Feds also have their systems up and running – keeping our personal data safe. These states will use paper systems until the Feds get their act together.
Note that the REAL changes occur on Jan. 1, 2014, when US residents must be enrolled in ACA / Obamacare, have their own coverage, or have insurance from their company.
The Feds have a website for us to check out: https://www.healthcare.gov/
You can even give them an email address for them to send you information updates, based on your US state….
Follow them and LIKE them on Facebook ! Sign up to Get their tweeeeets !
steve
Many thanks for explaining on this rather difficult topics. You’re punch smart people if you can take this complicated subject–ACA.
I live and work in the US as a US Citizen. However, my wife and our four children are living overseas for more than 3 years and established residence there. Of course, they fully rely on me for full financial support. I’m insured through my employer but they are not since they do not leave here. Would ACA requires them to be insured? I’m responsible to pay for any penalties and wondering if there is any penalties.
Thanks,
Abdi J
Hello, thank you for your help, but I am still confused about my own personal situation, which should be very simple. My wife and I are American citizen expatriates and neither of us have spent more than 30 days in the U.S. since September 2004. We are retired but both still under 65, so do not qualify for Medicare. We live on my company pension (started at 55 years old) and my Social Security (started at 62 years old) combined. Those are our only sources of income.
In your article you wrote “Typical retirees currently living full-time in Mexico can use their Mexican address for all IRS filings to meet some of the qualifications as a Non-Resident.” I have filed and paid any Federal income tax due on my pension and SS in all nine years we have lived abroad with my foreign address on the tax form (which is my only address as I own no property in the U.S.) The part of the sentence above that bothers me is that you wrote “Mexican address for all IRS fillings to meet SOME of the qualifications as a Non-Resident.” The word SOME being the source of my confusion. What else do I need to do to meet ALL of the qualifications? Is there a form I have to file in addition to my annual tax forms? Clearly I should be exempt from the fine but how do I prove that to the IRS if they demand payment or proof of insurance (which I do not have, I self insure by keeping a savings account set aside for that specific purpose as healthcare is much cheaper where I live than in the U.S.)
Thank you so much,
Tom
Hi Tom,
That information is in our tax articles.
e.g.
“Can you tell us: Just where is your home?….
Is it your Tax Home?
Is it the property you call “home”?
Is it your principal place of Fiscal Activity?
Is it the locale where you have full voting rights?
Is it the place where you have been the past 183 days?
Is it the place where you spent at least 183 days last year?”
Basically:
“… old-hand-expats (a.k.a. non-gringos) know about the 330 day requirement for “physical presence” outside of the US (for that TY) to definitively qualify as a Resident of Mexico for IRS tax purposes * ” https://yucalandia.com/living-in-yucatan-mexico/tax-issues-for-americans-living-and-working-in-mexico-a-redux-for-2012/
This fits what you described above for you to qualify as a Resident of Mexico.
steve
Hi Steve,
Thank you for your reply. I don’t live in Mexico, I live in Thailand but I am desperate for information about how to deal with this new health law. You wrote (followed by my answers):
Is it your Tax Home?
I don’t know what that means. As I said I have paid taxes from a Thai address for 9 years and I have no local income, only pension and SS from the U.S.. Does that make this my tax home?
Is it the property you call “home”?
Yes, and has been (in 3 different addresses in the same Thai city) for 9 years.
Is it your principal place of Fiscal Activity?
I have a bank account in the U.S. where my retirement checks are deposited. Other than that I have no Fiscal Activity as I am fully retired.
Is it the locale where you have full voting rights?
I still have absentee voting rights in the U.S. only.
Is it the place where you have been the past 183 days?
It is the place I have been since September, 2004 with the exception of a 1 month visit to the U.S. in 2005. Other than that I have not left Thailand in 9 years.
Is it the place where you spent at least 183 days last year?”
It is the place where I spend 365 days a year.
I know this is a “Living in Mexico” forum, but it was the closest thing I could find to get answers to my questions. I’ve even sent questions to the IRS but they say since the law has not been implemented yet they cannot answer.
I appreciate any help or advice you can offer, mainly if there is a form I need to file other than my 1040a to qualify as a bonifide resident of a foreign country. I’ve searched for many hours and everything I’ve found applies to people earning an income overseas, which I do not.
Thank you again for any information you can give me,
Tom Dickens
Hi Tom,
Good details. You clearly qualify to file as a Non Resident.
Your “Tax Home” is clearly Thailand.
All good,
steve
ok yucalanda i never had to work im 54 i live in washington state well i own property there ,several ,and i dont have work hours for ss to receive benf and since no work hours i dont or wont get medicare ,so that ques wont matter with oboma care ,but im a globe trotter and been out of the country over 330 days i collect rents to live ,so oboma care dont cover me out of the country ,so i must still get oboma care or should i get travelers insurance throu lonely planet ,i wish it would cover like germany in any country since i pay so much taxes on property ,so i need both insurances then as all i do is travel last six year and plan to only do that tell i cant ,so i should still just get oboma care so if i visit like two times in last six years for six months each im covered ,what the rules for washington state then ,im lost on this what is the best cheapest ins for a globetrotter to get since i never know what country im in kelly
Hi Kelly,
Call 1-800-318-2596, 24 hours a day, 7 days a week to find out your options for Washington state. Compare the costs and the benefits of the Washington state insurance exchange options vs. Lonely Planet insurance to make your decision.
Happy Trails,
steve
Hello. I am a US Citizen who lives in Tijuana, Mexico, and work part time in San Diego, CA as a substitute teacher. However, my principal income comes from consulting in Tijuana. I report the consulting income in Mexico, pay taxes on it, and file IRS form 1116 to avoid double taxation. I file a CA non resident tax return, where I exclude the consulting income.
To the best of my knowledge, I CANNOT use the CA health exchange because I am not (nor do I want to be) a CA resident. Yet I am not a “bonafide resident” of Mexico, because I cross the border into the US over 200 times a year.
I do not think I can legally purchase Obamacare qualifying insurance, yet I do not think I qualify for an exemption.
Your thoughts?
Hi Jerry,
Unfortunately, our understandings are for routine boring situations. I think you should write them and ask them.
Hopefully, you do not have to buy private insurance. Alternately, you would have to pay the extra taxes…
steve
Thanks again Steve,
Sorry to be a pain, but specifically:
You wrote: “You clearly qualify to file as a Non Resident.”
But do I have to take any further action (than filing taxes from a foreign address for 9 years) to “file as a Non Resident?
Thank you again very much as this has caused me much worry,
Tom
Hi Tom,
No other requirements, no other actions. All good.
steve
ive lived in mexico for 32 years but I am still an American .what am I going to have to do in order to apply for Obama care
Hi emerson,
Read this to see if you qualify under the official proposed rules:
Click to access pdf_cms_1_031313.pdf
It is formally called: “Single Streamlined Application for the Health Insurance Marketplace: ”
There are 57 pages of questions to complete to determine your requirements. A family of four has to answer about 1000 questions to determine eligibility, so it may take a CPA’s skills to sort it all out.
Really, in the absence of the Federal government’s exchange program, I don’t think we can know the final answer.
Happy Trails,
steve
Yours is the first article I’ve found addressing this issue, but I find no relief. I “retired” mid June, 2013 at the age of 49. I did not purchase Cobra coverage from my employer. I have no personal income as of my retirement date. My husband is retired and has income, upon which we live, through Social Security and Kansas (and Texas) Teacher’s Retirement systems.
Our plans are to be out of the US roughly six months in 2014 and perhaps more in subsequent years. We will be cruising our sailboat during the remaining months of 2014, traveling on the coastal waters of the Eastern states.
We have a residence in Texas where our daughter (age 27) is living and paying all expenses. We will re-evaluate selling the property in a couple of years.
My understanding of the insurance pools, is that they only provide benefits in the home state. We won’t be in our home state for many many months, perhaps never. There are policies for travelers such as myself, that provide coverage both out of country and in the US (requires that we be in the Us less than 6 months per year). I was considering purchasing one of those types of policies. Will that satisfy the healthcare requirement under the ACA? If not, is there a policy that does, which also provides out of state and out of country benefits?
Thank you for your time.
wow..we wont know abt fed program til after election? any expays got a room I can rent? also if I quit my part time job…I qualify for Medicaid,,or keep it and pay half salary for health ins…or buy a LOUSY health PLAN..Plans are not insurance..folks don’t know this…plans are agreements between doctors and companies
Hi Steve…
Nancy Nurse here…. the last time we spoke was in 2012 and you were speaking “based on current knowledge”… has anything changed as far as someone living in Europe, on Medicare (but I ONLY have the hospital part of Medicare)… does that matter?
I have also recently spent over 3 months visiting here in the States… will that change anything?
Thank you so much.
Nancy Nurse.
Hi Nancy,
As long as you maintain your US non-resident status, then you have no obligations.
steve
Thank you Steve! You’re amazing…
“As long as you maintain your US non-resident status”… Oh my, dumb question, by how is that done? I’ve maintained a US address with a friend for anything important that might come in; I have US Bank Accounts, and I have used my US address for my last tax return back in 2009 I think it was… but, this year, I had to borrow a few dollars from a tax annuity so will have to pay taxes on that… am I best to use my Irish address on the return or doesn’t it matter? What else must I do to maintain my non-resident status or am I cookeresd already? I thought being on Medicare was enough…. NO?
What’s my worst case scenario?
Nancy
Hi Nancy,
The requirements for maintaining US non-resident status are listed above:
IRS Section 911 Rules:
” (d) Definitions and special rules
For purposes of this section—
(1) Qualified individual
The term “qualified individual” means an individual whose tax home is in a foreign country and who is—
(A) a citizen of the United States and establishes to the satisfaction of the Secretary that he has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or
(B) a citizen or resident of the United States and who, during any period of 12 consecutive months, is present in a foreign country or countries during at least 330 full days in such period. “
steve
Thank you Steve. I know how tired you must be of these questions from people (like me) that just don’t understand some of the terminology and for that, I’m sorry, but I know I speak for everyone when we say how very grateful we are to have you!
1. If I haven’t paid taxes for the last six years while in Europe, how can I say it’s a TAX home? And, when and if I DO pay taxes inn 2014, is there a special way of doing it? My first year in Europe, I just emailed my CPA and she put down “her” US address for me as an in C/O, Should I file a special way? FYI- for 2014, I will have to pay taxes on $2000 that I took from an annuity. (I have no income other than my S.S. benefit) Or is there a special for? Never having done this, I’m confused. Or doesn’t it really even matter since I’m on Medicare?
2. Having read this, does this mean that I do not have to worry since I have Medicare, Part A or have the rules changed since this was written?
The term “minimum essential coverage” means:
The term “minimum essential coverage” means any of the following:
(A) Government sponsored programs
Coverage under –
(i) the Medicare program under part A of title XVIII of the Social Security Act,
3. You also mention spending 330 consecutive days in ANY year? Again, does that mean any of the 7 years that I’ve lived abroad?
4. And if all else fails, what is the worst case scenario? That I have to buy supplemental insurance (even when I already have International Health Insurance and won’t be living in the U.S.?) Or is it worse than that? What would/could they do to me?
Thank you once again, Steve..
Sorry, my question was in the above email: “Is there a special form to use when filing taxes out of the country?”
Dear Steve,
My husband and I live overseas, but we are American citizens approaching retirement age. We don’t plan on returning to the States, until we are no longer able to travel. Isn’t the ACA (Affordable Care Act) dispensed by the state you live in. How do we sign up for medicare when we don’t have a residence and how long would we have to reside in a state to be able to sign up for medicare? Isn’t that considered a doughnut hole?
I assume we will have to pay for medicare after we retire (and are no longer in our overseas insurance plan, Will they just take that out of our Social Security?
thanks so much in advance.
I live in the US Virgin Islands. We are excluded from participating in the Federal Exchange. The Territory tried to partner with other states to become part of their exchange, but none would partner with us. We were not able to create our own exchange. All private insurance companies that offered private, individual health insurance have stopped doing so in the Territory. Individual health insurance is not available for any cost in the Territory. Additionally, private insurance companies have started cancelling group policies citing the ACA as the cause. We are subject to some of the restrictions place on insurers–just enough to effect their bottom line and get them to cancel our policies–but to few of the protections. For example, Cigna has notified the VI Bar Association that they are cancelling the group policy at the end of 2013. The VI Bar has attempted to get coverage under Blue Cross Blue Shield, but it appears that that will not go through. So even if individual law firms are able to get small employer policies (at small employer rates) adults are not protected by the pre-exisiting condition provision of the ACA, nor lifetime limits, nor yearly limits. Our policies can be cancelled if we get ill. For this US Territory, the ACA broke it, but so far the government has refused to own it. We are far, far worse off than we were before. The small increase in Medicaid that we are supposed to receive isn’t even being drawn down, so those additional pregnant women and children who were supposed to be covered are not. The ACA is proving to be a disaster for the US Virgin Islands.
wow…
Oh. And, Yes. We will be subject to the tax if we don’t have health insurance coverage!
Thanks so much for a greatly needed article and forum.
I am a US Citizen, age 80, living in Canada, and spend winters the states. What are my options for getting coverage starting Oct 1? Starting Jan 1, 2014? I have a previous heart condition.
Test. I left a comment and don’t see it.
Test worked so here is the question again–
I am a US citizen living in Canada. I file IRS yearly. I have been snow birding to SW US for the last many years. I have a previous condition. I expect to pay the Individual Shared Responsibility Provision on my 2013 IRS tax return, or buy insurance on an exchange, if I can. Will I be covered starting Oct 1, 2013? Or starting Jan 1, 2014?
What are my options? TIA..
For what it is worth, found this website (http://www.ustaxfs.com/what-does-obamacare-mean-for-expats/) from June 2012 with the following statement.
“While there exemptions for certain categories of individuals, there is no exemption for individuals living outside of the United States. However, the legislation does provide that such individuals will be treated “as if” they have obtained the “minimum Essential coverage” for any month if they are a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or during any period of 12 consecutive months, they are present in a foreign country or countries during at least 330 full days in such period.”
Thank you for posting Mark. But does anyone know WHICH tax year they are referring to? For instance I have lived in Europe for 12 consecutive months for many years, but in 2013 I came back to the US for a long visit… so are they referring to ANY taxable year or just the most recent?
Well, the requirement kicks in for the 2014 tax year, for which we will file returns in 2015. The penalty starts small and grows, so the penalty for the 2015 tax year, which we will file in 2016 is higher than the year before. The personal income tax year is the calendar year, UNLESS you have gone through the process with the IRS to establish a different fiscal year, which some business might do.
It appears that the 330 days is in ANY consecutive 12 month period, not just calendar years. June 1st to June 1st next year, for example. At any rate, you file taxes for 2014 in early 2015. So if you live or travel outside of the U.S. for at least 330 days in 2014 then you shouldn’t have to pay a penalty when you file in 2015.
Here’s another IRS link that describes the 330 day clause:
“12. Are US citizens living abroad subject to the individual shared responsibility provision?
Yes. However, U.S. citizens who live abroad for a calendar year (or at least 330 days within a 12 month period) are treated as having minimum essential coverage for the year (or period). These are individuals who qualify for an exclusion from income under section 911 of the Code. See Publication 54 for further information on the section 911 exclusion. They need take no further action to comply with the individual shared responsibility provision.”
http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision
If we read further in the IRS official “Publication 54” that describes who qualifies for the exclusion (through a flow chart) on page 13, which describes:
“Were you physically present in a foreign country or countries for at least 330 full days during ANY period of 12 consecutive months?”
If you got to this box, and answered “YES” to this question , then you qualify.
Click to access p54.pdf
Continuing on pages 14 & 15, the IRS also describes how you ~ must be a formal resident of a foreign country and ~ YOU MUST BE LIVING OUTSIDE THE USA FOR A PERIOD OF AN ENTIRE TAX YEAR:
“Statement to foreign authorities.
You are not considered a bona fide resident of a foreign country if you make a statement to the authorities of that country that you are not a resident of that country, and the authorities:
~ Hold that you are not subject to their income tax laws as a resident,
or
~ Have not made a final decision on yourstatus.”
and
“Uninterrupted period including entire tax year. To meet the bona fide residence test, you must reside in a foreign country or countries for an uninterrupted period that includes an entire tax year. An entire tax year is from January 1 through December 31 for taxpayers who file their income tax returns on a calendar year basis. During the period of bona fide residence in a foreign country, you can leave the country for brief or temporary trips back to the United States or elsewhere for vacation or business. To keep your status as a bona fide resident of a foreign country, you must have a clear intention of returning from such trips, without unreasonable delay, to your foreign residence or to a new bona fide residence in another foreign country.”
“Bona fide resident for part of a year.
Once you have established bona fide residence in a foreign country for an uninterrupted period that includes an entire tax year, you are a bona fide resident of that country for the period starting with the date you actually began the residence
and ending with the date you abandon the foreign residence. Your period of bona fide residence can include an entire tax year plus parts of 2 other tax years.”
So, the 330 day test appears to not be the only issue.
Happy Trails,
steve
ACA and NON Residents of the USA: Excluded or Not Excluded?
In the simplest case, to qualify for the ACA Foreign exclusion:
~ We must be outside of the the USA for 330 days in a calendar year to qualify.
or
~ We must qualify under IRS requirements to be a “bona fide resident” of a foreign country. http://www.irs.gov/pub/irs-pdf/f2555.pdf
Key parts of meeting the IRS requirements for qualifying as a “bona fide resident” of another country, are covered by IRS Form 2555, Question 13:
“13 a. Have you submitted a statement to the authorities of the foreign country where you claim bona fide residence that you are not a resident of that country? See instructions. Yes or No
(13) b. Are you required to pay income tax to the country where you claim bona fide residence? See instructions. Yes or No
If you answered “Yes” to 13a and “No” to 13b, you do not qualify as a bona fide resident. Do not complete the rest of this part. ”
As we can see, we must be residents of another country to qualify – which points to Residente Temporal and Residente Permanentes only qualify for the EXEMPTION if they are out of the USA more than 330 days, while VISITORS on 6 month visas – who are not required to pay income taxes in Mexico – owe for ACA insurance coverage or pay the IRS penalty.
😦 for those with TIP cars and Visitors/visitante visas.
steve
Thank you everyone! Perfectly clear now! Hmmm… wonder how long that clarity will last huh? :))
I have lived in Italy for 32 years! I am a US citizen ONLY, but I have national health coverage in Italy on my husband’s account, as I have been a resident here for 30 years. I travel back and forth frequently, and I pay exorbitant taxes in the US because of my investments there. I have never had coverage in the US as I always paid full price for anything health-wise there. I may spend a month or 6 months in the US, but my primary residence is in Italy and…oh yes, also in the US. Will I pay? Do I understand the “penalty” for not having coverage to be a choice between a percentage of income for a family, or a fixed rate for individuals?
Lastly, where do I sign up for the revolution to overthrow this tyrannical regime?
I understand that your Italian national coverage qualifies. Does your Italian coverage pay for hospitlizations or medical treatments while you are in the USA?
steve
No, as I am not an Italian citizen. When I am in the USA, I pay out-of-pocket for everything. I don’t mind as I am used to paying my way, but I don’t like the idea of paying for things twice! My two sons, 20 and 23, are dual citizens, so I suppose their case will be yet another to decipher.
Thank you for your quick reply! The site has been helpful so far.
Yes, I, too, wish to sign up for the revolution!
Hi Steve, I was really hoping to get a reply to this – posted earlier:
I am a US citizen living in Canada. I file IRS yearly. I have been snow birding to SW US for the last many years. I have a previous condition. I expect to pay the Individual Shared Responsibility Provision on my 2013 IRS tax return, or buy insurance on an exchange, if I can. Will I be covered starting Oct 1, 2013? Or starting Jan 1, 2014?
Also, the penalty does not kick in until the 2014 tax year, so it would be due on your 2014 return on April 15, 2015 (or whenever you file since expats get an extended deadline).
I work at an HMO. We are telling our staff and customers that if they sign up on an exchange between October 1 and December 15, 2013, coverage will be effective January 1, 2014. If they sign up between December 15 and January 15, 2014, coveage will be effective February 1, 2014. If they sign up between February 16 and March 15, coverage will be effective April 1, 2014. If they sign up March 16 to March 31, coverage will be effective May 1, 2014. For 2014, the Open Enrollment will be October 1 to December 15, 2014 for an effective date of January 1, 2015. – Meg
Thanks so much for this article! Very imformative! I do have one question: I am currently working for the US Army in Germany. I get paid in dollars, pay US taxes, file as if I still lived state side, but we live on the German economy (Here as a NATO component so no visas are needed). However, My wife, son, and myself all have German health insurance. Will I be forced to pay a “fine” for not having US coverage? We find the German health coverage to be better while living here in Germany.
Hi Brent,
Does your German health insurance cover you while you are in the USA? Some German policies do, some don’t. Are you out of the USA for more than 330 days per years – allowing you to qualify as a non-resident of USA?
steve
My German insurance does not cover me while stateside (It might for life threatening situations but that’s it). We have traveller’s insurance for when we travel home for a visit that covers us for our entire stay. We have lived in Germany since 2008, we travel home for a week or two a year that’s it. However, because we are NATO and have Status of Forces Agreement (SOFA) we are considered still living in the US and not technically here in Germany. Meaning we don’t pay German income tax on our income. We are paid in dollars, pay US taxes and file as if we still lived in NH. So the out of the US is a very gray area for us I think. The US army offers insurance for civilians (AETNA) but we choose to not take it because the German one is much better, though more expensive of course but well worth it for ease of use and the fact it has no deductables nor co-pays. We’d hate to be forced to drop that and take subpar insurance or pay for German insurance AND a fine (tax).
Brent
Hi brent,
I think you need to contact the ACA with the specifics of your case, because the specific details of your situation are unique, the rules are complex, and I am afraid that our general understandings of ACA would force you to either pay penalties to the IRS or get US insurance – which I hope is NOT the case. Can you please come back and tell us what the ACA folks tell you? (It would help other Americans living and working overseas/internationally with similar questions.)
steve
I would be happy to come back tell you what the ACA tells me. I think I am correct in assuming I will be forced to buy US insurance or pay a fine. I too hope that’s not the case but it’s likely it will be the case (sadly).
It seems a bit odd that the ACA is trying to fold in the 330 day Bona Fide Residence test when this test has been in the tax code for years to define who qualifies for a Foreign Income Exclusion. If you leave the country of your residence to work in another country, those days are counted against you and if you’re away more than 35 days, your income exclusion is reduced.
However if you leave your country of residence for a non-working trip, those days to not count against you, even if that vacation is back to the U.S.
Now if you have a residence in the US it might be difficult to prove your trip was a vacation. It would also seem that filing your 1040 under your address in the foreign country would be prudent.
I worked for many years while living in Mexico as a consultant to some US companies. As my work was mostly Internet based I rarely had to travel but if I did for work, I entered those dates on the residence test section of the income exclusion forms. During those years I went on many vacations both to visit family in the US as well as abroad but I never reported any of them.
Does anyone know if we use our foreign address on the tax form or our U.S. Address (which I use for all my mail). I ONLY need to file taxes this year for $2000 I took out of an annuity… I have no income other than s.s. I live in Europe. I haven’t filed taxes since 2009 and I wouldn’t this coming year except for the $2,000 I withdrew.. wonder if I can just use something like Turbo Tax? I’m very confused over how to do all of this. First time ever taking out some money and first time doing taxes while in a foreign country.
Hello, my family and I are moving to Costa Rica in a few days. We are applying for residency there but I will still be working remotely for a U.S. company that I have medical insurance through. My husband is retired but he is on my insurance. When you apply for residency in Costa Rica you have to join their CAJA program which is their country wide medical plan. I was planning on dropping my husband from my insurance as we will all be part of the CAJA system. What I wanted to know is would we be assessed the tax if my husband isn’t insured for part of the year until we are enrolled in the Costa Rican health plan if he isn’t on my health insurance?. He did work for part of the year for 2013 before he retired, but will not be drawing any income at all for 2014. I’m just wondering how we will be affected and if the CAJA program qualifies as coverage according to the Obamacare guidelines? Thank you for your response.
Hi Amanda,
Did you read the sections above about meeting physical presence tests or bona fide foreign residency above? (330 days outside of the USA or foreign residency reqmts). This issue comes up for 2014 – and 2014 tax filings in April 2015.
Does your Costa Rican insurance cover medical expenses incurred while visiting the USA? If so, then you have qualifying coverage. If not, then you either need to get insurance coverage for the times you are visiting, or meet the non-residency or 35 maximum days present in the USA for 2014.
steve
HI, I posted before, but i am wondering why no one answered. What constitutes residency in a state? We will have lived overseas for six years when we retire, we don’t have a home in the US, and we haven’t been home in 3 years (we are American). We will be over 65 when we eventually go home, so where do we go to sign up for ACA?
Hi Janice,
I did not reply, because I did not know the answer, and we are waiting to hear from the US Govt. on these answers. As written above, since you have been outside of the USA for more than 330 days a year, you owe nothing to ACA/Obamacare. Check with the 1-800 number listed in the article above to find out what your state may require.
steve
Thank you for your reply. I think because I am already getting social security, I will automatically be signed up for Medicare Part A. Is that right? Will I be automatically be signed up for Part B?
Thanks again. I have forwarded this blog on to friends who are also working expats.
Hi Janice,
http://www.medicare.gov/sign-up-change-plans/get-parts-a-and-b/get-parts-a-and-b.html
Some people get Part A & Part B automatically
“How to get Part A & Part B
Some people get Part A & Part B automatically
You may qualify for Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) if one of the following applies to you:
~ I’m already getting benefits from Social Security or the Railroad Retirement Board (RRB).”
“How to sign up for Part A & Part B
~ Apply online at Social Security. ”
steve
I am a US citizen living in Canada. I file IRS yearly. I have been snow birding to SW US for the last many years. I have a previous condition. I expect to pay the Individual Shared Responsibility Provision on my 2013 IRS tax return, or buy insurance on an exchange, if I can. Will I be covered starting Oct 1, 2013? Or starting Jan 1, 2014?
What are my options? TIA..
Forgive me Steve for post ING again, but I sure really hope to hear from you. You have permitted here, a very important discussin.
All good.
I have left some questions unanswered in the Comments section, hoping that others who have experience with researching ACA issues on filing/applying to answer. A previous poster who works for an HMO reported the following:
“I work at an HMO. We are telling our staff and customers that if they sign up on an exchange between October 1 and December 15, 2013, coverage will be effective January 1, 2014. If they sign up between December 15 and January 15, 2014, coveage will be effective February 1, 2014. If they sign up between February 16 and March 15, coverage will be effective April 1, 2014. If they sign up March 16 to March 31, coverage will be effective May 1, 2014. For 2014, the Open Enrollment will be October 1 to December 15, 2014 for an effective date of January 1, 2015. – Meg”
Individuals should call the official 1-800 number listed above to confirm how their states are doing things:
“Call 1-800-318-2596, 24 hours a day, 7 days a week.”
steve
So how does this effect myself? I have just recieved my green card through marriage to a US citizen but have duel citizenship with the UK (England). I have been told due to the immigration procedure that I can’t qualify for any state assistance or health based assistance (eg Medical/MSI etc) for 5 years. I am not working as am applying and getting nowhere at the moment and my husband and I (who is on MSI and doesn’t work due to compound health problems) survive on $200 a week gifted from his father. I can not afford health insurance, we struggle badly financially, live in a run down home and i am terrified I will be fined for not having insurance! Please can I have some advice on my situation if you can help as I am worried sick. Thanks. Cathy G.
Hi Cathy,
1. Fortunately, the first year IRS “fees” (fines) are relatively small ($95 per person) and are not due until April 15, 2015.
2. Unfortunately, your situation is more complicated than any of the official descriptions published on government websites.
3. We have spent 1½ hours on the phone with US government phone line with three different “experts”, including one agent with “advanced training”. The agent with “advanced training” will be calling us back with answers to questions about people who are in the USA more than the max. allowed 35 days.
I recommend that you call the 1-800 number and describe your situation. Expect to wait 2 to 4 business days for final answers.
steve
With a fee/fine of $95, I wonder what the coverage would be before the fact of payment, and how much the out of pocket would be in a major medical catastrophe
Thanks so much for your blog. I’m 26 and so not only having to deal for the first time being off of my parents’ insurance but now i had the threat of the ACA looming over me. I’ve lived in France for over three years now and am just getting settled into the SS program here so this was very informative and I am sure to reblog some of the information that you shared in my blog about living in Paris.
A+EmilieinParis
You and your site are a godsend! Thanks again.
Great blog!
My question is: I’m a US and Australian citizen and covered with insurance in Australia where I live. I file a US tax return each year from my Australian address along with a claim (2555) as a non resident in the US. It this enough or do I have to get some certificate of exemption stating that I’m a bonafide resident elsewhere?
Thanks
Rozzie
Hi Rozzie,
We are supposed to get answers to your questions today from a government expert. In the meantime: Do you meet the “physical presence test” of being in the USA no more than 35 days per year? If so, then you are exempt from the ACA/Obamacare requirements. If not, then you have to use the IRS qualifications for being a “bona fide resident” of Australia to be exempt – using the information at the IRS link provided above.
More later,
steve
As far as my research goes, as long as you file a Bona fide Residency form with the IRS (IRS 2555), your exempt from the ACA. The IRS considers two tests to determine your ‘ex-pat’ status. The first is a residency test and the other is the Physical Presence test. If you live in Mexico and have filed for a resident visa (I have a FM2 or whatever they call them now, on the back of the card it says, “…The holder of this card is a resident of Mexico…”. This should satisfy the residency test because you have “made it know to a foreign entity of your intentions to establish residency”.
Below is an excerpt from IRS Publication 54. The publication refers to foreign income but there are parts in there about those of us who are self-employed or receive income from the US, such as social security. As long as the IRS knows that you reside outside of the US, you are exempt from the ACA. I file a return, even though my income is small enough to be exempt. Even if you don’t have a foreign income, I would still file so you can be exempt from the ACA.
However, my family has insurance here in Mexico that will cover us in the US when we travel. For a family of 5, we pay about $36,000 pesos a year with a international company that covers just about everything, private hospitals and doctors with a $7500 annual family deductible. It also covers us with $100,000US coverage while traveling in the US.
Here is the excerpt:
You meet the bona fide residence test if you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. You can use the bona fide residence test to qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction only if you are either:
A U.S. citizen, or
A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect.
You do not automatically acquire bona fide resident status merely by living in a foreign country or countries for 1 year.
Example:
If you go to a foreign country to work on a particular construction job for a specified period of time, you ordinarily will not be regarded as a bona fide resident of that country even though you work there for 1 tax year or longer. The length of your stay and the nature of your job are only two of the factors to be considered in determining whether you meet the bona fide residence test.
Bona Fide Residence
The bona fide residence test applies to U.S. citizens and to any U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect.
To see if you meet the test of bona fide residence in a foreign country, you must find out if you have established such a residence in a foreign country. Your bona fide residence is not necessarily the same as your domicile. Your domicile is your permanent home, the place to which you always return or intend to return.
Example:
You could have your domicile in Cleveland, Ohio, and a bona fide residence in London if you intend to return eventually to Cleveland. The fact that you go to London does not automatically make London your bona fide residence. If you go there as a tourist, or on a short business trip, and return to the United States, you have not established bona fide residence in London. But if you go to London to work for an indefinite or extended period and you set up permanent quarters there for yourself and your family, you probably have established a bona fide residence in a foreign country, even though you intend to return eventually to the United States. You are clearly not a resident of London in the first instance (going as a tourist). However, in the second (going for an indefinite work assignment), you are a resident because your stay in London appears to be permanent. If your residency is not as clearly defined as either of these illustrations, it may be more difficult to decide whether you have established a bona fide residence.
Determination
Questions of bona fide residence are determined on a case-by-case basis, taking into account such factors as your intention or the purpose of your trip and the nature and length of your stay abroad. You must show the Internal Revenue Service (IRS) that you have been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. The IRS decides whether you qualify as a bona fide resident of a foreign country largely on the basis of facts you report on Form 2555, Foreign Earned Income. The IRS cannot make this determination until you file Form 2555.
Statement to Foreign Authorities
You are not considered a bona fide resident of a foreign country if you make a statement to the authorities of that country that you are not a resident of that country and the authorities hold that you are not subject to their income tax laws as a resident. If you have made such a statement and the authorities have not made a final decision on your status, you are not considered to be a bona fide resident of that foreign country.
Good Stuff Robert,
This almost completely fits what we describe in our article. I see one small variation though. You wrote:
~ ~ “The IRS considers two tests to determine your ‘ex-pat’ status. The first is a residency test and the other is the Physical Presence test. ” ~ ~
The way this is stated it sounds like the tests are required steps in a process. They are actually “either ~ or” rules – meet one or the other and you are exempt.
As described above, the easiest test to meet is the “physical presence test”. The “physical presence test” is simple – don’t be in the USA for more than 35 days during a calendar year. If you pass this test, then you are exempt from ACA / Obamacare.
If you cannot pass the “physical presence test”, then you default to trying to meet the more difficult requirements for a “bona fide resident” test.
Thanks again for the very good information,
steve
Is it better to file as a NON-RESIDENT or if you keep a US Address for mail etc, is it OK to use that address? Or does it even matter? I live in Europe, have no income other than S.S. I “might” have to file this year since I took $2,000 from an annuity (although it still won’t put me over $25,000, so perhaps I don’t have to file? But STILL curious about whether to file as a NON-RESIDENT or can I use my US Address?
Hi Puppet-K,
You ask very good questions. Because there are a number of interlocking issues around your choice of filing status, and there are multiple personal details we don’t know, we are not in a position to tell you how to file. You can try to piece together things yourself using the IRS websites, or contact a knowledgeable tax professional who is familiar with international filing issues. Depending on your answers to several questions, you may not have a choice in deciding where your Tax Home is – your Tax Home may be specified by the details of your situation.
If you want to try to do it yourself, you can start with:
http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad
then continue to
~ http://www.irs.gov/Individuals/International-Taxpayers/Frequently-Asked-Questions-About-International-Individual-Tax-Matters ~ and drill into the specific issues and questions that fit your situation.
Hope it goes very well for you,
steve
Thank you SO MUCH! We SO appreciate how you are helping all of us, Steve!
Thanks for providing so much info about the ACA but I’m still not sure where I stand with it. I have lived and worked full-time in Mazatlan since leaving the U.S. in 2010.I have a green residente temporal card good until 2015. I’m in the process or renewing my IMSS coverage. I still don’t know if I have to get coverage through ACA as well.
A modified repeat:
I am a US citizen and permanent resident of Canada since 1965 ( I also hold Canadian citizenship). I am age 81 Oct 18. I receive about $1700 in monthly income, including $300+ in USSSecurity. I opted out of US Medicare a few years ago after carrying it for a few years from age 65. I have wintered in the US every winter, except two, for the last 16 years, with a temporary mailing address in Winterhaven, California. If I go south again this year, I assume I will have to pay the Individual Shared Responsibility Tax in early 2015 as part of my IRS filing. The Affordable Health Care coverage begins Jan 1, 2014. If, perchance, I had a serious, or very serious health problem on Jan 2, 2014 in California or Arizona–or on the way down thru Montana-Idaho-Utah-Nevada, what level of care would I get and what would be my maximum out-of-pocket expenses be.
Or, can I purchase private insurance in Califonia that would also cover me on the way down and back? If so, what would the monthly cost be and what would be the maximum out-of-pocket per year cost be to me in the event of a major medical event?
Hi ger,
Read: Basic Information on Americans Living Abroad and ACA Obamacare
Since you have to be a resident of a state to register for insurance coverage under the special exchange programs, you would either have to establish residency in a US state, or get a travel insurance policy to cover things in the meantime.
When you arrive in your US state of residency, there are special rules allowing people to sign up for insurance protection, even outside the open enrollment periods.
I cannot say what the total possible out of pocket expenses would be for some catastrophic event, if you had no insurance protection. I guess that if you have no assets, and you are treated in a public hospital’s ER, US rules force US public hospitals to treat emergency indigent patients for free. ???
steve
Thanks Steve, btw, I am quite embarrassed to have to find out via The Colbert Report that I would have no insurance even after paying the Shared Responsibility fee.
Hi ger,
Unfortunately, that has been the law since 2010.
You either get insurance through a state exchange, buy personal insurance through a private carrier, use your employer’s insurance plan, or pay the “fee” (fine?) to the IRS (and have no health insurance protection).
At just $95 per person a year (the IRS “fee”), I can’t imagine how that would pay for any kind of medical insurance?
steve
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Hello! I am a US citizen, but I have been living undocumented in Spain for the previous 9 months, and will continue to be here for the next 10 months. I pay taxes here, but since I’m undocumented, there’s no way to prove that. Also, I don’t think I have to file in the States since I made less than $800 before leaving in 2013. I’m so terribly confused by all of this.
Hi Joan,
If your income is below the IRS filing limits, then you are exempt from ACA Obamacare.
See the IRS link in the article above that says who must file.
Also read: Basic Information on Americans Living Abroad and ACA Obamacare
Happy Trails,
steve
US Citizen living outside of the US for the last 5 years. I have no insurance in the US, I pay for private insurance in the country I live – reasonable cost. I meet the foreign resident test and get the IRS exemption, so I will not have to pay a penalty. The question is, what happens when I return to the US, say after 2017. Will I be able to participate in ACA then? I will be ~ 56 yrs old at that time, and under the current system (pre-Obama) it would have been be practically impossible to purchase private insurance. Does the new system (ACA) make it possible for people like me to obtain coverage? Do I have to “enroll” now for that to be possible then? Thank You !
Hi ADP,
The current answers to your questions are: Yes, as a person returning to the USA, there is a special open enrollment period window for you when you return – so be sure to apply when you get here. Next, when you have a state of residence, you contact their state exchange to find out what options are available.
Happy Trails,
steve
Hello!
I’m so glad to have come upon this article and this blog. Thanks!
If you are still available for feedback, I have a related question…
I am a 44-year-old and live in and work in Israel as a teacher. I am a citizen of Israel and have a permanant residency card in the US but have not applied for citizenship yet. I own a small business in the US and own rental properties..
The business generates around $15K and rental income of $130K. I file for taxes and pay all my US taxes and keep a small guest house in one of my properties in California. I do visit the US once a year and stay for less than a month. In Israel I make 20K, and pay for health Insurance.
Do I have to enroll in Obamacare? I am so confused
Hi Godabash,
Since you meet the “physical presence test” of being outside the USA for 330 days or more, then you do not enroll in ACA Obamacare.
steve
Hi, I am an American expat woman living abroad and have qualified as a bona fide resident outside of the USA and won’t need to apply for Obamacare. However, my current health insurance provider does not provide maternity benefits, so I was wondering if its possible to apply for a maternity rider or some type of insurance plan for pregnancy that I could use in the future should I choose to have children. Do you know if this option exists and if so, where do I look for it as I am not currently a resident of any US state. Thanks!
Coverageplease,
Since you are not a resident of any state, according to every govt. website we have read, and according to 3 different ACA phone line personnel, you are not eligible to join a state health exchange, and you would need to find individual coverage with a private insurer. We have no advice on which insurance companies offer good coverage.
steve
Hi there,
I may go on an expat assignment. I get that I need to reside outside US for 330 days or be recognized as “bona fide” resident of a foreign country.
Problem – How can I know that in advance? Many expat assignments get cut short, in which case I may decide NOT to enroll in the ACA thinking that I will be in overseas for 2 years. Then in July ’14 my expat assignment gets cancelled (happens alot for expats) and I could be fined for not signing up. It seems that you get the exeption at the end of the tax year, as opposed to the beginning. Thoughts on how to mitigate?
Hi Nate,
Fine question.
You only need to have qualifying minimum health care coverage for at least 1 day of each of the months. When you are working abroad, you should have medical coverage , no? As long as that “overseas” medical coverage covers the months you are outside the USA, then you are only responsible for getting medical coverage for the months when you return to the USA (or pay the “fee” to the IRS – a fee which may be modified by partial year residency tests – but because the final IRS rules on this have not been published).
When you know you are returning to the USA, you can apply at a state’s insurance exchange using the address of a family member or friend that you might stay with. To avoid penalties, get coverage for at least one day of each of the months you are back in the USA.
Makes sense?
steve
Steve,
Thanks for the great answer. This a very real world issue. 2 follow ups if I may:
A. I was able to find the 330/365 reference & “bona fide”. However, would you happen to have the reference to “As long as that “overseas” medical coverage covers the months you are outside the USA, then you are only responsible for getting medical coverage for the months when you return to the USA”?
Why: My concern is that the 330/365 is clear. But if I am overseas for 90/365 days before my expat is recalled, then it seems very clearly that I am not within the written guidelines. A ref would help me sleep better 🙂
B. “To avoid penalties, get coverage for at least one day of each of the months you are back in the USA”. – Does this mean that if I come back in Feb for a week, June for 4 days and August for 10 days that I should get 1 day insurance in Feb, 1 day in June, and 1 day in Aug?
Hi Nate,
I have now completed 7 different calls with a US govt. ACA / Obamacare – “Marketplace” specialist. This specialist has more training than the normal technicians on their help lines. I asked a series of very specific questions about these issues, and the specialist spent a week researching them – as she and I talked 3 different times on the issues you describe.
This specialist is the one who talked with their manager (2 levels up), who provided the answers you request, but no web references – so these things are buried in the regs, but not published on the websites (yet?).
Will you have appropriate medical coverage during the 90 days? The specialist with the “advanced training in special issues” told me 3 separate times that being out of the country is not a problem, but that you need to get at least minimum coverage within 30 days of returning to the USA. She also says you can start the coverage before you get back to the USA if you are worried about having insurance protection.
The “at least 1 day of coverage per month” covers situations when you are in the USA for an entire month, then you need to get qualifying coverage for at least a day (if you are not outside of the USA for at least 330 days per year)….
Really, you should call the 1-800 helpline and ask to speak to an expert on Americans living and traveling overseas – to get the specific answers you want on the 1 day a month for 4 different months. When you start slicing the sausage very very thin, the general principles that we know may not cover your somewhat exotic proposed scenarios – and it takes a very special expert to know the answers.
For people who live outside the country, for the 330 days or more per year, we are allowed to come in and out without any issues. Fortunately, the $95 per year penalties (owed in 2015 if you do not qualify) … seem pretty small, especially when compared to typical salaries paid to specialists working on overseas projects. ???
steve
Thanks Steve. FYI – I called the 800 3 times and I got 3 different answers. I am not worried about the $95 at all. If I understand correctly, the fine is the higher of $95 or 1%. 1% of the annual is >>> $95. Great info and thanks for looking into this. At the end of the day, I will likely get US based insurance to cover major events (heart attack, cancer), while getting local insurance which is mendated by local law. This does bring a new question, which I will post shortly. Thanks again!
When I was sent on my first ex-patriate assignment to France, some 15 or so years ago, our tax accountant has us use extensions to get us to the point where we met the physical presence test (and, since then, we have used the bona fide residence test). However, an important point at the time was that if my expat assignment had been terminated before meeting the physical presence test, then I would not have been able to benefit from even a pro rata form of income exclusion relief.
Put in the context of the ACA, and extrapolating on the guidance I received regarding how the IRS treats it, it seems to me (but I caution that IANAL!) that one would be subject to penalties if one were both uncovered by insurance and did not, in the end, meet either the physical presence test or the bona fide residence test.
I am not a resident of any state, having no property and living outside the US for the last 6 years. We will probably go back sometime though. How does one establish residency in a state. Is there a list of requirements?
TIA
Jan
Hi jan,
In talking with the ACA Obamacare helpline people, they said to first use the address of a family member (in the state you plan to move to). Once you arrive in the USA, then use the address where you are living. They said you can apply with the state insurance exchange in that state. So, the requirement is a physical address.
steve
Topic: As an expat, can I wait to sign up to the ACA until I actually need it?
Explained: As an expat that meets either the “bona fide” or 330/365 days overseas, I can be exempt from the ACA. However, the thoughts of getting medical treatment for cancer or a major operation overseas is scary. So, the obvious thing to do is to get high deductible ACA to cover these major events. This means that I could be spending $5-7K in premiums while spending more $ to get local insurance. To optimize, could I do this?
1. Get local insurance, but not ACA.
2. If I happen to need a major surgery, cancer treatment, etc… then move to the US and sign up to the ACA?
Basically, as an expat can I wait until I need major US treatment and only then move back to US and only then sign up to the ACA?
Seems like cheating, but on the flip side being forced to carry double insurance is not nice either.
Hi Nate,
Based on my understanding of the answers from the help line person “with advanced training”, yes, you could do as you described – but as you can tell from the qualifiers I used, (and the variety of conflicting answers given on the helpline), since the ACA legislation is so large and complex, I don’t know if anyone can definitively tell you the answer to your specific hypothetical situation. The current government websites give such non-specific oversimplified advice, even ignoring (not reporting) the 330 day rule, that we have no strong resources on complex issues like the ones you propose…. yet.
I personally think that ACA Obamacare’s rules on US citizens living abroad will evolve as they are forced to actually provide coverage for us… like the IRS fideicomiso rules – where the government’s technical experts in Washington said no reporting was needed – but each of us still had to apply for individual waivers with the local IRS offices, and such waivers could be denied at any time… It took almost 3 years, but the IRS finally resolved that one in June 2013. I believe (a.k.a. an educated guess) it will play out similarly for ACA Obamacare…
steve
Question topic – How will ACA work for a couple overseas where the wife and the husband have different expat schedule. Specifically, husband spend 100% of the time overseas, wife only 50%.
Case 1 – Husband meets the ACA exemption, but the wife does not (frequent visits to US). Does this mean that ACA must be purchased by both, the wife, or none?
Case 2 – Wife does want ACA due to pre-existing conditions, husband does not (he is OK with local insurance). Can we file for an individual ACA only?
Case 3 – Lets say the answer for case 2 is yes. Once the assignment is over and husband and wife return, what is the process of switching from a single person ACA to family. After all, the marital status has not changed, but just the work location for one has. I don’t recall seeing that identified as a “major life event” in the official list of approved changes that would allow for enrollment change. Yet, that is life.
Case 4 – Not related to expat directly, but worth considering. For someone who is healthy, can this person choose low premium high deductible program. But, if he gets diagnosed with a major non urgent illness (means, treatment is needed, but it can wait 4-6 months), then leverage the open enrollment to switch to a high premium, low deductible program? Asking differential, anything preventing people to switch from one program to another based on their health-risk during the open enrollment period (or move to a different state, which would allow them to re-enroll. Sounds ridicules, but perhaps not so much if you have cancer and 6 months to live)?
Thanks – Nate
Hi Nate,
For US adults, the ACA insurance coverage rules are meted out one person at a time on exemptions.
1. The wife would have to demonstrate minimum qualifying coverage for the months that she is in the United States, or pay the extra “fee” to the IRS in 2015.
2. Yes, file individually with your state exchange, or get her qualifying private coverage.
3. Good question – whose answer is beyond our ken. I assume that when you return, you check with your state exchange on what route best fits your details and desires.
4. Check with your state exchange for their specific rules on this.
steve
Has anyone tried to call for help on any of the 800 numbers from OUTSIDE of the US? I am trying to call from Canada to the AHCare nationally and to California but all I get is “that number is not available from your area.” I am trying to apply, online, to CoveredCalifornia and I am stuck/ can’t get beyond a certain page. Does anyone know of a non-800 number nationally or to CoveredCalifornia?
Again, thanks for this site.
Hi Gerald,
Have you tried the usual conventions for converting US 1-800 numbers into phone calls from Mexico?
When dialing an 800 #
you replace 800 with 880
866 is replaced with 883
877 is replaced with 882
888 is replaced with 881
???
steve
Gerald – I have successfully used Skype to call the domestic 1-800 numbers. One of the big advantages I’ve found is that calls to 1-800 numbers (even from abroad) are free when you use Skype. Skype also seems to route the calls into the US before connecting them to the regular phone network, so you never get a “not available from your area” message. It’s a real godsend, I must say.
Thanks Kurt. I will definitely try Skype. That will probably work even better than the work-around of calling the Health Dept. To ask for a call transfer. .again thanks.
No Steve, This idea is totally news to me. You think the Mexican work-around will work from Canada?
ger,
What “Mexican work-around” are you referring to?
steve
I was referring to the “work-around” from Mexico that you had suggested earlier. Btw, I just tried the 880 as sub for the 800 and I get the same “not valid in this area” response.
Sorry to hear that. Magic Jack works, if you have a friend or acquaintance with it.
steve
An update: I called my cell service provider and they gave me what I think is the California Public Health 800 number and that worked and they transferred me. That person wasn’t able to help me with the webpage but at least maybe now I can find someone that can help me with the webpage that I am having trouble with. Btw, the webpage that I am stuck on…and I have emailed them about it…..is the page that asks for my SS# and I have given it over and over and it still keeps asking for it. She told me to try again later….so we will see if later helps…..I doubt it but I will try. Again thanks for all your efforts to help, Steve.
I live in El Paso, Tx and work in Juarez, Mexico under Mexican payroll. I declare my income in the USA. I have Mexican health insurance thru the Company i work for. It covers emergencys in the USA and i do not have health insurance from a USA health provider. Do i need to buy a health insurance in the USA under the new ACA?
Lordy! This is all terribly confusing. I just married a UK citizen who is living in France. I still live in the US. We haven’t even decided yet how to file taxes here…married separate or joint…let alone where we want to ultimately settle…here or France. So will his income affect my obamacare subsidy allowance if I buy into it? On my income alone, any plan would be free. With his income, I’m looking at thousands. Thoughts?
Hi Dee,
We have no details of your income, his income, nor do we have any knowledge of the US-USA or France-USA tax treaties/agreements, which leaves me saying there is no way to say what filing status you should use with the IRS. If you stay out of the USA for at least 330 days a year, then you are exempt from Obamacare.
If you move back to the State and you want subsidized health care, then you have to check with the State you will live in to find out their policies.
Your situation is sufficiently unique that you should talk with a good tax accountant who is familiar with the UK, USA, & France tax policies and systems.
steve
Hallo
Thank you for sharing this information.
1 Re: open enrollment Oct 1 2013 – Dec 31 2013
~ What happens if I choose to wait, and decide to join some time after the open enrollment period? After open, it’s closed? After closed, what? It’s more expensive?
2. Re: tax penalty
~ I file my taxes ‘married filing separately’ rather than jointly. Is the tax fine $95 or 1% of my income (whichever is greater). I thought it was $95 and now am not sure if it’s the latter (or if the latter applies to families only).
~ If it is the latter, does the 1% pertain to total income or taxable income.
Thanks, Steve.
Hi G,
1. Open enrollment for health coverage in 2014 closes on March 31, 2014. f you miss the window, you could wait until 2015. If you are outside the USA for 330 days in 2013, then (as a non-resident of the USA) you qualify to enter the ACA insurance exchanges whenever you return to the USA.
This is covered in our article above ACA – Obamacare’s Effects on American Expats Living Abroad
2. Turbotax says:
….” Even if you file as Married Filing Separate ( MFS ) you will still have to take into account the total household income. Also if you are in a community property state then you will have to use 50% of the total income from the two spouses. So I don’t see the advantage in conditioning marriage on tax breaks — currently the marriage penalty is somewhat abated. ”
Under the new rules, individuals choosing not to carry minimum health insurance are subject to a penalty of $95 per person each year, or 1% of household income, whichever is greater…
steve
video shows how obama makes sure the public accept obamacare – http://youtu.be/52aFfMCYTrQ
Hi Jon,
Readers can decide if watching the 5 minute Christian – Bible ad that Jon set up to play first, speaks louder than the 40 second artificial video of Obama supposedly menacingly pointing a pistol to coerce a citizen to eat salad labelled Obamacare.
Which one is the real message?
steve
My understanding is that expats are left out in the cold on insurance. From a chat session with healthcare.gov:
“To buy health coverage through the Health Insurance Marketplace, you must live in the United States, be a U.S. citizen or lawfully present, and cannot currently be incarcerated.”
According to the expert on the Healthcare.gov help line: Part year residents must have coverage, and are eligible to sign up when they return to the USA – providing either their US address, or address of a family member or friend willing to say that their address will also be your residence.
The advanced troubleshooter on the Healthcare.gov help line said you can start the process from outside the USA by applying at your state exchange (using your residence, or claim the residence of a family member/friend).
steve
which, by the way, conflicts with this:
” If you’re living abroad, it’s important to know this before you consider buying Marketplace insurance.”
My plan is to retire at 62 and take early Social Security. I will be living in Panama 8 months a year and don’t qualify for Medicare for several years. Can I buy an International Health Insurance policy? California bound 4 months a year. My wife and I also plan to become Pensionados down there. I would prefer not to pay for two policies as my retirement revenue will go to health insurance only! Travel Insurane for trips to California only and medical Insurance for Panama?
Hi J,
If your International Health Insurance policy covers the minimum items required by ACA, then you would not need any additional insurance while you are in the USA.
steve
Okay, I am trying to make sense of this. Please tell me if I am correct. Since I am a US citizen with a tier 4 visa living in England (Masters program going to school) am not working but AM filing with the IRS for the 2013 year, does this mean I have to enroll in health coverage? I have been out of the country since September 2013 and I will be out of the country until at least October of 2014. I am a full-time student, not working at the moment. And again on a visa. From what I am reading it sounds like I HAVE to enroll in medical coverage although I have NHS coverage here.
Hi Theresa,
If you are out of the USA for 330 days or more in a year, then you are NOT a US resident (by IRS and ACA “physical presence test” rules) – and you are exempt from ACA requirements. Check the IRS link on who has to file for TY 2013. If you do not have to file, then you are also exempt from ACA requirements.
Makes sense?
steve
Even though I worked January through August of 2013 in the states, full-time I do not need to file a return? I always end up getting money back so essentially it would be if I want the money or not. However, it seems if I DO file then I am not exempt from the ACA. I do plan to come home to the state for a couple of weeks in August, which in turn would disqualify me for the 330 if I am correct. Unless I return here and continue school at the PhD level.
Hi Theresa,
Since you are working Jan-Aug in the states, 8 months of work generates enough income to usually trigger filing requirements. Since you are in the USA more than 35 or 36 days, you are not exempt from Obamacare.
If you have mis-stated where you are working, working from Jan-August overseas, then by being outside the USA for 330 days or more makes you a non-resident of the USA and you qualify for the Foreign Income Exclusion for 2013 (about $97 K for TY 2013).
Have you read our articles on taxes for expats? Start with: Tax Issues for Americans Living and Working in Mexico – A Redux for 2013 and for investment, banking and other issues go on to Summaries of US Tax Laws Affecting Citzens Living Abroad – TAX TIME 2013 !
steve
enjoy
You need to stay out of USA for 330 days? OK What if you stay out for 3 years and then come to the States for a 1-month visit and return to your foreign county where you have permanent residence. Does that mean you’ll be in hot water with ObamaCare until the next 330 days are passed???
Hi Maurice,
If you read the replies to comments above, you could see the following earlier reply:
“Here’s another IRS link that describes the 330 day clause:
“12. Are US citizens living abroad subject to the individual shared responsibility provision?
Yes. However, U.S. citizens who live abroad for a calendar year (or at least 330 days within a 12 month period) are treated as having minimum essential coverage for the year (or period). These are individuals who qualify for an exclusion from income under section 911 of the Code. See Publication 54 for further information on the section 911 exclusion. They need take no further action to comply with the individual shared responsibility provision.”
http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision
If we read further in the IRS official “Publication 54″ that describes who qualifies for the exclusion (through a flow chart) on page 13, which describes:
“Were you physically present in a foreign country or countries for at least 330 full days during ANY period of 12 consecutive months?”
If you got to this box, and answered “YES” to this question , then you qualify for the exemption.
Click to access p54.pdf
Really, the situation you describe better fits the IRS’s “bona fide resident of a foreign country” rules. You can read them in the IRS publication 54 website – page 13-14 rules on qualifying for being exempt.
Hope this helps describe the current 2013 TY years rules. Note that the IRS can change the 2014 TY rules (for filing in April 2015).
steve
I am feeling a bit better after reading the following on the IRS site:
“Bona fide residence. To meet the bona fide residence test, you must have established a bona fide residence in a foreign country.
Your bona fide residence is not necessarily the same as your domicile. Your domicile is your permanent home, the place to which you always return or intend to return.
Example.
You could have your domicile in Cleveland, Ohio, and a bona fide residence in Edinburgh, Scotland, if you intend to return eventually to Cleveland.
The fact that you go to Scotland does not automatically make Scotland your bona fide residence. If you go there as a tourist, or on a short business trip, and return to the United States, you have not established bona fide residence in Scotland. But if you go to Scotland to work for an indefinite or extended period and you set up permanent quarters there for yourself and your family, you probably have established a bona fide residence in a foreign country, even though you intend to return eventually to the United States.
You are clearly not a resident of Scotland in the first instance. However, in the second, you are a resident because your stay in Scotland appears to be permanent. If your residency is not as clearly defined as either of these illustrations, it may be more difficult to decide whether you have established a bona fide residence.
Determination. Questions of bona fide residence are determined according to each individual case, taking into account factors such as your intention, the purpose of your trip, and the nature and length of your stay abroad.”
So: All other factors aside, INCLUDING the 331-day stay, it would seem that there is a little flexibility in the rule. For myself, I am married to an Italian, my kids are Italian, have a residence officially in Italy, a Soggiorno, pay taxes and pay into national health coverage there, own land, houses, etc. there for thirty-plus years. If that doesn’t qualify then I don’t know what does?! The fact that I have a house and pay my taxes also in the US hardly precludes my foreign residency. Or does it? Nobody ever said there was LOGIC involved, after all…
Exactly.
The IRS has us start with the 330 day abroad “physical presence test”, and if we cannot meet that test, then you go on to the decision tree of the “bona fide residence test” for someone living outside the USA for years.
IRS rules are so long and so intricate (taking an 8 page publication for them to describe these issues) that we here at Yucalandia only give simple guidance as an overview – and offer links to the IRS publications for readers to educate themselves – like Publication 54 on this complex issue: http://www.irs.gov/pub/irs-pdf/p54.pdf .
Specifically: IRS Publication 54 See: ~ Bona Fide Resident – (of a foreign country) ~ tests to see if you qualify as a “bona fide” resident of a foreign country. There are just way too many questions I would have to ask you to see if you qualify, so, please see the IRS publication 54 on this at: Pages 14-15 AND Page 34 of http://www.irs.gov/pub/irs-pdf/p54.pdf
There is a reason that the average US citizen spends over 40 hours working on taxes every year, and that the US economy spends over 6.1 billion hours on IRS compliance – making it beyond the scope of our blog to explain every detail.
steve
Yes, you are so right. One thing is clear, however: The very existence of insurance (including auto and home and life as well) leads to higher prices for product, mostly because it obliterates the “need to know” about pricing for the consumer. I have no doubt that the debacle so far in the US will eventually lead to simplified single-payer for those who need it. If, by some miracle, the insurance business were to get out of the loop, then prices would dramatically decrease for all. No-brainer.
I’ve been monitoring the responses to this question and I confess that I find it all absolutely impenetrable. I live and work in Mazatlan and I believe I meet the 330 “physical presence abroad” test. But the thought of having to wade through IRS rules in order to resolve this “domicile” issue fills me with dread. My sense is that the people who designed the ACA (assuming they designed it to succeed and not to fail) gave little thought to expats. Perhaps our leaders will wake up one morning in the near future and realize that the not-insignificant number of Americans who live abroad need a great deal more clarity on the question of whether they, along with other Americans, must buy insurance from private companies based in the United States, even though, as expats, they do not live in the United States. Until then, I plan to pay the $95 “fine” and be done with it. I have IMSS anyway.
I do not want to enroll to ACA, I have insurance in Mexico with IMSS, what do I do, so I will not pay any fines?
Hi Josh,
Ooooops, I misunderstood your question.
I assume you have slogged through IRS Publication 54: If you do not qualify for the IRS Foreign Income Exemption, as a bona fide permanent resident of a foreign country, then I can see no other options to either pay $95 or 1% of your 2014 income, filed in 2015.
We’ve studied this from a bunch of angles, for the past year, and there just don’t seem to be any other work-arounds. 😦
Could you change jobs in the USA to an employer that offers health care benefits?
steve
I think my last comment was rather ill-tempered but I am still unsure about whether I have to get insurance through the ACA. (I recently got IMSS coverage.) I live and work in Mazatlan and just got a green “residente temporal” card, which is, I believe, the new version of the FM3 card I had previously. I moved down here from Des Moines In September 2010 and I go back there several times a year on family business but I spend 330 days (at least) in Mazatlan. Is that enough information to determine whether I have to get insurance through the ACA?
Hi John,
I understand that we react sometimes, especially when under the pressure of trying to figure out how a new multi-$billion federal govt. law affects us – when IRS penalties loom if we make a mistake.
Fortunately, if you are outside the USA for 330 days in 2014, then you are exempt from all ACA requirements.
If you are not able to meet the “330 day physical presence test” in an individual future year, you may qualify for the exemption if you can meet the “bona fide” (permanent) resident test described in IRS Pub. 54.
Happy Trails,
steve
Thanks for your response. One question: You said, “Fortunately, if you are outside the USA for 330 days in 2014, then you are exempt from all ACA requirements.” Do you mean calendar year 2014 or tax year 2014? Or did you mean 2013?
ACA does not take full effect until Jan. 1, 2014, so the first year that this affects is 2014.
The 2014 calendar year (Jan 1, to Dec. 31, 2014) is the same as 2014 Tax Year… ???
If you are outside Mexico for 330 days or more during any Jan. – Dec. year in the future, you are exempt from ACA requirements for that year.
Happy Trails,
steve
Steve,
I tried to find an answer on this page for my specific situation and did not understand many issues about Obamacare. I am a middle aged US citizen living in Mexico more than 330 days a year and do not file any tax returns since my husband files his tax returns in Mexico, as a Mexican national. He has to dole out more than $6000 each year (more than 60% of our total income) just to cover my private health insurance and I have a preexisting condition which merits that I always remain insured. With the new laws of Obamacare, can I benefit with free health insurance, thus eliminating the hefty cost of private health insurance? I can provide a US address since my folks still live in the US and have my name in their corporation. Is “being exempt from ACA requirements” in my best interest if I wish to be covered by a US health insurance plan? What must I do?
Thanks, Vicky
Hi Vicky,
If you choose to be a US resident, using your parents address, then check/file with their state health exchange to find out what coverages are available, and if they have any restrictions on covering treatments in Mexico (so you get the coverage that you want and need). As a US resident, I believe you would be best to begin filing tax returns in the US. Any taxes your husband pays here are credited (deducted from) anything he (and you) would owe in the USA – because income for determining what you owe under ACA is HOUSEHOLD income.
steve
Just want to say thanks to Steve for his help. I get on line a couple days a week and read something about the Affordable Care Act/ Social Security/ Medicare/state exchanges and anywhere else the page takes me. And I keep up with Steve’s comments and answers. And it does get easier – don’t give up. I can just about figure out most answers even before Steve’s comments. The best tip is to educate yourselves. I am getting my graduate degree in American Retirement! (not really, but I think i am studying about as much as I did for my actual grad degree. It is just as important.)
You’re welcome.
Lifelong-learning: A fire that never goes out?
steve
Thanks for this article and for doing the reading for us 🙂
I am a U.S. citizen have lived with My wife in Germany for the past 9 years. We will be returning to the U.S. in the next year or so; getting the visa paperwork together for my wife has been a lot of work. I discovered that as part of my “Affidavit of Support” they would like to see my U.S. federal tax returns for the past few years to make sure that I can support my family when we get back to the U.S. Naturally, I haven’t been filing any tax returns since we have been over here so I am getting ready to file all of my missing returns in the next month or so. Tracking down all of the wages, housing, costs, and savings account interest for that has been excellent fun. Translating all of the amounts from Euros to Dollars at the exchange rate on the dates we received the income has been even more excellent. Fortunately, there is a yearly tax guide (IRS Publication 54) for U.S. Citizens living abroad that has been a ton of help and has answered the questions that I’ve had so far. I recommend that everyone living abroad go to the http://www.IRS.gov web site and read this guide because in most (or all) cases, if you pass the foreign residency tests, you don’t need to buy healthcare in the U.S. and you can exempt or exclude a portion of your foreign earned income. I also recommend that all folks living abroad look into filing the IRS Report of Foreign Bank and Financial Accounts (FBAR) if theyhave more than an aggregate $10k balance in their foreign bank accounts (see the FBAR instructions to find out how to figure out the aggregate account balance).
Thanks again for the article!
-Jeff
Hi Jeff,
You wrote:
“…Tracking down all of the wages, housing, costs, and savings account interest for that has been excellent fun. ”
and
“Translating all of the amounts from Euros to Dollars at the exchange rate on the dates we received the income has been even more excellent. ”
What a marvelous attitude !
Best of Luck with your wife’s application,
steve
While living abroad does the ACA cover me here in local hospitals?
Hi Steven,
We do not know what is offered by your state’s group of insurance companies in their exchange. Each state has their own insurance exchange, with their own groups of insurance companies. Each insurance company offers a variety of policies with different levels of coverages, often called: “bronze”, “silver”, “gold”, and “platinum”. “Platinum” coverage offers many more protections (at higher costs) than “bronze”. Some of the higher cost plans in your state may offer coverage of “out of network” treatments overseas(?). The bronze packages are designed for lowest costs with lowest levels of service, having only a relatively small number of “in network” hospitals. Hospitals negotiate lower prices with insurance companies when there are only a relatively few “in network” hospitals to compete with => Free Market approaches – that cut services to offer lower prices.
Since it would cost a lot to negotiate prices with foreign hospitals, your state’s insurance companies may or may not have insurance plans that cover overseas treatments. When you check with them, can you please come back and tell us what you found?
THanks!
steve
Hello Steve: I live in Spain as a missionary, and depending on the year, I am either a bona fide resident of Spain, or not. There are times I come back to the states for 2-3 months at a time. So how do I walk through THIS minefield?
Hi Dan,
Options:
1. Get qualifying minimum health insurance coverage. or
2. Stay outside the USA 330 or more days in 2014 and in each future year. or
3. Have low enough net income that you do not have to file IRS returns. or
4. Identify a past year(s) when you were out of the USA, and follow the Pub. 54 flow chart requirements, to qualify as a long-term (permanent?) NON resident of the USA using the “bona fide resident” of a foreign country. OR
5. Do nothing and pay the annual IRS fees for not having qualifying coverage. If you have $30,000 of qualifying income, you would pay just $300 in IRS “fees” for 2014.
or… If you are NOT outside of the USA for 330 days or more in 2014, then you can use the IRS Publication 54 ~ Bona Fide Resident – (of a foreign country) ~ tests to see if you qualify as a “bona fide” resident of a foreign country. There are just way too many questions I would have to ask you to see if you qualify, so, please see the IRS publication 54 on this at: Pages 14-15 AND Page 34 of http://www.irs.gov/pub/irs-pdf/p54.pdf
Happy Trails,
steve
Thanks for the quick answer Steve!! I have health insurance here in Spain, and it actually covers me for up to 3 months when I’m outside of the country. Would this be recognized as legitimate health insurance, or would I have to buy a 2nd policy?
Hi Dan,
Our other piece on ACA/Obamacare describes the minimum coverages that your insurance must offer to meet the ACA’s requirements: Basic Information on Americans Living Abroad and ACA Obamacare in the “What are the essential benefits that a qualifying foreign health care insurance program or travel health care insurance policy must cover?” section.
steve
Great! That answers it! Thanks again Steve.
-I am a US citizen living in the UK with my husband and son.
-My husband is a UK citizen, never lived in the US
-Our home is in the UK.
-He works and pays taxes here in the UK.
-I am a stay at home mom.
-Our family is covered in the UK under the National Health Service.
Am I correct in reading if we visit my family in the US for more than 26 days in a given year I will be required to pay for healthcare? Does it matter if the time is not consecutive?
If I am required to have US health insurance, what will happen (as I, the US citizen, make no money, and my husband, the UK citizen, refuses to pay the US a single penny of HIS UK TAXED money)
I find it all rather bizarre considering a foreign citizen can remain in the US for months on a VISITORS visa, but if I visit twice a year for 3 weeks at a time I am suddenly a resident and possibly fined for not having US health insurance.
Oh and lastly, does having Indefinite Leave to Remain in the UK change anything?
Hi Hilary,
Did you read the section of this article describing whom is exempt from ACA?
One clause we describe about whom is exempt, seems to cover your situation:
“……Specifically, if you are not required to file a tax return with the IRS, then you have NO responsibilities under the ACA / Obamacare. To find out if you are required to file a federal tax return, use the IRS Interactive Tax Assistant (ITA).”
Do you file US taxes?
If not, then you are exempt from the ACA.
steve
Hi Steve,
I have a similar situation- but still so confused by all of the answers. I live in Denmark, but I’m an American citizen. My husband is Danish. I’ve been a stay home mom for 3 years, therefore, I have not filed taxes in the U.S.- because I make no income- and we pay Danish taxes. I do visit the U.S. more than 26 days per year- not necessarily consecutively. Do I still need to pay for healthcare in the U.S. – when I already receive national healthcare through Denmark? We are permanent residents in Denmark. Have no residence in the U.S. (but visit family more than the established ’26 days per year’).
Hi erica,
Read the section above on exemptions:
“https://www.healthcare.gov/exemptions/
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 Healthcare.gov 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)
======================”
Hope this helps,
steve
Thank you so much for starting this blog. As with Tom Dickens, I have been living in Thailand for over 7 years now. My question is which state’s exchange I need to go to in order to apply for coverage. My last state of residence, state where I’m registered to vote, and state most likely to go if medical care is needed is Idaho. I’m a self employed fisherman and work about 2 months each year in Alaska. And myy mailing address for banking and bill paying is my sister’s residence in Montana. Can I choose from either of these, or not?
Hi Byron,
The expert tech on the govt. hotline said you should use the address of a family member or friend in the state where you plan to be a resident. She said you use this address in the (brief) time before you move back to the USA – using the address to start your process – where you will be a resident. That state can expect you to establish residency to get benefits: things like driver’s license, filing state taxes, etc. Under these principles, you pick the state, and work to establish residency there (where each state has its own residency requirements).
steve
My wife and I are US Citizens. We moved to Honduras in June 2013 and have attained annual residency in Honduras. We will visit the states for a total of 30-60 days each year (split over 2-3 trips). If insurance through the marketplace is an option for us, we would like to get it. International insurance is over $7k for us due to maternity coverage.
I called the marketplace and was told we are ineligible for marketplace plans because we do not live in the US. According to the woman, we must live in the US during the entire time we would be seeking coverage.
I do not believe we are exempt from the IRS fee because we do not have a taxable home outside the US (at least, I don’t think we do – we live onsite of a mission facility). Our income is paid from the states through a US organization. Our tax address is currently my parent’s home in the US.
Are we stuck having to purchase insurance through a private company? We like the acceptance of all pre-existing conditions under Obamacare… our’s aren’t serious, but other than some minor things that we are treating, we are healthy individuals who rarely seek health service.
Can you offer any advice? If possible, we’d like to purchase a mid-level obamacare plan to cover any service sought while in the states. Was the representative correct in saying that we cannot qualify since we do not live stateside? She referred to this page – https://www.healthcare.gov/am-i-eligible-for-coverage-in-the-marketplace/
Thanks!
Hi Michael,
I think your understandings are all correct. You plan to be inside the US for more than 35 days in 2014? If you can keep it under 36 days, then you are exempt for that year. Did you go through the IRS’s decision tree (in Pub. 54) on whether you qualify to be a “bona fide” (permanent) resident of Honduras?
Specifically: If you are NOT outside of the USA for 330 days or more in 2014, then you can use the IRS Publication 54 ~ Bona Fide Resident – (of a foreign country) ~ tests to see if you qualify as a “bona fide” resident of a foreign country. There are just way too many questions I would have to ask you to see if you qualify, so, please see the IRS publication 54 on this at: Pages 14-15 AND Page 34 of http://www.irs.gov/pub/irs-pdf/p54.pdf
To qualify for ACA/Obamacare coverage on a state exchange, you must be a resident of that state, and get medical treatment in that state (or in a neighboring state if they have a mutual agreement).
I don’t see how you can qualify to be a resident of a state while living abroad so much…. groan….
Which means you must either stay outside of the USA for at least 330 days during 2014, or pay IRS penalties, or get qualifying private insurance coverage.
steve
As a permanent resident in the States, would I be covered under Obamacare when travelling abroad on business or vacation? Do I need to purchase travel insurance to get the necessary coverage in case of an accident or illness when outside USA? Thanks, David
Hi David,
That would depend on what state you live in and what coverages are offered. The state’s exchange have 4 levels of coverage packages: Platinum, Gold, Silver, Bronze.
Platinum or Gold packages from some insurance coverages may offer travel coverage… or not. You will need to check with your state’s insurance companies. (likely you will have to buy special travel coverage)
steve
What if the person living out of the country doesn’t know if their employment in the other country will be 330 days on march of 2014.
Is proof of payment for insurance originating in the other country absolve the person of fees.
Is it necessary to pay for insurance in both countries?
Hi BLT,
I understand that the ACA insurance coverage is based on the Jan 1 – Dec 31 tax year, with open enrollment ending in March 2014. That would mean that you would need to be outside of the USA for Jan 1 – Dec 31 of 2014 for at least 330 days. Do I misunderstand your “March 2014” point?
If a person is not exempt from ACA, then other insurance absolves one from the fees, if the insurance covers the minimum coverage items described above.
I hope you do not have to pay for insurance in both countries, but one example where you would legally need to pay for both: 1) You live outside the USA for 8 months; 2) you are back in the USA for 4 months and 3) your foreign insurance does not cover treatments in the USA and does not meet minimum requirements. We are allowed to not be covered for up to 3 months a year, so you would be required to have coverage after 3 months in the USA, and by being in the USA for more than 35 days in 2014 you would not be exempt under the “330 day physical presence test”.
Hope this helps,
steve
I have a question about “qualifying for Foreign Earned Income Exclusion”. Do we have to file Form 2555 on our taxes, or just meet the qualifications? We are a missionary religious order. A number of our members living abroad qualify but don’t file Form 2555 because their income ends up low enough not to owe income tax anyway, especially those with several children.
Will they be able on the 2014 tax return to demonstrate that they qualify without actually filing Form 2555 and therefore are not subject to ACA?
Secondly, in Pub 54 , it says if you revoke your Foreign Earned Income Exclusion, you have to wait 5 years to start again. Does simply not filing Form 2555 one year consist of revoking it?
Is a revocation only for a specific year and you have to wait 5 years before claiming it again for that specific past year, or does it apply to all subsequent years?
Pub 54 isn’t clear to me on this.
Often our members live overseas for 3 – 5 years, then return for 1 year. It may mean that they have to skip that year for the exclusion, but they start again the following year when they are overseas again. I’m well aware of how complicated and expensive it can be to get a letter ruling from the IRS. I don’t file their taxes but I’d love to know what those requirements are for advising people.
Hi DD,
Re “A number of our members living abroad qualify but don’t file Form 2555 because their income ends up low enough not to owe income tax anyway, especially those with several children.”
For these folks, if you do not owe income tax due to low income, then you are exempt from ACA.
Re ” in Pub 54 , it says if you revoke your Foreign Earned Income Exclusion, you have to wait 5 years to start again. Does simply not filing Form 2555 one year consist of revoking it?”
We are not familiar with the IRS rules on revoking FEI exclusion status, so we really can’t say.
Re: “Often our members live overseas for 3 – 5 years, then return for 1 year. It may mean that they have to skip that year for the exclusion, but they start again the following year when they are overseas again.”
If they stay outside the USA for 330 days for each of those years, then they qualify for the exclusion on a year-by-year basis, without having to qualify as a “bona fide” (permanent) resident of a foreign country.
Hope these short answers help,
steve
Thanks Steve, those are hugely helpful.
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You are amazing!!! Thank you for all your work, and helping me not further “put off looking into this mess”. Huge help!
Steve, I am new to this site and truly appreciate all of the useful infomation. While it appears that most of the discussion is tailored toward avoiding Obamacare and its fees or penalties, I am curious if you (or other members) have identified states or Obamacare plans that may actually provide international as well as U.S. coverage?
Hi Aaron,
In 7 different conversations with ACA phone reps, and from reading the US govt. websites on this: we have not found any states that offer high-level (Platinum? or Gold?) plans that include travel insurance for people who live or travel overseas. That does not mean that it does not exist in some insurance exchange plan somewhere – but that we have not found any (yet).
We would love to hear if or when someone does find this coverage – with specific details about which state exchange, which insurance company, and which specific plan offers it.
Since we must be a resident of a state to qualify for a state exchange, why not check your home state’s exchange.
As always, you can also buy your own private insurance from a private insurance company, but I would want to know that company’s track record on paying for medical treatments outside the USA. Some plans, like Blue Cross Blue Shield plans, only offer treatment at pre-approved hospitals, and there may not be any good quality pre-approved hospitals in the area you live in. ??
Happy Trails,
steve
Thanks for your reply! Hopefully soon we will be able to get some useful information!
Hey Steve, Great article , I have read it and even though I have I would like to present my case and see if you can shed some light.
I am a U.S citizen living in Cyprus , for the last 10 years and haven’t been back since I live here , insured from my employer but i would like to know if i can benefit from obamacare.
Only because I’m not getting any younger. maybe I can benefit even though I live outside the U.S ? for example be insured and if any major medical issue would arise in future (knock on wood) I could use it in my benefit.
Or would you recommend to stay local with the insurance ?
Thanks in advance Bill .
Hi Bill,
We have not found any information online (govt websites) or with repeated calls with experts on the Healthcare.gov phone bank. You must qualify as a resident of a state to participate in that state’s health exchange. By living overseas more than 330 days a year, we do not see any way to qualify as a state resident, and hence you would need to stay with your local insurance.
steve
Thanks for such a prompt reply have a good day !
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Hi Bill! I am an ESL teacher living in Jordan for the past 10 years. We go home in the summers, but not for more than three months. We do not own a home and I use my son’s address for filing my taxes. We file taxes every year. We file the foreign income tax, but maintain a physical address in America. So I am wondering, if I am filing taxes every year, would the gov’t consider me as a resident even though my physical presence is less than three months? Healthcare is not so great here (with the exception of regular checkups). Pharmacists do most of the diagnosing here and practically EVERYTHING is over the counter. I prefer to use American healthcare when I go back every year. So do you think that I will be required to sign up?
Hi Kara,
Did you read the section at the beginning of this article – on the 330 day Physical Presence test to be exempt from Obamacare’s requirement or pay a 1% “fee” on your income tax?
“Americans who are NOT residents of the USA, do NOT have to participate if you meet the requirements of being a resident of another country (or being outside the USA for 330 days or more per year). You can find more details below on Exemptions to ACA and how to qualify as a Non-Resident US citizen at:
https://www.healthcare.gov/exemptions/
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 Healthcare.gov 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)…“
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Thanks for the answer. Yes, I did read the article, but because we maintain a US physical address on our taxes, I thought that maybe the gov’t may consider us qualified participants in the healthcare.
Next question, does that mean that when we do go back in the summers, we won’t be able to get medical care?
Hi Kara,
If the US state’s insurance exchange in which you claim residency is willing to say that 3 months a year is enough to meet their requirements, then you could apply. Each state exchange sets their own requirements, and offer various insurance policies, so, we cannot say what your state’s insurance exchange defines as minimum requirements. If you got insurance through the exchange, typically the insurance exchange policies only cover medical treatments within that state (according to the information given on the help line for healthcare.gov).
Happy Holidays,
steve
Hi Steve, It is really wonderful how much you have researched and tried to figure out the best situations for expats. As for me I have what I think is a worrisome situation. First, I am living in Russia with my Russian (not American) wife and Russian (ditto) son. So I am married but I am the only US citizen in the family. I am here partially because I have been unable to find work since August 2012. I was living apart from the family for a year searching in the US, since that was where we hoped to live, but without success. So second, I am unemployed. Third, I have returned to Russia only this past November, 2012. So I spent most of the year 2012 in the US. Thus, third I do not qualify for living outside of the US for the 330 days. So do you have any idea what I should do to find out my best options. Of course, I would rather stay away from Obamacare but it seems we are being forced into it. I do not have the money to pay for anything, especially for an insurance policy that will be useless to me in Russia. Any advice you can give will be most helpful. Thanks again and Merry Christmas. Patrick
Hi Patrick,
I think you may be confused about what year you use to determine your exemption from Obamacare. 2014 is the first year of requirements to sign up – so, the 330 day physical presence test is for how long you are in the USA during 2014 – for tax filing in 2015. Since we do not know where you will be living in 2014, and do not know if you need to file with the IRS in 2015 due to insufficient taxable 2014 income – you may qualify for the exemption next year.
steve
why does the united states cost at least 70% more than all the rest of the country in the world ? this doesn’t make since .im not talking about the free medicare im speaking of the best medical work needed
Hi Emerson,
Why? Partly because US doctors demand very high salaries. Even after subtracting out malpractice insurance costs, US doctors demand/require salaries that are over 2X to 10X higher than other countries. The tangle of multiple insurance companies with multiple different forms to fill out typically add another 25% for the doctors and hospitals to fill out forms.
Finally, a good 2003 US study of over 2 million patient records showed that US physician and hospital errors unnecessarily kill 200,000 Americans every year. The US high medical error rates have been an issue for decades, but the AMA and doctors do their best to bury their mistakes. e.g. A 2002 study showed that US hospitals that do not have random autopsy policies routinely misdiagnose the causes of fatal illnesses, which means that in some hospitals, 65% of the sickest patients are being incorrectly treated for the wrong illness -> wasted $$. Since the mid-1960’s, the US university medical education system pre-selects who becomes physicians based on the student’s ability to memorize and do well on tests, which are not the qualities of either good diagnosticians nor of good critical thinkers – so, we have had 50 years of choosing people to become physicians who are not very good at diagnosing illness.
The US medical system spends the most per patient in the world, but provides far lower quality care than other comparable countries.
This situation is much like the American education system that spends the most per pupil, but turns out students who rank between 20’th – 29’th in basic skills, math, history, science, etc.
Both systems have very powerful deeply-entrenched groups that maintain and protect the status quo: AMA, NEA, AFT, et al spend $100’s of millions on lobbyists and campaign contributions to keep politicians from proposing effective reforms.
steve
Simple. With insurance companies as interlocutors, the actual cost of care and facilities is never revealed to the consumer. Now the government bureaucracy has been added to the mix for even more leavening of these invisible expenses. The devil himself could not have come up with a better plan for inflating prices. Fill your air tanks with gold, boys, we’re going under.
Steve, I am soon to be retired with my wife. We will be out of the US for greater than six months/year on a sailboat, but not more than the 330 days. Our incomes will be from pension over the subsidy threshold and we are too young for medicare. My understanding is I may have to get both insurance when traveling in the US for up to 1 month at a time as well as insurance outside the country if I want coverage. Prior to ACA I was all set to purchase a plan that would cover me worldwide even in the US as long as I was outside the US for greater than 180 days. It sounds like those plans will not meet the criteria or be allowed under the ACA. Do you have any insight to my predicament?
Thanks for all your great help on this site.
Dave
Hi Dave,
The ACA planners did not consider people in your living situation. … Get the minimum insurance coverage you believe you need – and pay the IRS annual “fee” ? If you are not paying much in taxes, then the 1% may be the cheapest route.
Alternately, find insurance coverage that covers what you want/need, but also meets ACA minimum requirements: which may mean a Gold or Platinum plan (in the scheme of metals), because the Bronze plans do not seem to cover international travels – but that means paying additional costs for protections you do not use (especially while traveling).
steve
Hi Steve,
I am a 25 y.o. student-abroad. I finish school in May, 2014 and will return to the States at that time. I turn 26 in July and loose coverage under my parents starting August 1st (I believe). Before 2015, I will return to France. I am engaged to a French man, set to marry in France. I did not make any money in 2013, nor will I in 2014. I am not sure yet what I will do for school or work in 2015, but I do know I will be married and living in France. My questions are: 1. Because of my July birthday, am I required to apply for healthcare before I turn 26, or would I wait until the next enrollment period of 2014-15? 2. What do I have to file with the IRS and when, concerning the fact that I do not make any money? 3. I visit my family in the US multiple times per year, adding up to being in the States sometimes more than 3 months out of a year. How do I show that I am only visiting? I do not go to school, pay rent, own a home or car, or have employment in the States. My time in the States is purely leisure.
THANK YOU, jessica
Hi Jessica,
Since you will not owe any US taxes, then you are exempt from the ACA (“Obamacare”) requirements. Follow IRS guidelines/rules on what people should do when they owe nothing. You do not have to file with the IRS, but many tax experts advise filing a simple 1040 short form return showing $0 owed.
steve
I have been living in Thailand for the past 12 years, the last 5-6 under a “retirement” non-immigrant visa, which I renew annually. I am not a formal resident of Thailand, nor do I pay any tax here. I have been filing a US tax return and California income tax return, but do not spend more than 30 days a year in the US. Up until December, I had insurance through Anthem Blue Cross, but was using a friend’s address to qualify, although I didn’t really qualify since I was not physically there for more than six months. I have health insurance in Thailand, but it does not cover the US. I have been thinking of cancelling my Anthem coverage and getting travel insurance the next time I go to the US. Now that Anthem has increased my monthly premium from $150 to $420, for essentially the same coverage, I have started the process to formally cancel the insurance (if I can get through the wait time on the phone).
But now I am confused as to whether I have to get annual coverage in the US (which I would only use for less than 30 days a year, if that), or whether I can even qualify for such coverage since I spend most of my time outside the US.
thanks
Frederick
Hi Fredrick,
Since you spend less than 35 days a year in the USA, you are exempt from being required to have US health insurance (“330 day rule”). Because you do not qualify as a state resident, you cannot use ACA’s state insurance exchanges. That means if you want insurance coverage while you are inside the USA, you would need to get a travel policy.
steve
Steve,
Thanks for the reply. Does that mean that the exemption test is either meeting the 330 day rule AND/OR being a legal resident of another country and paying taxes there? Will I have to provide proof of meeting the 330 day rule, or is it just a declaration?
Thanks
Frederick
Hi Frederick,
As written above:
“Americans who are NOT residents of the USA, do NOT have to participate if you meet the requirements of being a resident of another country (or you are outside the USA for 330 days or more per year). ”
and
“
steve
Steve
thanks….I guess I will need to schedule my US visits for less than 35 days now….
Frederick
Steve,
I have one more question for you. What would I have to do if I did spend more than 35 days in the US, but less than the time required to be eligible to qualify as a state resident? How would I be able to secure coverage to meet the requirements of the ACA?
Thanks
Frederick
Hi Frederick,
You would pay the penalty on your income tax the following year ($95 or 1%), or get qualifying insurance – through the private market (since you would not qualify for the state exchanges).
steve
Hi Steve,
I hope you can help me, I’ve searched and researched and I’m as lost as I can be…
Here’s my situation: my husband and I both have dual citizenships (US & Poland). In 2012 we moved to Poland. Now my husband earns and pays income taxes in Poland whereas my job allows me to continue to work for my US employer from Poland, so I still earn and pay taxes in the US, without actually being there.
Also, we go back and will be going back in the future, at least once a year, sometimes for 2 weeks, sometimes for 2 months..
What do we do?
I’ll be grateful for any advice. Thanks!
Gosia
Hi Gosia,
Unfortunately, the regulations were not written with people like you and your husband in mind. To be exempt from ACA requirements, you must either be outside of the USA for 330 days a year or qualify as a “bona fide resident” of another country, under IRS guidelines. Read: http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion—Bona-Fide-Residence-Test and IRS Publication 54 http://www.irs.gov/publications/p54/ch04.html
If you can qualify as a bona fide resident of another country, then you have no obligation. Otherwise you pay the $95 penalty or 1% to the IRS … or get private insurance.
steve
Specifically: If you are NOT outside of the USA for 330 days or more in 2014, then you can use the IRS Publication 54 ~ Bona Fide Resident – (of a foreign country) ~ tests to see if you qualify as a “bona fide” resident of a foreign country. There are just way too many questions I would have to ask you to see if you qualify, so, please see the IRS publication 54 on this at: Pages 14-15 AND Page 34 of http://www.irs.gov/pub/irs-pdf/p54.pdf
steve
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Why make health care like obligatory when everything is too expensive now like rent and insurance. only those few who make much benefit most from this Obama burden law but the rest are making nothing and if no one get sick, insurance are much happier to get our deductions. what a damn Obama care.
I can go visit my doctor without insurance and pay whatever and it’s better and not obligatory. now it’s working not for a living but for a headache.
pledge for expat insurance!
I am American living in Thailand with my Thai husband. I am a bonafide resident of Thailand but not a Thai citizen. We travel to the US each year and have a bonafide residence in Rhode Island. We are typically in the US for about 75-90 days each calendar year. We are both retired but when working, I was required to pay and file taxes in both countries.
My husband and I have global travel insurance through BUPA (purchased in Thailand) which we can use anywhere in the world including in the US. It meets the required health benefits as set out by ACA. I have done a lot of reading on ACA but I am still unsure as to whether I would also need to have a US-based health insurance plan in addition to the insurance I already have.
Thank you for any insight that you may be able to provide.
Hi Debbie,
If your travel insurance meets the ACA requirements, then that is sufficient.
steve
Hi Steve, I wanted to let you know that I have received a reply from HealthSource RI (my US home is in that state) regarding my question about meeting the ACA health insurnace requirements. Here is what was said:
My initial message dated Feb 10, 2014 to HealthSource RI:
“I am American citizen living overseas. I am only in the US for about 3 months each year. Do I still need to have a US-based health insurance policy? I already have global health insurance that includes the US.”
HealthSource RI’s reply:
“Thank you for contacting HealthSource RI!
Keep the Global Health Insurance as your insurance plan. It meets the requirements of having to have insurance and it will cover you no matter where in the US you are.”
I then asked the following:
“Does this also mean that I won’t have to pay a penalty?”
HealthSource RI’s reply:
“The way the Penalties work, it is for individuals and families who have not had insurance and do not enroll in a plan. There are circumstances where an individual feels they do not have to have insurance and just flat out refuse to agree with the terms of the new health care reform.
You have insurance, so you won’t be penalized.”
Nice.
hi Steve,
Thank you for your reply. That’s great news. 🙂 Does this mean I won’t have to pay the “penalty” eithr? Hope so!
Debbie
Hi Debbie,
If your insurance meets the ACA requirements, then that is sufficient. (no penalty owed to the IRS)
steve
Debbie and or Steve, It is my perception that if you have global type insurance that it does not meet the requirements of the ACA and thus won’t be acceptable insurance even though it fits your needs for insurance and even if it covers you in the US as well. What the ACA says is that your plan must be ACA compliant and after 2015 you would be subject to a penalty. An email from the state of Rhode Island sounds nice, but will the federal government still penalize you? I just dont’ know. I will attempt to get an answer from my home state of Washington. Thus far in contacting both the state and federal government call centers I have not ever been able to speak to someone that even knows what I am talking about when I ask about global insurance coverage and its applicability to the ACA.
Dave
Hi Dave, I did contact the ACA’s Health Insurance Marketplace initially and they told me that they could not answer that question, that I must contact the health resource in my state (Rhode Island) to find out whether my global health insurance, which also covers the US, would be adequate to meet ACA’s demands. I did that and HealthResourceRI, which is the authority in RI dealing with ACA, said it is adequate and that I would not have to pay a penalty. I would hope that they know what they are talking about but I guess we’ll have to wait and see what happens when I file taxes in April.
HI Steve,
Would that also apply to having temporary travel insurance, for just the time one is traveling in the US, so for one-two months?
I’m also wondering how is one going to go about making these declarations? Will supporting documents have to be provided to show coverage, or will it be just a box checked on one’s tax return?
Hi Fredrick,
Since the IRS TY 2014 forms have not been released for the public to see (for filing in April 2015), I don’t think anyone can say.
In a rational logical world, it could make sense to only have to have insurance coverage for while you are in the USA, but I suspect it does not work that way, because of other ACA requirements. For example, consider some of the official exemptions to ACA:
“You may qualify for an exemption if:
~ You’re uninsured for less than 3 months of the year
~ The lowest-priced coverage available to you would cost more than 8% of your household income ”
If you take the first item at face value, then you MUST BUY 9 months of qualifying coverage every year…
Now, if you have NO US residence, and you do NOT qualify for a State Exchange, then, under our reading of the ACA rules, you could try to prove that you qualify for an exemption to ACA because: “The lowest-priced coverage available to you would cost more than 8% of your household income ” … as long as all the 9 month travel policies that meet minimum ACA requirements “cost more than 8% of your household income ”
or if you do have a US state residence, then check out the costs for 9 months of state exchange coverage – and see it they are more than 8% of your annual household income.
???
I personally think we need to call an ACA expert on this one – because the ordinary ACA phone-help-line techs really do not know the subtleties of the rules for expats living abroad.
ALSO NOTE: If you are NOT outside of the USA for 330 days or more in 2014, then you can use the IRS Publication 54 ~ Bona Fide Resident ~ (of a foreign country) ~ tests to see if you qualify as a “bona fide” resident of a foreign country. There are just way too many questions I would have to ask you to see if you qualify, so, please see the IRS publication 54 on this at: Pages 14-15 AND Page 34 of http://www.irs.gov/pub/irs-pdf/p54.pdf
steve
Hello,
I live with my family in Dubai where I am a full time teacher for the pat 6 years.. Can you tell me how this effects my family and I? I visit the US during summer vacation, every other year for about 45 days. My husband does not visit for more than a couple weeks. We file our taxes jointly under foreign income and because of this we do not get any returns. We have no property in the US. Also, we have medical insurance here in Dubai. Do I still have to purchase this insurance for the whole family?
Hi Raheela,
If your husband is out of the USA for 330 days or more in 2014, then he is exempt.
If you are NOT outside of the USA for 330 days or more in 2014, then you have to use the IRS Publication 54 ~ Bona Fide Resident – of a foreign country ~ tests to see if you qualify as a “bona fide” resident of a foreign country. There are just way too many questions I would have to ask you to see if you qualify, so, please see the IRS publication 54 on this at: Pages 14-15 AND Page 34 of http://www.irs.gov/pub/irs-pdf/p54.pdf
Q&A
“Question 2) I understand the physical presence test to be simply a matter of being physically present in a foreign country for at least 330 days within 12 consecutive months; but what are the criteria of the bona fide residence test?
Answer: To be a bona fide resident of a foreign country, you must show that you entered a foreign country intending to remain there for an indefinite or prolonged period and, to that end, you are making your home in that country. Consideration is given to the type of quarters occupied, whether your family is present with you, the type of visa, the employment agreement, and any other factor pertinent to show whether your stay in the foreign country is indefinite or prolonged.
To claim the foreign earned income exclusion or foreign housing exclusion or deduction under this test, the period of foreign residence must include 1 full tax year (usually January 1 – December 31), but once you meet this time requirement, you figure the exclusions and the deduction from the
date the residence actually began.
Question 3)To meet the qualification of “an uninterrupted period which includes an entire taxable year,” do I have to be physically present in a foreign country for the entire year?
Answer: No. Uninterrupted refers to the bona fide residence proper and not to the physical presence of the individual. During the period of bona fide residence in a foreign country, even during the first full year, you can leave the country for brief and temporary trips back to the United States or elsewhere for vacation, or even for business. To preserve your status as a bona fide resident of a foreign country, you must have a clear intention of returning from those trips, without unreasonable delay, to your foreign residence.”
Read more for yourself to determine your status for 2014???
steve
Steve,
You are truly the font of knowledge on this matter…
I would read this to mean that you don’t have to have legal residency in the foreign country to be able to claim bone fide residency, residency for tax purposes (and I would guess ACA) is based on the facts and circumstances of one’s particular situation. But I guess I am going to have to address this with my tax accountant.
Thanks
Frederick
Steve,
Thanks so much for the info…It’s a great help. Before I ask this question let me say that I haven’t read all the responses cuz’ it’s gotten pretty long. Question is…is there an exemption for missionaries? I know this doesn’t apply to the U.S. but talking with a friend from Canada he mentioned that he is able to keep his coverage even tho’ they are gone 9 months out of the year. Made me wonder if there might be an exemption for missionaries. Thanks for help.
Bruno
Hi Bruno,
Did you check out the link above on exemptions? https://www.healthcare.gov/exemptions/
As described above (and also in the link in the govt. website):
““You may qualify for an exemption if:
~ You’re uninsured for less than 3 months of the year. ”
If you pay for 9 months of qualifying health insurance in the USA, then you would qualify for the exemption due to only 3 mo. w/o insurance.
steve
Hi Bruno,
What Steve has said is excellent advice. You could also contact your state’s health resource center to see what they suggest. You can find the link to your state’s center here: https://www.healthcare.gov/what-is-the-marketplace-in-my-state/ via the drop-down menu where it says “Get State Information”.
Hope this is helpful.
Debbie
I need help on my situation please. I am moving to London in March to do an unpaid internship for two months. I will be returning in the middle of May with no job. Of course once I return I hope to find a career job. How do I need to handle my situation? I obtained health insurance with Bunac for my trip to London, so technically I have health insurance while I am out there.
Hi Andy,
The law says you have to have qualifying healthcare insurance coverage for 9 months a year, unless you meet one of the exemptions – like not enough income to have to file a return with the IRS: Read about exemptions above. If you do have enough income in 2014 that you have to file a return with the IRS, and you choose to not get 9 months of healthcare coverage for 2014, then you will owe a penalty to the IRS of the higher of either $95 or 1% of your income.
Does the Bunac health insurance meet the minimum requirements as a qualifying plan under ACA?
steve
If I give the IRS a Mexican address for ACA does that trip a red flag under FATCA with my bank? Doing your taxes you can’t have a US address on 1099 and a diffferant home address . With banks not allowing foreign home address it could cost a lot more than a fee. I would like to hear some ideas on dealing with this.
Hi Chapalalife,
FATCA’s objective is the reporting of foreign financial assets. If you live in Mexico, and have a Mexican bank account that must be reported under FATCA rules, then how would reporting a Mexican address for ACA cause any problems with your Mexican bank?
Can you explain your thinking?
steve
Banks are closing accounts in the US if you have a foreign address (this happened to a friend ). You may not be able to open another account in the US because of “Know your Client” rule which banks are using. If you report to the IRS you live outside the US (ACA on form 2555) do they report the change to the bank. I don’t want to be forced out of my bank and am looking for some place that would clear it up. I have a mail drop for now were 1099’s are addressed but if I have to declare a permanent foreign address I may not have a bank or credit.
Hi chapalalife,
Is there any reason that the IRS would notify your US-located bank of what filing address you use?
You may be confusing the very different legal categories of “tax home” and personal residency – which are both different from what the US CIS and Border Patrol consider as your residence. The IRS is only concerned that you file your return from your legal residence as defined by (ARCANE) IRS rules.** e.g. The KYC (Know your customer) rules for banks means having a “Customer Identification Program” (CIP) but the CIP’s we’ve read about do NOT include inquiring with the IRS about where you list your “tax home”
**The IRS and the Tax Court maintain that a taxpayer’s “tax home” is his principal place of business, but the precise accepted definition of tax home remains in dispute.
~ The Fourth and District of Columbia Circuits accept the above definition of tax home.
~ The Fifth and Ninth Circuits define a taxpayer’s tax home as his residence.
~ The First, Second, Sixth and Eighth Circuits tax a middle of the road position, by holding that a person?s tax home is determined from all the facts and circumstances.
Since even the IRS tax Court, and the US Circuit courts cannot agree on a single definition of tax home – then why would a bank know what your real home is… when the IRS and courts have 4 different legal opinions?
Happy Trails,
steve
Thank you Steve. I see what you mean about the vagueness of the issue.
Hi Steve-
Thank you so much for this article. It seems like the entire system is still in shambles and we will be the ones left cleaning it up. I’m in a bit of a predicament and don’t really know where I fall in the whole scheme of the ACA. I am currently living in Merida, Mexico and have a temporary residency that is valid til the end of June 2014. I will be returning home to Nebraska before its expiration for 6 weeks and then traveling Europe and Asia with no reportable income.
I will only have qualifying residency for half the year in Mexico, no address of residency once I leave after my 6 weeks. My two questions here are:
1) Would I be exempt from paying the fine since I will have made less than $3000 US this year?
2) What evidence do you need to prove you were outside the US for more than 330 days?
Hi Jenny,
The IRS tool for determining if you owe taxes is listed above under:
“Exemptions from the ACA requirements and IRS payments
~ …
~ You have such low annual income that you are not required to file with the IRS: see the IRS Interactive Tax Assistant (ITA).”
http://www.irs.gov/uac/Do-I-Need-to-File-a-Tax-Return%3F
“Estimated Completion Time: 12 minutes.”
Your passport is sufficient to prove your time out of the USA, if the IRS asks. This is another reason why you have your passport stamped every time you exit and re-enter the USA.
steve
Hi Steve,
We are a religious order with most of our members/employees serving overseas. I wrote before in relation to our members who qualify for Foreign Earned Income Exclusion and the Individual Mandate.
This new question is related to the Employers’ Mandate. We don’t yet offer coverage that meets ACA minimum standards.The administration just gave an additional year of reprieve to employers with 50 – 99 employees. We have over 100 employees but many of them qualify for FEIE. I know that if an employer has to pay fines it can’t be assessed on them. Do you know if an employer can calculate the number of employees for this new reprieve without counting those who qualify for FEIE? I guess the same question is whether we count them in the basic calculation of who we are or are not “required” to provide coverage for.
I searched online but couldn’t find info on this, The Final Regulations article from 2/12/2014 on the IRS website doesn’t address it.
If you know the answer and/or can point me to where the answer is I’d really appreciate it.
Hi Steve,
I may have found my own answer. I’m reading
Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act.
There I found Q13:
13. Are companies with employees working outside the United States subject to the Employer Shared Responsibility provisions?
For purposes of determining whether an employer is an applicable large employer, an employer generally takes into account only work performed in the United States. For example, if a foreign employer has a large workforce worldwide, but fewer than 50 full-time employees (including full-time equivalents) in the United States, the foreign employer generally would not be subject to the Employer Shared Responsibility provisions.
That is still a little nebulous in that I wouldn’t call us a “foreign employer”. Otherwise it applies clearly to us. We have more than 50 but less than 100 performing work in the US.
Does this look like my answer to you?
Hi DD,
A foreign employer would seem to be an employer who formally claims some other country than the USA as it’s corporate home. I don’t see how you can meet this qualification. If your employees are working outside the USA, are paying taxes outside the USA for the work they complete for you, and are being paid outside of the USA, then under typical IRS rules: they would not seem to qualify as US workers for the purposes of determining their tax homes. If their tax homes are in the USA, then I suspect that you are liable for getting them qualifying healtcare coverage. If their tax homes are outside the USA, (lowering your FTE employee count below 50 inside the USA), then I believe you could make a case that you have less than 50 US employees.
Do 50 or more of your FTE employees pay US income taxes – or file annual returns with the IRS as US citizens with their tax home in the USA?
Do you pay 50 or more of your FTE employees in the USA or by making deposits to their US accounts?
If you can show that less than 50 FTE employees have US tax homes, I believe you should contact the officials at healthcare.gov and find out if you can use the ACA calculation for determining your organization’s total number of FTE employees by calculating the numbers of hours they spend working in the USA – excluding the hours they are paid outside the USA for working outside the USA.
Is your intent to shift the burden of healthcare expenses to your employees?
Since your employees must meet the 330 day physical presence test to be exempt from ACA, I suspect that employees who cannot meet the 330 day physical presence test are going to be treated as US FTE employees of yours under the IRS rules. (You and they cannot have it both ways?)
If you can prove that your employees’ tax homes are outside the USA, then you might be able to avoid your fiscal and legal responsibilities to provide health care as a large employer.
**As with all our information on taxes, it is for entertainment, educational and informational purposes only, as we are neither tax experts nor licensed attorneys nor accountants. Consult a competent professional for determining what you should do.**
Please come back and tell us what you find out,
steve
I’m a US Citizen and I live in Florida, but I have medical insurance through a Mexican Insurance company since 2000 which gives me a great service without all the problems and expenses that US companies give us, I travel 2 times a year to Mexico for all my medical needs. My Mexican Medical Insurance have coverage for Emergency in any Foreign Country and attention through Mayo Clinics. Do I still need to get medical insurance in US? I really don´t want to drop my actual medical insurance for the expensive and poor coverage that the new plans are giving us, I don´t qualify for any help of the government
Hi PS,
Compare your policy’s coverage compared to the requirements listed above in the section called:
” ***Essential Health Benefits must include items and services within at least the following 10 categories: ”
If your plan meets these requirements, then you are set,
steve
Hi Steve
Given the pending m,arch 31, deadline we are in urgent need of advice. My wife and I became legal permanent residents in October 2013 and moved to the U.S. We lived in Virginia and had insurance converage (one of those catasthropic plans and was very expenisive). For several reasons in January 2014 we moved back to Colombia and do not plan to be in the U.S. in 2014 except for 2 months in the summer.
We have our Colombian insurance plan but does not cover us in the U.S.
Do we need to get Obamacare, can we traveler’s insurance?
Also, if we don’t get insurance and are fined, you mentioned the fine is $95 or 1% of income, but I file US taxes as self employed along with my wife.
Please help,
Thank you very much
Hi Vladimir,
Are you US citizens? or Columbian citizens?
As Columbian citizens, with US Permanent Resident permits, LIVING in Columbia – I have difficulty seeing how you have enough US income to owe US 2014 taxes – to have to file or pay US income taxes. If you are paying US taxes, then the only way to avoid the additional 1% or $95 ACA penalty on your 2014 taxes is to either stay outside the USA for at least 330 days in 2014, or prove that you are a “bona fide resident” of Columbia (following the IRS rules in Publication 54) – as described above. or get ACA qualifying insurance for at least 9 months of the year…???
Do I misunderstand your situation?
steve
Hi,
I have been living in Spain with my husband for the past seven years, I don´t file taxes because I don´t work, but I have health insurance through him here in Spain. We travel to the US every summer for about two months to visit family, therefore I´m not considered a “resident” of Spain, even though when we visit the US we do it for holidays.
Do I have to sign up for this plan?
Hi Cassandra,
Did you read above, where it says: If you are not required to file an IRS return for 2013, then you are not required to get qualifying healthcare under Obamacare? That principle seems to cover your situation.
steve
I’ve been researching online for hours now but can’t figure out the ACA details concerning my situation. My family and I are currently traveling aboard our sailboat in Mexico. We are permanent Oregon residents. We will be back in the states about mid-May, but will still be traveling north up the coast of CA and OR for a couple of months before we get home and go back to work. We are currently covered under a major medical plan that does not cover us in the US. We won’t be covered by employer insurance until late summer or early fall. We need to apply for insurance for the intervening months somehow, but the coverOregon website for the Oregon insurance exchange isn’t working and we don’t have reliable access to phone service.
Does our move back to the states count as a qualifying event, giving us the opportunity to apply outside of the open enrollment period? If so, how do we apply from here to make sure we are covered once we are back in the country? (I’ve heard we may have to be present in our state to apply. That sounds ridiculous, but some things are.) Or do we legally have to apply now for insurance we can’t use until we get back to the US? On a friend’s referral, I have contacted an agent in our area, but she seems confused by our situation and the website that should give us a list of local agents is broken.
Once we do apply, how is financial assistance calculated? We earned more than the upper limit during the 2013 tax year, but will only have income during the last few months of the 2014 tax year, so we should qualify for help for the few months we need it. What numbers should we be looking at to determine if we qualify for assistance and how does that process work (I’ve read all sorts of convoluted and contradicting information!)
Finally, thank you for your work! I’ve been following the comments on this article by e-mail since we left last fall, hoping to get my questions answered before the deadline. I can’t believe how much time and energy you have put into helping the expatriate community. Thanks again!
Hi Bethany,
You have asked some superb questions.
“Does our move back to the states count as a qualifying event, giving us the opportunity to apply outside of the open enrollment period?”
A check of the healthcare.gov site shows that you do not qualify for a “Special Enrollment Period”:
“A time outside of the Open Enrollment period during which you and your family have a right to sign up for health coverage. In the Marketplace, you generally qualify for a special enrollment period of 60 days following certain life events that involve a change in family status (for example, marriage or birth of a child) or loss of other health coverage. If you don’t have a special enrollment period, you can’t buy insurance through the Marketplace until the next Open Enrollment period. Job-based plans generally allow special enrollment periods of 30 days.”
If you got a job that provides health insurance, that would qualify you, but you are only allowed 3 months without US insurance (unless you can prove you meet the 330 day physical presence test, or that you are a “bona fide” resident of another country) – so, you really must either get coverage before March 31, or pay the penalties in your taxes next year.
If you accept paying penalties, you MAY still be allowed to apply for a subsidized policy when you return (after March 31, 2014) – if the government accepts your claim that you were out of the USA. When I had about 8 different dialogues with a technical expert on the healthcare.gov 1-800 helpline, She said that US citizens who reside in Mexico can return to the USA, and most states allow a brief (30 day) open enrollment period when you return.
I would call both the Fed’s and Oregon’s 1-800 help lines, and ask what the requirements are for Oregonians living abroad, to return and enroll in Oregon’s version of ACA.
When you find out the details, please come back and tell us how it works in Oregon,
steve
cont.
“do we legally have to apply now for insurance we can’t use until we get back to the US?”
The technical expert on the helpline said Americans living overseas can start the enrollment process (remotely from abroad) with their home state’s program using their home address (or if you have no home address, she said to use a family member’s address), but that the process could not be completed until you physically return to your “home” state.
“Generally, health insurance 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 Marketplace insurance.
Questions? Call 1-800-318-2596, 24 hours a day, 7 days a week. (TTY: 1-855-889-4325)”
https://www.healthcare.gov/am-i-eligible-for-coverage-in-the-marketplace/
steve
So let me get this straight. I may or may not be able to apply after March 31 depending on whether Oregon considers moving back to the country a qualifying event. Even if it is an acceptable event, I have to physically be in my home state to complete my application, correct? (And I can’t find an agent or start the application process from here because the websites are broken.) Does that mean there’s no way around an insurance gap during the last couple of months of travel time until we hit Oregon? Crazy! We really don’t want to risk the few months without insurance in a system that regularly bankrupts average people, and we’re trying to comply with the law, but it seems to be physically impossible.
We’re in a pretty remote location on really sketchy internet waiting on a good weather window to travel north, so we may not have phone access until a few days before the deadline. Thanks for the helpline numbers, though. I’ll try to find a way to call, but if they have a way to receive questions by e-mail, I’d love to know what it is!
Hi Bethany,
Yes, you seem to understand the possibilities correctly.
“If you have a question or need to submit any changes, like a change of address, please e-mail OregonHealthPlan.Changes@state.or.us . Staff will respond within 48 hours.
With so many new people enrolling into OHP at the same time, you may not get an appointment right away. Your new health care providers are working hard to get you the care you need.
If you have immediate questions about the Oregon Health Plan or your health benefits, please call 1-800-273-0557 or 711 (TTY), from 8 a.m. to 5 p.m., Monday through Friday. The Client Services Unit (CSU) is closed on holidays. ”
http://www.oregon.gov/oha/healthplan/Pages/New-to-OHP.aspx
There is a .pdf handbook for OHP: https://apps.state.or.us/Forms/Served/he9035.pdf
I scanned the 52 page handbook and found nothing on the open enrollment issues.
???
steve
I’m really confused about whether US citizens living abroad are ALLOWED to purchase healthcare on the marketplace. My family live in New Jersey, all mail, credit cards, bank accounts, etc. are linked to my family’s address. But for the last 3 years, I have been outside of the US for about 330 days/year (sometimes a bit more, sometimes a bit less) and probably will be for many years to come, but who knows; it’s possible I’ll move back to the US in 6 months.
I’d like to purchase healthcare from the marketplace, as I’d probably return to the US for treatment if something goes wrong, to be with my family and friends. I called the healthcare.gov hotline and was told that I need to be present in the US for “about 6 months” out of the year to be eligible. What you wrote above seems to contradict that. I can’t seem to find anything in writing stating that I am permitted to buy health insurance; all I see is that I am not required to. Any specific thoughts / resources you can point me to? Thanks!
Hi Av,
As I wrote above, you must be a resident of a state to qualify for enrolling in that state’s insurance exchange.
Since we do not know what your state is, or what requirements it has to be a resident, then we cannot absolutely say.
Under generic IRS rules and most state tax rules, you must generally be in that state for 6 months to claim residency.
The general bronze health insurance plans DO NOT cover treatments outside of that state (except for some who have reciprocity with neighboring states). This means that whenever you are out of the country or out of that state, you would be paying for insurance that you cannot use. ???
Do I misunderstand? Do you want to enroll in coverage that gives you no benefits – except if you decide to return later this year?
If you return later this year from living abroad, that qualifies as a major life event – that is supposed to give you a 30(?) day window of open enrollment.
As I wrote above, the technical expert on the federal ACA helpline said that you could start the enrollment process just before you return – online – using a family member’s address.
None of this is spelled out in the govt. websites or general guidelines – so If you call the general helpline, the people on the other end really do not know how things work for Americans living abroad.
Ask to talk with a specialist or supervisor.
steve
Hi! I have dual citizenship from the US and Mexico. I’ve been living back and forth, but currently I’ve been living in Tijuana, Mexico for the past 2 yrs, working and paying taxes here. I’m married and my husband is Mexican. I;m interested on getting the California health insurance just of rmyself, but don’t know if I qualify because I won’t be paying taxes in CA this year, though I will report the taxes paid in Mexico to the US. I use my brother’s address for important mail. Do you think I would qualify to get the insurance? how would I do it?
Thank you!!!! Maria
Hi Maria,
California has strict strict requirements that you be a resident – with full time address – (generally working) and paying taxes in California.
They seriously want to block people from slipping in to take advantage of their program….
Can you meet their residency requirements, and tell them that you actually live there?
Another fellow found that his almost daily trips to Tijuana disqualified him (as they do track border crossings).
steve
We use Mexican buses to go from Queretaro to San Antonio, Texas. When leaving Mexico by bus and returning by bus, INM does not know you are leaving and the U.S. does not scan your passport on entry. There is no requirement to fill out anything on entry or exit, either side. Is this a workaround for the Obamacare 330 day limit? A bit of caution. These bus rides tend to be 17 to 20 hours. That is if nothing goes wrong. My longest to date is 30 hours. Pay attention to holidays. Take back up water and snacks. Your results may vary.
Hi JB,
Are you saying that the US CBP does not have the bus company provide a list of who is entering the USA by bus crossing at Nuevo Laredo/Laredo?
Are you saying that the US CBP does not do checks nor have any documentation on the people on the bus entering the USA?
(e.g. The USA can track your movements by more than just passport scans.)
If this is true, why do illegal Mexicans take risks crossing the AZ desert or swimming the Rio Grande – when they could just ride an air-conditioned bus?
???
I suspect that the bus company must provide the USA a list of passport #’s in advance of crossing – and entrance visa #’s for Mexicans – which means you are logged into Homeland Security’s data base, CBPs database, and the NSA’s database => the US govt. likely knows that you have entered (?) – but that information may not be listed in IRS databases – but if a future issue arises – they can go back into the records – and hit violators with stiff penalties and interest – and intents to defraud the government and intent to file false returns….
… Remember, this 330 day test and the penalty is not an ACA-Obamacare issue –
~ It is an IRS REQUIREMENT – and 1% IRS Tax penalty, and
~ It is the IRS that investigates, and
~ It is the IRS who enforces, and
~ It is the IRS who audits and assesses penalties and interest, and
~ If the IRS finds any real problem in the past 7 years of your returns, particularly the intent to file a false return (by trying to scam the 330 day rule), the ALL of your back IRS returns are open to audit – meaning that with the false return charge, there is NO STATUTE of LIMITATIONS….
Does anyone one of us want to risk audits on every return we have ever filed – just to avoid following ACA laws?
steve
Hi Steve, we come for a the UK and currently staying in the US for the last 6mo while I am on sabbatical here. My wife has just got a green card by marriage sponsorship from me, but has not yet worked in 2014, while me and the kids are US citizens. I am a bona-fide non-resident for tax purposes, based in the UK since 1990, and therefore presumably not liable to ACA charges or penalties. Our travel insurance is expiring and we would like to get insurance under ACA for the wife and kids, whereas I do not need this as I travel back frequently to the UK (can rely on travel insurance). My questions are should my wife can complete the ACA application while declaring 1) no income (since she did not have any yet in 2014), 2) expected income (hypothetical for 2014, as no job yet), 3) my foreign-earned income (as expected for 2014)?
If it’s no. 3 then she qualifies for much less of a subsidy, based on income which is non-taxable (though plenty taxable in the UK!). Further to this, is it therefore best (and permissible) for my wife and I to file separate returns for 2014, her as resident and me as non-resident? We have previously filed jointly but as my income is tax exempt anyway by virtue of the exclusion, this has no advantage to filing separately.
Any advice on the above, and for how to make sure my wife and kids have affordable healthcare in the US (Florida), preferably URGENTLY BEFORE 3/31, such that I can retain exclusion from ACA requirements would be much appreciated!
Thanks
AXP
Hi AXP,
If your wife continues to qualify as a resident of the state where you are living during the period she wants health coverage, then yes, she and the kids qualify. To the best of my understanding, you cannot effectively “make your wife a pauper” showing no income on a tax return (by jiggering filing status) to allow her to qualify for subsidies.
The IRS and state exchanges and IRS consider your total family income when determining eligibility – which means you need to enter your foreign earned income – when you apply for the state exchange coverage.
Happy Trails,
steve
I have retired early at the ge of 55. Have gotten mariied in Argentina and also in California. We live 10 months out of the year in Spain and in Buenos Aires. We file every year our incometaxes in Los Angeles, as I’ve elected to received my SS. at the age of 62. I will be 64 in May and will be returing to LA for two months, as we do every year. We live on our rental properties in LA, and wanted to know if we are required to get Insurance in the CA. althought we pay for private medical insurance in Buenos Aires. Any feed back would be great appreciated. E.A.
Hi Eric,
If you read the exemptions above, Medicare and Medicaid qualify. I believe you are on Medicare = exempt.
steve
I am a US citizen resident in UK since 1993 and considering moving back to US. Am frantic about getting medical cover before March 31st although I have no permanent address as of yet. I would like to “transition” back to US and stay for a few months at a time but I need health insurance. I have a serious pre-existing condition. I could use an address of friends or family but they live in different States and not sure which one to use. Plus my income may be lower once I move back so I don’t know how to calculate it. How do I calculate my income and if I choose one State now as my address can I change this in a few months time? What if I decide that I can’t move back because of my particular health needs and need to be cancel the policy, is there a penalty? Also I can get Medicare but not permanently resident yet…any advice?
Hi Adel,
Make your best good-faith effort to estimate your income. Re state: Talk with insurers at each of the states and ask what restrictions or consequences for moving out of their state / into their state – as a “qualifying event” to change state exchanges.
Base your decision on these results.
steve
If we are outside the US for less than 330 days in the year, then we have to have insurance (barring some other exemption). However, do we have to have insurance for the entire year or just while we are in the US?
Hi Randy,
If you cannot meet the 330 day physical presence test, nor the “bona fide” resident test, then you must purchase at least 9 months of approved coverage, or pay the IRS penalty (larger of 1% or $95).
You are allowed to join state exchanges within 30 days of moving back to the USA (a qualifying event for joining a state exchange) – which gives you access low cost coverage WHEN you return.
Since we do not know what 1% of your income is, we do not know if it is better to only buy insurance when you move here (saving months of $$ payments to an insurance company in the meantime), or if a 1% penalty is bigger. Plus, you have to be/qualify as a resident of your state to actually sign up (now).
steve
I am an American citizen living in Australia and I found your information so extraordinarily helpful. Thank you so very much. I may move back to the USA this year and found this page while searching for information on the ACA, but you also answered IRS tax filing concerns regarding the time I have spent living, working and paying taxes in Australia. Many thanks!
Hi Miriam,
Great!
steve
HI Eric,
Thanks for your article which is very helpful. I have been living abroad for years and have qualified for IRS exemptions up until the present time. I am totally covered by the insurance that I have from the country that I live in. However, recently I bought a house in the US where one of my daughters live for free of charge, and I am thinking more and more of returning to the US in the next few years. I am not yet retired. Will I be penalized for not acquiring ACA insurance now? Will the fact that I come back to the US for longer visits (maybe more than 40 Days a year) and stay in my daughter’s (my house) home change anything, even though I continue to work in a foreign country and pay premiums there? Can’t I just “pick up” the Obamacare when I decide to return permanently to the US?
Thanks in advance,
Barbara
Hi Barbara,
If you believe that you will be in the USA for more than 35 days in 2014, and you do NOT want to pay the IRS penalty of the larger of either 1% or $95 – then you need to sign up now.
You are allowed to join state exchanges within 30 days of moving back to the USA (a qualifying event for joining a state exchange) – which gives you low cost coverage WHEN you return
Since we do not know what 1% of your income is, we do not know if it is better to only buy insurance when you move here (saving months of $$ payments to an insurance company in the meantime), or if a 1% penalty is bigger. Plus, you have to be/qualify as a resident of your state to actually sign up (now).
steve
I mean Thanks Steve ! I don’t no where I found Eric! Sorry
Thanks Steve for yor speedy reply. I am not on any care in the states, ( Medicare or Medicaid). I will look into the above when in LA in April. I thought that one receives Medicare only at the age of 65! Have a good day
Hi Steve, thank you for your response. I declared about 31000 in US dollars. But my employer is French and for the moment I am fully covered on French insurance, even while travelling to the US. In 2013 I qualify for an exemption under IRS rules, even if I traveled to visit in the US for 35 days. Are you sûre that I should be paying for health insurance in the US too? Would it be best for me to pay 95 dollars a month for ten years even if I dont live there? Thanks for your help. Barbara
Hi Barbara,
As I replied earlier: “the IRS penalty of the larger of either 1% or $95” .
This means you would pay only $310 in IRS “fees” in April 2015.
The “fees” grow every year: 2016 = $695 per person per year or 2.5% of your income => still less than a few months of insurance payments.
You also wrote: “I am fully covered on French insurance, even while travelling to the US.” Since I have no idea what “fully covered” means, so, please check if your French coverage covers the essential minimum health benefits listed above in: ***Essential Health Benefits must include items and services within at least the following 10 categories:
If you can prove that your French plan covers these 10 items for treatments in the USA, then you are exempt from ACA’s requirements.
When you have evaluated your French plan, could your return here and write about it to help other readers?
steve
Hi again. I am pretty sure that the US government knows what benefits are included in the National Health Plans in France. I really don’t know how I would prove it but the French are considered as having the best health care in the world. I haven’t clearly understood. If they cover these 10 points, does that mean that I do NOT have to pay anything? I am exempt from paying US taxes because of the US-French tax agreement.
Hi Barbara,
I would not assume that the IRS or the ACA administrations know anything about French health plans.
Since there are only about 196 countries in the world,
and:
Each of those 196 countries can change their health plans on a whim – with no requirements for the other 195 governments to notify the USA of their changes …
~ Why “assume” that the US government, or ~ the IRS clerk that reviews your tax return ~ would know 10 current specific details on French health plan coverage – especially when you describe a blend of private and governmental French health care coverage?
KISS: Keep it simple…
As I replied earlier: Does your 2014 French health care meet the “Essential Health Benefits” listed above – providing coverage for all 10 treatments and items when you are in the USA: “Essential Health Benefits” ?
Hint: Ignorance of the law is not a valid legal excuse.
Did you also read the sections above on who is exempt?
~ Exemptions from the ACA requirements and IRS payments
~ Special Exemptions to Participating in the ACA / Obacare Program – Including not needing to file a tax return with the IRS
I truly believe that you are a resident of France and have become very french – because every good Français knows zat zee whole vorld knows of zee French rules and how zee French government does zings.. *grin*
Happy Trails,
steve
PS. In France I am considered to be a permanent French Resident even if I travel, as long as my tax home is here.
Nice, but if you read the IRS rules above: French rules of residency don’t have any effects on IRS rules of residency for determining your US requirements. The USA is still a sovereign nation, still having legal authority over US citizens. The US government’s tax and health insurance laws are not bound by French law or French conventions.
steve
Here is something I found in English about French National Health Insurance. Many of us also have a private insurance to cover things that the National Insurance does not cover. That is true of myself. http://ec.europa.eu/employment_social/empl_portal/SSRinEU/Your%20social%20security%20rights%20in%20France_en.pdf
I think that it covers everything in the list.
Hi Barbara,
In those 30 pages of French rules, does the French health system pay for all of the 10 items – while you are inside the USA?
I could not find references in your French document on international travel protection on:
~ Mental health and substance use disorder services, including behavioral health treatment;
~ Rehabilitative and habilitative services and devices;
~ Preventive and wellness services and chronic disease management; and
~ Pediatric services, including oral and vision care.
???
Happy Trails,
steve
Yes, the French insurance provides for all of that. I don’t know what is meant by “behavioral health treatment”. That sounds pretty scary. However, I don’t know how to prove it. I will have to find out. I have some other insurance that kicks in when I am traveling in case I need to be sent back to France for treatment.
Thanks Steve, I will keep in mind that France is not the only country in the world. However, since there are individual agreements for retirement, I just assumed that it would be so with the health insurance. This is Europe, it changes its rules very slowly. Of course I know that I could expect to receive a letter from a government agent doesn’t know these rules, however, these things can be explained.
I meant, that according to the IRS, I am a bona fide French resident. I can’t understand how this could be otherwise with even 35-50 days of presence in the US when I still am employed for a French company in France, declaring a French tax home, and, up until recently, even a homeowner here in France. I am hoping to transition one day back to the US, however, I thought that would correspond to my leaving my job here and beginning to work or collect retirement in the US. What happens for dual nationals?
Hi Barbara,
There is a distinction in US tax law regarding your “tax home” versus whether you are a resident of a foreign country (not required to file anything in the USA).
It sounds like you have confused your french “tax home“, which qualifies you for the Foreign Income Exclusion, versus whether you meet the 330 day physical presence test to prove if you are actually a resident of a foreign country for that Tax Year. So, you can be considered a resident of France if you are outside the USA for 183 days or more, but you fall into yet a different non-resident living outside the USA if you are out for 330 days or more.
IRS Definition of “Tax Home”:
“Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes.”
International-Taxpayers – Foreign-Earned-Income-Exclusion—Tax-Home-in-Foreign-Country
Next, even though you qualify for France as your tax home, you may still be liable for filing under FIN CEN rules for foreign assets. e.g. You may need to file IRS Form 8938 to report the ownership of specified foreign financial assets if the total value of those assets exceeds an applicable threshold amount (the “reporting threshold ”).
Clear as mud?
God Bless the IRS,
steve
Your tax home is generally defined as
Steve, can you please elaborate on this distinction between residency and tax home? I’m wondering where this 183 days comes from. In my case, I am a bona fide non-resident by phyiscal presence, based in the UK, yet have been spending many weeks in the US on a sabbatical year. Am I in danger of losing the bona fide status, and will this therefore make me no longer excluded from ACA provisions?
Thanks
AXP
Hi Adar,
Please see our Main Article on Taxes for Americans Living Abroad at: https://yucalandia.com/answers-to-common-questions/irs-tax-issues-for-americans-living-and-working-abroad-in-mexico-master-article/#Commonly%20Known%20US%20IRS%20Rules%20for%20Innocents%20Abroad
and
and
Tax Home Definition: https://yucalandia.com/answers-to-common-questions/irs-tax-issues-for-americans-living-and-working-abroad-in-mexico-master-article/#IRS%20Definition%20of%20a%20Tax%20Home
are specific sections for your questions.
When in doubt – especially in your questionable “bona fide” resident status as affected by a sabbatical: Boogie on over to the IRS Publication 54 – http://www.irs.gov/pub/irs-pdf/p54.pdf
and it’s 39 pages of detailed instructions for Americans living abroad – but remember that those 39 pages do not cover FIN CEN, FATCA, or other foreign financial assets filing requirements… *sigh*
Happy Trails,
steve
Steve, Thank you for all your help. As you say, IRS is clear as mud and I still don’t understand what to do! I file IRS forms because I was always told that I had to file even if I owed nothing. And as I read this year on the US tax forms, I still qualify for an exemption. And I pay income taxes and health insurance in France. However, I am trying to clear this up; so even though I have worked over here most of my life and rarely returned to the US during all that period, I could still be considered to be a US resident because I spend more than 35 days in the US one out of 30 some odd years ? I thought that one had to live in a state a couple of years in order to be considered a resident of that state ? Could I be considered a US resident but still a resident of no state? Sorry about all the questions. Your answers are getting us closer to the response, but I don’t think I’m quite there.
Hi Barbara,
You’re making good sense now:
~ You can trigger ACA and IRS requirements if you go back to the USA for more than a total of 35 days in 2014.
~ If you are out of the USA for 330 days or more in the current tax year, then you are exempt.
~ Past years of being in the USA for more than 35 days only matter if you are claiming the exclusion(s) based on being a “bona fide” resident of a foreign country (a whole other set of requirements that you may meet).
~ For the insurance exchange requirements, living in a state for as little as 30 days, PLUS having an official “abode” in that state, is enough to qualify for your state’s ACA insurance exchange.
~ Yes, if your french health insurance protection covers those “Essential Medical Benefits”, then you are in the clear.
~ For TAX purposes, yes, you could be considered a US resident, or dual resident, without having a physical home in the US.
e.g. If you live abroad, AND have kids and grandkids in 3 different states, and you visited each of the 3 families for 2 weeks apiece in a calendar year, you then are considered a legal US resident for IRS tax and ACA requirements…. *sigh*
Really, Read the IRS Publication 54 (as listed above http://www.irs.gov/pub/irs-pdf/p54.pdf ) to determine if you meet the “bona fide” resident of a foreign country qualifications. If so, then it is all easy…
~ Many are now figuring out that when ACA was written, the politicians and their goofy-lawyers did NOT think through how their requirements would affect the 6.32 million Americans who live abroad… This means that things get messy for people who return to the USA for more 35 days a year.
Realy,
Hi Steve,
I think that I’ve got it now. I am pretty sure that I am in the clear but will look a bit closer at the links that you are sending. I also have children living in both countries, so, it is not as easy as it might seem.
Thanks again for your help. Great work!
Best regards,
Barbara
Hello Steve. Thanks a lot for this article, it’s really helpful. I just have one question about my situation. My son has been living abroad since last December, he won’t be back until 6/29/2014. His current insurance ended on 2/28/2014. (I stopped paying it since he’s abroad, and I just realized this tax penalty thing…) He’s out of coverage for one month already. To avoid the tax penalty and to take advantage of the 3 months short gap exemption, can I just buy him a cheapest insurance from the marketplace for one month? (I’ll buy him a good insurance once he comes back in June). If so, is it going to be difficult to cancel the insurance? Thanks in advance!
Hi Oliver,
Excellent question about buying just 1 month. The law reads 3 months of short gap allowed in the 12 months of the year. In my simple math view of the world: March – May 2014 uses up that 3 month gap – which means to avoid the 1% IRS tax “fee”, would need to have coverage started June 1 – and then sign him up for better coverage when he gets back.
steve
Call the helpline to find out if there is some special exemption from the penalty – because they have also given a special extension to this year’s open enrollment period – where applicants to health exchanges have been given yet another 2 weeks to get signed up – as long as they have started the on-line process by March 31.
Thanks so much for your reply! Would it be possible to pickup the start date for the coverage from the marketplace? From my understanding, today is the deadline, if I enroll today (or even 4/15), the coverage will start May 1st.
I just realized that there’s “one day coverage counts as the full month’s” rule on the IRS website. In this case, as long as I add my son into my company insurance plan on 6/29 when he’s back (even if he was out of coverage for 3 months and 28 days), then I don’t need to pay tax penalty for him. Do I understand it correctly?
Hi Oliver,
I’ve seen that too, and yes, when the IRS/ACA decides that 1 day = 1 month (versus the traditional 16, 30 or 31 days), then your interpretation is correct for one month. Unfortunately, I have seen nothing that describes how the “short coverage gap” policy interact/overlaps with the 1 day coverage = 1 month rule… Does a lapse of 31 + 30 + 31 + 28 = 120 days exceed the 3 month short coverage gap rule in your case? You could always call the ACA-help line.
steve
You could do, as I do when travelling or living abroad short-term, purchase travel insurance. For a few $ a day, you can get 100% worldwide cover with free choice of doctor and hospital. I don’t get anything for this but I’ve been using them for last 12 years and I recommend them to all my friends. Here’s the link I use http://www.ihidanmark.jp/
Hi David,
Does the travel insurance you are recommending meet the “Essential Health Benefit” requirements listed above?
steve
Btw. feel free to remove my comment above if it violates your “policy”. Just want to help a fellow American stuck in a predicament.
Hi Steve, since it’s travel insurance it “only” covers in case of illness or accident while overseas which is what I need (since treatment can be very expensive depending on where you are in the world). It does not cover for preventive treatment like annual health checkups, vaccinations, etc. They also have international health insurance plans that meet ACA requirements. I know for a fact that they insure lots of US citizens abroad, both private clients and corporations including schools. I guess you can ask them for more information since I don’t know all the details. David
Hi David,
Since the travel insurance you recommended does not meet the Essential Health Benefits required by ACA, then it would not qualify – and people who try to use this option to meet ACA requirements may be liable for the IRS penalties. One would have to check into their “international plans” to see if they are acceptable,
steve
Hi Steve, what if someone is on temporary assignment (say 2 years) overseas and get an annual travel policy? Would they still be required to get insurance that meet Essential Health Benefits even though they are living abroad during the entire 2 years and don’t go home to the States for more than a week or two? Thanks, David
Hi David,
As described multiple places above (in the article), the 330 day “physical presence test” is the first criterion. Americans living abroad who do not want to have qualifying US health insurance must show that they were outside USA for at least 330 days a year. If you are in the USA for more than 35 days in 2014, and you do not have qualifying health insurance protection, then you owe the IRS an extra 1% fee (if you are paying taxes).
If you do not meet the physical presence test, then you can check if you qualify as a “bona fide” resident of another country. Read above for details. Remember that the IRS “fees” get larger every year for people who do not comply.
Enjoy.
steve
Hi Steve,
First of all, thank you so very much for this amazing resource (by which I mean your site generally, and this incredibly long and detailed thread in particular).
I’ve read the IRS publications you kindly provided the link to and I think I have this right, but am not sure. My wife and I are early retirees living in México. We rent year round and have a lease ane utility bills to prove it, have temporal visas and will apply for permanentes when we are eligible.
No Mexican bank accounts, no income other than from investments. We have high-deductible catastrophic health coverage here that requires us to have Mexican residency visas but the provisions, while they meet our needs, don’t meet ACA requirements.
Most years our taxable income doesn’t come anywhere near the 20,500 IRS filing threshold, but when I do a bit of consulting work I am required to file a tax return due to that. I guess I can’t do that work anymore since it triggers a need to file when I otherwise wouldn’t have to? We have used our U.S. mailing address (a relative’s home) for tax filiings in the past but will use our México address for 2014 and beyond.
Normally we don’t spend more than 35 days in the U.S. but with aging parents there we certainly do want the option to do so in future years. Clearly we wouldn’t meet the physical presence test in such years and the bona fide residence test in Publication 54 still requires 330 days of residence in a calendar year. If I am reading all of this correctly it sounds like I need to try to find a Mexico-based health insurance product that complies with the silly ACA 10 Essentials requirements while still being affordable.
Talk about incentive to keep our taxable income low enough to not have to file a return! This is making dealing with Mexican INM requirements look like a piece of cake.
Thanks again in any case for the fantastic resource!
Kevin
Hi,
Could you either pay the 1% penalty this coming year, and higher penalties in future years that you exceed the filing requirements limits? or Could you structure how your income is earned, paid, and reported, so Mexico becomes your tax home for that income – and that all your Mexican income and tax payments to Mexico do not count against the US filing limits???
steve
Hi Steve,
I will check with our insurance agent here and report back if I find any ACA compliant plans that look like they might be of general interest to Mexican expats (we’re at Lake Chapala so the market is very competitive).
We won’t exceed the income maximums that trigger a need to file this year. I’m not sure I’m correctly understanding your other questions, but all of our assets are in U.S. brokerage and bank accounts and we have no Mexican income and I don’t see that changing.
Thanks again!
Kevin
Hi Steve –
A friend of mine who’s been living as an expat in Asia for a number of years read this whole thread and still wasn’t entirely satisfied with some of the unknowns or partial answers. He got an interesting counterpart thread going over on the Bogleheads investing site that I think you and some of your readers may find worthwhile (only 11 posts so far vs hundreds so it’s a quick read!):
http://www.bogleheads.org/forum/viewtopic.php?f=2&t=137773&newpost=2036402
Hi Kevin,
Sorry to hear that your friend was not “entirely satisfied” with our treatment of qualifying for the IRS’s “bona fide” residence status.
If you read the IRS publications on this that we suggest (above) you and your friend both read, esp. IRS Pub. 54. When you read Pub. 54, you will find the the supposedly better discussion on “Bogleheads” is missing much.
The IRS rules on establishing “bona fide” residency are sufficiently squishy and only loosely defined, such that even the IRS needs 4 full size pages of dense text and examples to try to explain how we can try to determine if we qualify….
Realize also that the IRS also presents additional facets of their “bona fide” residency policies that are not listed in Pub. 54. This is like the IRS issues that have been resolved by successive IRS Tax Court rulings that are never mentioned in IRS publications or websites ~ Issues and solutions and resolutions that are only listed in professional tax preparation books and IRS law publications – basically known only to tax professionals.
Do you and your friend realize, that due to these factors: The Bogleheads discussion only touches on one narrow type of allowed cases. … making it substantially incomplete ~ while the posters write as if they offer complete or substantially complete answers, while in reality, their answers are substantially incomplete for other cases & other personal situations.
Really, each person should NOT RELY on overly-simplified personal views of one type of situation as a measure of whether the reader qualifies or not. Yucalandia authors intentionally left the “bona fide” residency discussion open-ended ~ intentionally creating a discussion that intentionally does NOT answer questions – due to the complexity and squishy nature of the IRS policies on “bona fide” residence.
EACH person really should read Pub. 54 for themselves, if they want to try to qualify as a “bona fide” resident outside the USA.
e.g. One other different IRS publication mentions that if you have at any time in the last 10 years been outside the USA for a consecutive 330 day period, living as a resident of another country, then you likely continue to qualify in subsequent following years, whether you are outside the USA for 330 days or not, as long as you do NOT MOVE BACK to the USA, or as long as you do not re-establish residency in the USA. but that’s only the first step …. The “intent of residency” subsequent evaluations start after meeting that 330 day requirement. …
Then remember: The IRS’s annual 330 day “physical presence” test is a different thing than the “bona fide” residence test. Bona fide residence evaluations also use a 330 day period – but one that is not necessarily completed during a Jan. 1 – Dec. 31 calendar year – and not even in the last tax year.
Since this stuff is so custom tailored to each person’s situation, I believe it does a disservice for individual opinions to be used as the final word, on such a complex and multi-layered tiered set of IRS requirements.
Please suggest to the people on “Bogleheads” to read IRS Pub. 54 before making any decisions on this issue.
Happy Trails,
steve
Wow, this entry has answered most of the questions i had. really great information here, thank you. i plan to quit my job and travel around the world for 18 months, coming back home for 30 days in the usa during that 12 month span to visit family. I was worried about whether to get insurance under obamacare or pay the penalty. now that i know i can be exempt as long as i’m outside the usa for 330 days or more out of the year, i feel a sigh of relief. of course i still would want to get travel health insurance. do you know of any that is covered by obamacare?
Hi Ian,
To the best of our knowledge, all of the “bronze” level plans in ACA/Obamacare exchanges ONLY provide treatment within your state of residency (or a neighboring state that has a reciprocity agreement with your state’s exchange).
There are also silver, gold, and platinum level plans. These shiny-er metal plans offer higher levels of % payments of our medical costs, and since each insurance company is allowed to offer the extra benefits they choose (as long as they meet the minimum requirements), your state’s insurance company-(ies) may offer protection that covers treatments outside your state, and possibly outside the USA. Since there are 1,000’s of plans, there is no way for us to check them all out.
Check with your state’s exchange to find out if any of their insurers offer an expensive plan that covers international treatments.
steve
Ian, since I travel quite a lot overseas I’ve chosen to get an annual travel insurance for around $195 for 12 months (in my age group). I get 100% cover for accidents and medical treatment. Free choice of hospital and doctor anywhere in the world. Can’t complain. Check them out if you want. http://www.ihidanmark.jp Good luck and safe travels! David
Thanks David!
Does this insurance meet ACA/Obamacare’s requirements?
…or is it just additional convenient travel-protection for people who already have ACA approved insurance (since almost all ACA qualifying policies do not cover medical treatments outside their US home state)?
The $195 per year is stunningly-low. What limitations and deductibles does your coverage have?
steve
I have looked at Blue Cross, Blue Shield, but it very expensive. Anyone have any other ideas, until we can get them to cover us overseas?
This policy does not cover preexisting conditions. For some of us older folks, this is not a good option. For those of you younger though, it’s a different story. Still read the policy description.
There is no co-pay and no deductible. I have copied and pasted the exception list below to the travel policy (same for everyone). Pretty straight forward. I don’t think you will find any travel insurance policy that covers serious pre-existing conditions (heart disease, cancer, hep C). If you are not going to be in the States for more than 30 days a year then it does not have to be ACA compliant. If you are, then I would take the $95 penalty.
Exceptions to cover
23.1: The Company shall not be liable to pay
compensation for expenses which concern:
1) any illness, injury, bodily infirmity or
physical disability and consequences
thereof which have come into existence,
or shown symptoms, before the insurance
became effective or, if Annual Travel has
been chosen, before each trip abroad
(cf Art. 6.6),
2) cosmetic surgery and treatment and
consequences thereof unless medically
prescribed and approved by the
Company,
3) recreational treatment,
4) pre-existing diseases of the teeth and
dental treatment which is not pain
relieving and provisional and can await
the insured’s arrival home,
5) dentures, glasses, contact lenses and
hearing aids,
6) venereal diseases, AI DS, AI DS-related
diseases and diseases relating to HIV
antibodies (HIV positive),
7) medical assistance in connection
with maternity after the 8th month
(36th week) of pregnancy and after the
4th month (18th week) of pregnancy when the pregnancy is the result of
fertility treatment and/or the insured
is expecting more than one child.
Medical check ups are not covered in
any case,
8) induced abortion which is not medically
prescribed,
9) the use of alcohol, drugs or medicines
unless it can be documented that the
illness or injury is unrelated thereto,
10) intentional self-inflicted bodily injury,
suicide or suicide attempts,
11) treatment by naturopaths, naturopathic
medicines and other alternative methods
of treatment,
12) treatment for sickness or injuries directly
or indirectly caused while actively
engaging in:
war, invasion, acts of a foreign enemy,
hostilities (whether war has been
declared or not), civil war, terrorist acts,
rebellion, revolution, insurrection, civil
commotion, military or usurped power,
martial law, riots or the acts of any lawfully
constituted authority, or army, naval or air
service operations (whether war has been
declared or not),
13) nuclear reactions or radioactive fallout,
14) treatment performed by an unrecognised
physician or facility (cf also Glossary),
15) epidemics which have been placed under
the direction of the public authorities,
16) treatment by psychologists, unless
prescribed by the treating physician in
connection with emergency relief,
17) medical check-ups, vaccinations and
other preventative treatment,
18) the insured resisting or failing to comply
with the medical directions given by the
Company’s medical consultant and the
treating physician,
19) the insured resisting medical evacuation/
repatriation (cf Art. 6.8),
20) transportation which has not been
pre‑approved and arranged by the
Company. However, expenses equivalent
to the amount which the Company would
have reimbursed if it had been notified of
and approved the transportation shall be
covered,
21) medical treatment and examinations
which can await the insured’s arrival
home,
22) private room in hospital unless medically
prescribed and approved by the
Company,
23) any treatment which is not necessary
or which is not directly related to the
diagnosis covered by the insurance,
24) active participation in any motorsport
show, motorsport race or motorsport
competition, base jumping, paragliding
and mountaineering that requires
specialized climbing equipment,
25) any illness or injury resulting from active
engagement in any illegal act,
26) search and rescue services,
27) expeditions, mountaineering and
trekking in Antarctica, the North Pole
and Greenland,
28) injury caused by gross negligence and/or
with intent.
Hi David,
THANKS! for the excellent update.
So, the very inexpensive ~ very economical ~ coverage comes through (summarized):
~ not covering any treatments for pre-existing conditions,
~ no elective procedures (unless previously approved by the Insurance company),
~ no dental, even accident treatment, unless the pain is unbearable,
~ no treatment of sexually transmitted diseases,
~ no treatment of pregnant women in their last month of pregnancy,
~ no treatment that the insurance company deems unnecessary (a pretty big area),
~ treatment can be denied (with no appeal) if you get are injured in a terrorist attack, caught in a “civil commotion”, insurrection, revolution etc.
~ no treatment if that treatment can possibly be delayed until you return home,
~ no treatment if you disagree or “resist” the personal health choices of the Insurance company’s “medical consultant” – which means an insurance company clerk can deny treatment if you “resist” their personal choice about any treatment,
~ no treatment if you are either negligent or injured by someone’s intent.
The insurance company has written themselves some very broad exceptions/exemptions to having to pay for treatments, which explains why they can still make profits on just $195 per year.
All the best,
steve
steve
Steve, slight correction. If you are “actively engaged” in war, civil commotion,riots etc then you are not covered. In other words, if you are an innocent victim then you are covered. If you have mouth trauma (teeth knocked out) from car accident or falls (unless you are drunk) then you are covered (my friend had four teeth knocked out in a tuck-tuck accident in Thailand…bloody mess…fully covered). Their medical “consultants” are actually in-house medical doctors (not clerks) based in Denmark available by phone, email or text. From my experience dealing with them the last 11(?) years, they are very fair and have good morals unlike some companies I have dealt with. The company has been around for over 100 years so it’s not a “fly-by-night” operation. Anyway, I always recommend them to my colleagues and friends and I have not heard one complaint so far. You can probably tell I am a loyal customer…I guess I have been “lucky” with my dealings with them! Have a good one. David
Hi David,
“Actively engaged” can be interpreted several ways. A young man who watched a local protest here, but walked into a store when the police moved in, was arrested, charged, and deported for being actively engaged in the protest.
If you notice, this insurance company’s wording is sufficiently vague and ambiguous enough to allow them to deny many types of claims – and simply “resisting” (disagreeing with) the personal opinion of an Insurance company rep on the phone, is written legal grounds for them to deny coverage on that event.
I am very glad that you and your friend have gotten good service from them. This kind of service at modest cost is very valuable.
I was the contracts officer for a 500 person environmental company, with responsibilities to evaluate and negotiate $30 million of contracts a year. These years as the guy on the front-lines, working through contract disputes have made me a little gun-shy of some of this policy’s broadly-worded and ambiguously-worded exception clauses, exemption clauses, and dispute-resolution clauses.
It is professionally troubling when a big corporation specifically claims the legal right to deny payments solely for “the insured resisting or failing to comply with the medical directions given by the Company’s medical consultant“.
Do they invoke this clause? I would not want a “medical consultant” having the authority to revoke my coverage because I “resisted” their personal advice.
I do not advise for or against this coverage, but simply offer readers the opportunity to see and understand their written policies and risks, and then choose for themselves.
Happy Trails,
steve
I’m so confused. Too much information and it’s boggling my brain. I’m a US citizen living in South Africa. I’ve been here since 2011. I am married to a South African and our baby was born here in SA. I do go back to the states to visit my family at least once a year for 4-6 weeks. Do I now have to make sure I do not exceed 35 days?? I am not working at the moment so no income. I have Temporary Residence at the moment. Please advise. Thank you.
Hi Dana,
Are you required to file US federal income tax forms for 2014? (filed by April 15, 2015)?
As described above, if you are NOT required to file US federal income taxes, then you are also exempt from ACA participation. If you ARE required to file 2014 US income taxes, then if you go back to the USA for more than 35 days a year, you would pay $95 or 1% more in 2014 taxes. You might also qualify for the IRS’s category of “bona fide” resident of another country (See Publication 94 – as described above).
steve
I am also a US citizen living in Durban wondering if I can get obama care i have sister in the states whose address i could use and say i go back and forth. Any ideas help info greatly appreciated
Hi Julia,
You would have to meet the official residency requirements of the US state that your sister lives in.
It generally requires physically living in the state for at least 6 months a year. e.g. For New York:
“Resident
You’re a New York State resident for income tax purposes if:
– your domicile is New York State (see Exception below); or
– your domicile is not New York State but you maintain a permanent place of abode in New York State for more than 11 months of the year and spend 184 days or more in New York State during the tax year.”
and
“Your domicile is:
– the place you intend to have as your permanent home
– where your permanent home is located
– the place you intend to return to after being away (as on vacation, business assignments, educational leave, or military assignment)
You can only have one domicile. Your New York domicile does not change until you can demonstrate that you have abandoned your New York domicile and established a new domicile outside New York State. For more information, see the instructions for Form IT-201 or Form IT-203.”
Permanent place of abode
In general, a permanent place of abode is a residence (a building or structure where a person can live) that:
– you maintain, whether you own it or not, and
– is suitable for year-round use
A permanent place of abode usually includes a residence your spouse owns or leases. For more information, see Tax Bulletin Permanent Place of Abode (TB-IT-690).”
Under typical state rules, your proposed plan does not work.
We generally have to actually live in a state for more than 6 months a year, to claim residency.
steve
We live overseas and are covered while overseas. We travel to us about 33 days a year. Is there any coverage we can get for when we are in us?
What if the family (spouse and young children) members of an expat stays behind the US? The spouse in the US is unemployed. Can the family members enjoy a better insurance rate since the insurance can’t and won’t cover the expats who works overseas.
Hi Lucy,
I would call the ACA helpline (number listed above).
It is my understanding that if the husband stays out of the USA for 330 days or more a year, OR if he does not pay US income taxes, then he is exempt from ACA requirements.
If you and the family also do NOT file US income taxes (nor your husband), then you also are exempt from ACA requirements. If you choose to get insurance for you and your family, then as low income people, you could qualify for the subsidized healthcare insurance offered by your State insurance exchange.
Call your state’s helpline for details,
steve
Check up–US citizens cannot exclude the Obamacare tax upon the rich. If one’s income exceeds a certain amount, US citizens are taxed upon their investment interest. This cannot be excluded (form 2555) or credited (form 1116). And you can’s use Obamacare. But you gotta pay for it!
Yes, I couldn’t agree more… thanks, Steve, for this FABULOUS blog and for helping all of us… you’re a blessing!
I have a question concerning my parents:
1. They are 70 years old and Naturalized Citizens of US.
2. They have never worked in the US and have an annual income of less than $5000.00 per year in the US (doing odd jobs like tutoring, baby sitting, etc.).
3. They currently qualify for our state Medicaid program due to their low income. And they have been using it for doctors visit the last year.
4. They want to move back and live in their home country of India for the next 3 to 4 years.
5. They have an income in India based on stocks, rents from property etc of about $5000.00 per year.
6. India allows its former citizens to move back if they get a residency permit and can live for as long as they wish.
7. There is no mandatory health coverage in India (you pay as you go).
Questions:
1. Do they have to file for taxes here in the US (for both their income earned here in the US and India)?
2. Do they have to continue to get coverage under ACA?
thanks,
1. I’m a US citizen living in India for my pretty much my entire life. I’ve researched the tax laws and can tell you that they being US citizens they will have to file taxes in the US for any income earned in India. They will have to file taxes in India because they will be residing there. But in the end because of their age, double taxation laws and low income they might not have to pay any taxes.
Please do check whether they have to pay social security and medicare taxes.
2. Once they are legally non US residents they do not have to get coverage in the US but I would highly recommend you to continue to renew with Medicaid/Medicare. You can always fly them back to the US for major medical treatments. I say this because at their age they would not get health insurance in India.
Hi Steve,
Wow, this is the best information I’ve found anywhere on the web! As you say, when it comes to taxes, IRS, health insurance, and all things government, it’s all about as clear as mud…
Here is my situation. My husband and I had a great plan in Oregon through the exchange for all of 2014. We are moving overseas for a stint of 2 years (probably without returning to the US during that time). Under the rule of 330 days out and claiming the federal tax exemption for that, it seems we would not need to have health insurance in the US.
However, here is my dilemma. This insurance coverage we have through the exchange in Oregon is EXCELLENT for my two very expensive prescription drugs. Even the generic Malarone malaria medicine is on their formulary for a cost to me of $0! I would love to keep this insurance to be able to continue getting a 3-month supply of these medications from the USA. Unfortunately, the plan (silver) documentation states that it will not cover anyone who is not living in the state: “You must be eligible for coverage under the Policy. To be eligible: (a) you must be an Oregon resident; (b) you must live in Oregon for at least six months during each calendar year.”
We are looking into a bona-fide travel policy that also covers USA prescriptions (I don’t trust buying these life-sustaining medications in the country we’ll be living in). However, the premiums for coverage in the US are all around $1200/month which we cannot afford. I need to maintain some type of USA insurance since without insurance my medications would be $1500/month out of pocket. I’m just wondering if there is any workaround to keep the insurance even though I’ll be out of the country and not “living in Oregon.” We have a nonprofit in Oregon of which we are employees, so we will be collecting USA income, our bank is in the USA, and we have a shipping address which is actually an address for the post office’s special shipping department (which UPS does ship to).
We won’t actually be using insurance in the country we’re going to since medical care is extremely cheap and not worth the hassle of submitting reimbursement anyway. All we need is a basic travel insurance policy to cover evacuation, etc., above and beyond something in the US to cover my prescriptions.
If I can’t retain our current insurance policy, I’m also wondering how to find out if any of the subsidized policies will still cover me while I’m overseas so that I can still order my prescriptions under that insurance. I use Fedex to ship them. I did this when I was in the same country for 14 months a few years ago, but then I had Medicare and just kept getting my prescriptions once a month in the US and shipping them Fedex (special Medicare policy for my medical condition that has since expired due to a change in my condition… I am not retirement age). Thanks for any advice!
Hi seamsmg,
You seem to have very good understandings of these things. Well done!
Unfortunately, when we did the weeks of research with the official ACA technical experts on these things – the ACA experts came back every time to say that you have to be a resident of a state to qualify for subsidized coverage. Since you won’t meet Oregon’s requirements, we don’t see any way that you can get subsidized coverage under the general ACA rules.
Wish I had better news,
steve
Sorry I didn’t reply to this. My reply is below. Thanks. Seamsmg
Hello,
I’m an American living in India for pretty much my entire life. I was born in the US, though. My current income is below poverty levels in the US. I would like to avail Medicaid so in case of some major medical treatment I can fly out to the US and get treated.
I was a student at Boston University between Sep 2002 to May 2003 and therefore vote from Massachusetts. Does that make me eligible for medicaid from MA? or can I enroll in any state’s Medicaid program?
I would also like to purchase the insurance for next year as I might move back to the States in 2016. My reason for getting insurance next year is that I can deliberately lapse the 1 year pre existing conditions clause while I’m not in the US (year 2015). And when I arrive in the US in 2016 , I’ll be fully insured.
Please provide answers for both Medicaid and regular insurance purchased off the marketplace.
Can I purchase a cheaper plan for 1 year and upgrade it the year after?
Hi Varun,
Everything the ACA/Medicare/Medicaid experts told us was that you must meed the state’s requirements for residency, to qualify for US govt. subsidized healthcare – which means living in that state.
Many US states require that you live in the state for at least 6 months of the year – to qualify as a resident.
Check with the state you intend to live in,
steve
I am confused. I thought that as long as we had Medicare, that it didn’t matter where we lived; I mean what country we lived in… I live in Ireland and if I need some major medical procedure, aren’t I entitled to return to the U.S. for that? I DO understand that since I do not have supplemental insurance that I would have to pay for some of the major procedure, but we WOULD be able to return to the U.S. with our Medicare card right?
Hi PK,
I mis-spoke if I implied that Medicare patients must maintain American residency in an American state. That applies to ACA and Medicaid related coverages.
I don’t know Medicare rules, but a friend explained that he needed to continue to pay for Medicare part B coverage to be able to access it easily – and there are rules about when we can apply and when we can change Medicare coverages: like the current Oct 15 – Dec. 5, 2014 open enrollment period:
http://www.cms.gov/Center/Special-Topic/Open-Enrollment-Center.html
and
Click to access 11219.pdf
steve
Thanks so much for your help. I’m looking into a good global insurance that will still cover my meds in the USA. Unfortunately, all of them are saying “we don’t cover pre-existing conditions” (which is what my meds are for, a kidney transplant) even when they say that they will if I have proof of continuous coverage! So I guess I won’t be able to get ANY health insurance (India does not have health insurance and I’m not buying my medications there). So I’m kind of up a creek with this. I have been talking to the company that insured me in 2014 in Oregon through ACA. They thought that as long as I have a residence address in Oregon that it wouldn’t matter if I’m “traveling” for more than six months. However, I will also be eligible for the foreign earned income tax credit. Which makes me in-eligible to be an Oregon resident: http://www.oregonlaws.org/ors/316.027. What does someone like me do? Go without insurance entirely? I guess we’d at least be exempt from the penalty since we qualify for the foreign earned income tax credit. Although our income comes from our organization in the USA. We receive no income from another country and do not have health insurance from that country. What are we to do?
What happens if I decide not to take the foreign earned income credit? Can I do that and then maybe still get the health insurance subsidy and get Oregon health insurance? Our combined income will be really low… we’ll be mostly living on savings and won’t be drawing much of an income from the organization we started. How do US embassy workers get US health insurance? I’m sure the government has a good plan for it’s own employees… (Just wondering…)
Hi seamsmg,
When the Feds created ACA, and when Oregon created their insurance exchange, no one considered or included or addressed the needs and situations that arise for American citizens who live abroad part of the time. We really have no other insights on how to help you.
I would call the ACA helpline, and ask to speak with a technical expert who knows the rules for Americans living abroad – to see if they have come up with any good work-arounds for people like us. It took at least 6 phone calls, and roughly 2 weeks of efforts (waiting for them to research our questions), to get the answers we present above – so, be prepared to spend some time on hold – and time waiting for detailed answers.
Please come back and tell us what you find out.
THANKS!
steve
Hi Steve,
Good news. I talked to the rep for the 2015 insurance policies with the company I currently have insurance with from the exchange (Oregon Health Coop, which is a nonprofit insurance company). He wrote me an e-mail that I’m definitely keeping in case there’s a problem! Here’s what he said:
“I asked the following question to management: If a Member is out of the country on business for more than 6 months will their coverage be canceled?
Their answer: Technically the prospect client will still be considered an Oregon resident because she is traveling for work. As long as he/she pays for their premiums every month he/she should be fine. They can be out of the country as long as they want because they are not establishing residency somewhere else due to his/her travel for business.
Also, out of the country we only cover life and death situations.”
Although since Oregon does not consider me a resident if I claim the foreign earned income tax exemption, I don’t know how that plays into it. We’ve decided, if possible, not to claim the credit since we won’t be earning that much anyway. But now we have to talk to our tax person to see if we can opt out of that. I don’t see why we would have to claim it if we don’t want to. It’s a nice perk, but better for me to have health insurance than be considered a foreign resident!
Hi seamsmg,
Excellent news. Each insurance company company can set their own policies – that are allowed go beyond the State’s minimum requirements, as long as their policies meet the state’s minimum qualities.
Please come back and tell us how it works out,
steve
Hi Steve. Thank you again for this forum and for all of the useful information that you have provided. it appears that most of this conversation relates to either Medicaid or ACA subsidized plans. Have you found any information about residency requirements for full pay private plans (guaranteed issue under ACA guidelines). It appears that some plans in certain states do cover routine care abroad. I curious what is required in terms of residency in order to putchase such a policy at full rate.
Hi Aaron,
Yes, the ACA expert said that under the system of Bronze, Silver, Gold and Platinum plans, that some states did have Gold and Platinum plans that cover overseas medical care – but she said that it was a state-by-state insurance company specific offerings.
So, we have to check with the insurance companies in the state we are interested in, as there are no general nationwide requirements.
Wish I could tell you more,
steve
My daughter will be working as a full time employee in London starting in February. She will be covered under the UK national health plan and paying into the system. If she were to have a serious illness such as developing a tumor or heart disease, can she return to our home in Florida and sign up immediately for ACA. Say she is aware of the problem on March 1st and decides to come home immediately. If we file the paperwork to purchase ACA on that date but the process takes a couple of weeks to be approved, would she be covered retro-actively to March 1st so that all treatment would be paid for? I have contacted our state senator and his staff had no clue. I was told possibly, maybe, not sure, and probably by folks at healthcare.gov and the senators staff members. Nobody could give a definitive answer. This could end up costing tens of thousands of dollars if they reject a claim based on the above scenario. Thanks for your wonderful blog. All authors gave fabulous questions and you provided excellent answers.
Hi Eric,
A few thoughts/questions/issues come to mind:
~ If she has become a resident of England, and is working full time in London – then how would she qualify as a state resident?
~ Each state insurance exchange has different rules, so your state’s exchange rules would seem to govern her situation.
~ The ACA technical experts with whom we discussed expat issues said that we have to apply for coverage from the insurance exchange BEFORE we would return to the USA – and that it takes time to qualify for coverage AFTER we return to the USA – after living outside the USA as non-residents, and that we have to actually return to the USA to complete the process – which seems to rule out trying to get medical bills covered retroactively when applying at the time of illness.
~ The open enrollment period for 2015 is now… so I’m not seeing how she could be qualified for getting ALL 2015 medical bills paid for, unless she files for coverage… now…? and pays for ACA coverage … now ?
~ Expats who formally opt-out of ACA/Obamacare by claiming they are not US residents, are allowed to come back into the USA throughout the year, and as non-residents they have a short window of open enrollment time (30 days?) period to apply – but that would cover medical expenses that happen after she is accepted onto the insurance company’s policy.
???
Again, these things are NOT legal advice, and only starting points for asking questions of your states actual exchange – and insurance company representatives. I suggest: Contact a qualified insurance company rep.
steve
So then basically, if she were to contract an illness needing emergency or immediate care, she would have to be treated in UK until paperwork and premium payment were completed here in the US before she could return to the states for care here in the states. So basically, 6.3 million expats are exposed to not being able to have urgent medical care in the US and will be confined to being treated in a foreign country. As I stated, up to now we had a policy in force that allowed her to receive treatment out of country as well as in the US. Due to Obamacare, this option has been deleted. That is a sad state of affairs for our country. Most foreign health insurance policies exclude treatment in the US. There should be a provision for American citizens to have some kind of catastrophic coverage while living and working abroad. This is the new American Way. Its interesting that the 5 million illegal immigrants that have been granted immunity from deportation have a better chance at receiving emergency care in our hospitals than our citizens that have chosen to be expatriates. We spiral slowly into the mire. Thanks, Steve, for your insightful views on this matter.
Hi Eric,
Medicare (retired folk) qualified expats can return to the USA for subsidized care – a big %’age of the 6 million total expats, so, only a fraction of the 6 million expats are uninsured.
Similarly, Obamacare/ACA did not force insurance companies to stop some of their policies – insurance companies simply chose to continue some policies, change some policies, and add some policies. Insurance companies CAN STILL offer international coverage, they CHOOSE not to.
Obamacare/ACA describes guidelines for 4 different levels of coverage types (Bronze – Platinum), but the press and Right Wingers focus on the lowest – cheapest – version: “Bronze”.
If people choose to buy the cheapest car, and the car meets minimum government safety standards – Do we blame the government because the car does not have a computer display in the dash?
When we buy an ultra-cheap Yugo, do we blame the government because it does not have On-Star internet access or WiFi in the cheap car?
Many insurance companies continue to offer more expensive products/packages that cover overseas protection – but, as always: More exotic features and more benefits cost the buyer more than the cheapest version.
So, this really is an issue where the Free Market has not responded to cover the expats who want dual US-International health insurance with modestly-priced insurance policies.
The “American Way” is often thought to be met by the Free Market, yes?
Free Marketeers insurance executives have simply decided that it’s not sufficiently profitable to offer cheap international+US coverage policies. The hassles of dealing with a variety of US medical billing systems, plus the costs of dealing with the huge variety of international medical billing systems (to avoid frauds perpetrated by international expat cheaters) would be a likely reason that insurance executives have decided to not offer cheap coverage. ???
Have you asked about the features of Gold and Platinum insurance packages from every qualified insurance company in your state’s insurance exchange?
Best of luck finding an insurance company that has Gold or Platinum policies with the features you want!
We have had some past readers write in to say that they found insurance companies in their state that did include international coverage – and who offered much more than the bare minimums of ACA “Bronze” plans.
Go for the Gold!
steve
We are currently enrolled for 2014 healthcare.gov plan in texas state. In 2014 we traveled outside united states for personal reasons and still living outside USA. Expected to return back sometime after July 2015 to usa and live in texas, which makes healthcare.gov open enrollment closed. We don’t want to buy insurance from Jan 1st 2015 since we won’t be needing then for 1st 6 month since we are living outside USA. How do we get insurance thro healthcare.gov b’cas we are qualified for tax subsidies. we don’t want to buy insurance from open market, which we cannot afford. There was article in this site, mentions that traveling into usa qualifies for Life Changing event and we can buy insurance thro State Exchanges. It doesn’t mention anything about Federal offered (healthcare.gov) exchange. B’cas Texas doesn’t have State Exchange. Only Federal Exchange. Are we forced to buy 2015 insurance only during open enrollment before 2015 Feb 15th or can we wait till we get back to USA (Texas) and then apply thro healthcare.gov for Texas and get subsidized insurance. Anyone Help on this matter with some documentation from website is really help. Thx for all. This is very confusing. Things are not clear.
HI Gp,
Near the beginning of this article, read the 3’rd section called “~ What if I return to live in the USA during the year? ”
(at https://yucalandia.com/living-in-yucatan-mexico/aca-obamacares-effects-on-american-expats-living-abroad/#What%20if%20I%20return%20to%20live%20in%20the%20USA%20during%20the%20year )
This section describes how Americans formally living outside the USA (meeting the requirements of IRS rules and IRS filings**), can enroll in ACA insurance programs during the year, because returning to the USA is a “qualifying event” for people who formally qualify as living outside the USA.
Enjoy,
steve
.
.
.
**The IRS rules are also posted above: ~ Exemptions for Americans Living Abroad ~ 330 day IRS physical presence test & IRS “Bona Fide” Residence Test ~ https://yucalandia.com/living-in-yucatan-mexico/aca-obamacares-effects-on-american-expats-living-abroad/#330%20day%20physical%20presence%20test
Thank goodness for your information. I haven’t come across anything so comprehensive as you answer.
I’m lost in finding an affordable policy for health care because of my situation. My wife and I are in our 50’s and have been expats in Australia and NZ for over 5 years after living in California and selling our home and property. We were living on temporary visas abroad and were able to always procure excellent overseas health coverage. We made enough when we cashed out to live on and neither of us currently work or are looking for work since we returned last week to America.
We are visiting family in CA, but no plans to stay here for more than a month or so. We are looking to travel from state to state and therefore will not establish any state residency. So without an employer and a state to call home, I keep hitting a wall finding coverage. I’m fairly confident we won’t have tax issues for 2014 since we spent over 330 days outside the US, but probably need something in place for 2015, assuming we don’t leave the country.
I find the advisers on the ACA aren’t much help in directing me to sources where I can go for coverage with a vagabond lifestyle. Any suggestions?
Hi Larry,
Good good questions. Unfortunately, when the insurance companies negotiated the ACA/Obamacare terms and conditions, they did not include anything for us retired travelers.
According to one ACA technical specialist: You could simply choose a state in which you have a relative who is willing to let you claim their home address as your home – and you then file taxes there, get a drivers license, enroll to vote, etc, to establish/maintain legal residency. You would then find an insurance company within that state’s insurance exchange that has a policy that covers the treatment you want when traveling.
That means you might not find a Bronze (aka cheap) plan that fits your needs, but you might have to find a Silver, Gold, or Platinum level plan that covers you when traveling, etc.
Look forward to hearing updates next year (or next December – before the close of the open-enrollment window) on what you find,
steve
This was exactly the info I needed to stop freaking out, haha. I just want to say thanks!
And since it took me a minute to actually locate it, here’s the direct link on the gov website that states the 330-day rule:
https://www.healthcare.gov/quick-guide/eligibility/
My apologies if this has already been discussed ad nauseum. Isn’t there a catch 22 here in that one must enroll in a plan if one resides in the US any more than 35 days yet will not qualify to enroll in a plan unless one lives in a state for more than 184 days? Have the Feds offered any guidance for those who may not be out of the states for a full 330 days yet who don’t meet the residency requirements of any state?
Hi Aaron,
As described above, expats returning from living abroad can start their process by enrolling online into a state exchange before they actually get back, using a family member’s address in the same state. Once in the state, they declare their return to the USA as “a qualifying event” for entering ACA/Obamacare outside the normal October-Dec. application period – applying within 30 days of re-entering the USA. You then go through the state’s procedures for becoming a resident within that same 30 day period: get a state driver’s license or ID, register to vote, etc. As described in the NY State requirements, NY also requires an intent to stay in NY permanently.
If you are outside the USA for more than the allowed 35 days (331 days out in leap years), but do not qualify as a resident in a state (by not actually living there for the rest of the year after returning to the USA or not getting a state driver’s license etc), then you don’t qualify for ACA/Obamacare.
Hope that helps,
steve
Hi Steve, I wrote a while ago but can’t find the thread and want to clarify again. I am American but live in South Africa. I am married to a South African and had a baby here. I do not work. My husband supports us all. I have a Temporary Residence Permit to live in South Africa. The only “income” I receive is $5000 a year that I take out of a beneficiary IRA (in the US) my father left me when he passed away. I only have South African health insurance although I’m pretty sure it covers me when I visit the US. I did not return to the US in 2014 but will exceed the 35 day limit in 2015 because I have to come home for weddings and need to introduce my baby to my family. SInce the visit will be longer than usual I will be out of the US less than 330 days, in the US more than the 35 day limit. It will be 3.5 weeks in January, 2 weeks in February, and about 3-4 weeks in July 2015.
My questions are these: Do I need to file a return earning that little income? My accountant said I don’t, but I’ve read I have to file if I earn more than $3950 and am married, filing separately. If so, do I have to claim my daughter in any way? Can I count the days from January 2015 on my 2014 return and then claim the February and July days next year so not to exceed the 330 day limit in a 12 month period? How would the penalty fee be calculated in my case? 2% of the $5000 I earn? Should all accountants know how to help me? I am currently looking for a new one and not sure where to turn. Thank you in advance for all your help with this. I am truly confused and worried about it all.
Hi Dana,
Did you read the section on being a bona fide resident of another country (above) – which allows you to be exempt from ACA/Obamacare?
The few details you describe about your situation makes it sound like you qualify.
Does your South African insurance coverage meet the “essential benefits” required by ACA – as described above? If so, then you do not need to pay any penalties.
Did you read (above) about “Special Exemptions to Participating in the ACA / Obacare Program”? – specifically about the exemption for having low gross income?
Re tax issues: Have you read our master article on US taxes for people living abroad? https://yucalandia.com/answers-to-common-questions/irs-tax-issues-for-americans-living-and-working-abroad-in-mexico-master-article/
The main IRS publication covering US citizens living abroad is Publication 94.
As published in our article on US Taxes:
“Tax Guide for U.S. Citizens and Resident Aliens Abroad
Got Worldwide Income?
Armchair expat experts might know that the 2013 Publication 54 – Internal Revenue Service, Tax Guide for U.S. Citizens and Resident Aliens Abroad tells us you have to consider your total worldwide income: Single filers must file a US return for worldwide gross income exceeding $10,000 for TY 2013, and joint filers must file a US return for gross income exceeding between $20,000 to $22,800 depending on your ages.****”
Enjoy,
steve
Oh no! Confused again! I live in Europe. I thought that if you made under $25,000 as a single person, that you didn’t have to file? I only receive S.S. and it’s under $20,000. I haven’t filed for the past 6 years. Am I wrong?
Hi Nancy,
Read IRS Pub 54 :
For 2014, filing requirements based on worldwide income section:
Single……………………. $10,150
65 or older……………….$11,70
Head of household……………$13,050
65 or older……………….$14,600
Qualifying widow(er)………….$16,350
65 or older……………….$17,550
Married filing jointly…………..$20,300
Not living with spouse at end of year
……………………$ 3,950
One spouse 65 or older………$21,500
Both spouses 65 or older…….$22,700
Married filing separately………..$ 3,950
at http://www.irs.gov/pub/irs-pdf/p54.pdf
Filing Requirements – page 3.
So, even if you don’t owe any taxes,
we generally still have file.
steve
Hello!! I lived outside the U.S. for 2013 and the first 240 days of 2014. I returned to the U.S., traveled for 2 months, and then got a part time job where I made around $1,800 in November and December combined. I checked the “out of country for 330 days box”, but now I’m wondering if that will be a problem. I have insurance now, but I didnt have it at all in 2014. Do they check to see the exact day you re-entered the country?
Hi EB,
Since your total income for TY 2014 was so low, you would not owe an ACA fee for being in the USA more than 330 days in 2014.
We have no idea how Homeland Security/Customs & Border Patrol shares data with the IRS, but since it is all computerized, the IRS could automatically check your US entry and exit dates if they chose to. We also have no idea of what checks the IRS makes on returns that are not audited.
If you are worried about full compliance with IRS rules, you could file an amended return (1040X) for TY 2014.
We are not tax professionals, so we don’t give professional advice: We just quote the regulations & laws.
steve
hi,
julie in china posted this link on jan 16 2015
12. Are US citizens living abroad subject to the individual shared responsibility provision?
Yes. However, 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 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 coverage for that year. In general, these are individuals who qualify for a foreign earned income exclusion under section 911 of the Internal Revenue Code. 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. See Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, for further information on the foreign earned income exclusion. Individuals who qualify for this rule should file Form 8965, Health Coverage Exemptions, with their federal income tax returns.
older material i have read always stated that if you were abroad full time (or more than 330 days) that you were considered “in compliance” with the law (the “as if” you had coverage rule).
however i have recently found something seemingly more up to date, that is the instructions for form 8965 (health care exclusions) where there is an exclusion — exclusion c — for people living abroad.
the part i have copied from julie’s link first states that not being physically present in the United States for at least 330 full days within a 12-month period are treated as having minimum essential coverage for that 12-month period, that is they are in compliance/as if they have coverage. however at the bottom there is this: Individuals who qualify for this rule should file Form 8965, Health Coverage Exemptions, with their federal income tax returns, which means you have to also file for an exclusion, in this case exclusion c.
how can you be in compliance (and therefore not need an exclusion) and need to file for an exclusion? if you need to file for an exclusion, how can you be in compliance?
if i am in compliance can i not simply check the box on line 61 of form 1040 and be done with it? or do i have to leave the box unchecked (stating that i am not in compliance — although i am — and file form 8965 with exemption c? or do i do both, state that i’m in compliance and file for an exemption as nonsensical as that sounds?
i don’t have any foreign income so form 2555 foreign income exclusion does not apply to me. am i confusing myself, that is, does the part at the bottom that talks about form 8965 only apply if you are using the foreign income exclusion? it’s not really clear to me if that part only applies to the sentence immediately preceding it or to “living abroad” in general.
additionally i use my U.S, address on my tax return as this is the address on my 1099 even when i am abroad for the entire year. someone else above talked about this and how this could cause problems with his eligibility with his U.S. addressed bank account (it’s a patr act thing). if i am in compliance and i can simply check the box on line 61 of the 1040 and not worry about form 8965 that would potentially make my life a lot easier, but my main concern is to do everything with the irs properly (as they see it) to make them as satisfied with me as possible.
i’ve also read that employers are not required to send insurance info to the irs until 2015, so unless you get audited or they arbitrarily decide to ask you for proof of insurance how can they know if anybody that checked the compliance box is actually in compliance?
thank you
Hi Eric,
I may be missing something, but since you did not have any 2014 TY income, you do not have to file with the IRS.
When I used our tax preparation software, I simply checked the line 61 box. If you are in compliance, then there are no penalties.
steve
Hi Steve.
After sending in another post following your reply (sorry for the migraine) I reread paragraph 12 from Julie in China’s link and noticed that they use the term “this rule” earlier in the paragraph, so it seems obvious to me now that what they mean is the answer to the question posed at the begining which is: Are US citizens living abroad subject to the individual shared responsibility provision? The answer being that they are are treated as having minimum essential coverage for that 12-month period (in compliance) so I think i’m clear on that, but then why would they ask you to file form 8965 which is for exclusions (also in the wording they say “should” not must).
So I guess the only question I really have left is “should” I submit form 8965 or simply check box 61 and if I do submit form 8965 should I still check box 61 (since I’m in compliance) even though it’s contradictory to be in compliance and submit for an exclusion?
Hi Steve, thanks for your reply
sorry but I left out that I do have investment income that is well above the limit to file a return although most of it is long term capital gains taxed at 0% so I will owe no taxes. So I will have to file a return and 1% of my gross income is quite a bit above $95. And since I was abroad all of 2014 I should not have to pay any penalty anyway.
I’m still confused whether I have to file form 8965. The last line from the paragraph I copied in my previous previous post is:
Individuals who qualify for this rule should file Form 8965, Health Coverage Exemptions, with their federal income tax returns.
What do they mean by “this rule”? The paragraph has a number of different “rules”, first it talks about the 330 day/physical presence rule, then the bona fide resident rule, then goes on to talk about foreign income exclusion. the sentence immediately before the last one that talks about form 8965 talks about a special situation for gov employees that cannot deduct all of their foreign income.
So what is “this rule”? Do they mean that in general, US citizens living abroad (whatever test/rule they use to satisfy this) are subject to this provision but are considered in compliance? If that is so does anyone living abroad who is in compliance also have to file form 8965 and if you do you also check line 61? That seems contradictory
My 1099 from my brokerage has my US address and that is what I will be using on my return even though I was abroad for the entire year in 2014. Should I simply check line 61 and move on and if the irs questions me later inform them that I was abroad and send them form 8965 then or should I include form 8965 with my 1040 return with exclusion c checked for the full year, and if so should I then not check line 61 on the 1040. Again checking line 61 which states that I am in compliance (Since I am!) and sending in form 8965 with an exclusion seems contradictory but not checking it states that I am not in compiance (but I am so that seems wrong).
again this is the sentence at the end fo the paragraph:
Individuals who qualify for this rule should file Form 8965, Health Coverage Exemptions, with their federal income tax returns. What is “this rule” and should everybody who lives abroad and is “in compliance” still submit form 8965 with exemption c even though it seems contradictory?
Sorry if I have given you a headache
Thanks so much for your help
Greetings…I am confused like so many…my daughter, husband and 4 grandkids live in Honduras as full time missionaries. They are residents of Honduras and have been for the past 4 years. They do not pay taxes in Honduras because no one does! They travel to the USA once a year during the heavy rain season and usually stay for about 2 months. Their annual income is well below what is considered the poverty level. Do they have to get Obama care? My daughter would not ever use it as she does not trust US medical practices.
Hi Brooke,
Did you read the IRS limits for who has to file (see link above) ?
If they do not have to file with the IRS due to low 2014 income, then they are simultaneously exempted from ACA/Obamacare.
If they are required to file with the IRS (based on the IRS link above), then read the IRS’s rules on qualifying as “bona fide” resident requirements (see link above). If they can qualify as “bona fide” (permanent) residents of Honduras, then they are exempt.
If they are required to file IRS tax statements for 2014, AND if they do NOTt qualify as “bona fide” residents (under IRS rules), AND if they spent more than 35 days in the USA in 2014 (failing the IRS’s physical presence test), then they have to pay one the IRS fees of either $95 (for single filer) or 1%,
steve
Hi Yucalandia,
I have some interesting information that will help many of your expats in Mexico and elsewhere by giving them a viable and legal alternative to the ACA. They can become exempt by becoming a member of this program. You can go to http://www.medicalcostshare.com for more information. After reviewing the site I would be happy to answer any questions you might have and even write or help write an article for your blog if you wish. When you email I can give you my cell number. By the way I lived in Cancun from 1994 to 1999.
Best regards,
Thomas
This is a front end for Liberty HealthShare? “members are exempt under Obamacare as a religious exemption”? so I pay $449 a month, but what are you backing up the payment of my medical costs with? what assets do you have? how many pay into this group?
consider me suspicious … Seguro Popular is real hard to beat
sdibaja,
Yes we are authorized representatives of LHS. We just have a better marketing website. The price and the program is exactly the same. LHS has a 30 year track record but has become much more popular with the passage of the terrible ACA. There are tens of thousand of members now and it is very solid. Assets? This is NOT insurance. There are no guarantees. However, have you ever had, or known someone who had a traditional insurance claim denied? How good was your guarantee on that day?
Members voluntarily pay an amount each month which is used to share each others medical expenses as they are needed. It is a very health conscious group. It is like the difference between a bank and a credit union. One is for profit the other is non profit but they both do similar functions. Of course you should be suspicious. I was too. Now I have been a member for nearly a year, seen how it really works for me and for many friends that are also members. It exists solely to pay members medical expenses.
Its not for everyone. It may not be for you. If you have Seguro Popular and are happy with it thats great. Our program allows you to be EXEMPT to Obamacare so you can spend more than 35 days a year in the US should you want to. You actually do get to choose and keep your doctor, and be protected on both sides of the border. And as you already know it is very affordable as compared to other International Plans or health insurance in the U.S. http://www.medicalcostshare.com Its not health insurance. Its better!
I am already exempt, and can travel all I want in the US and still be exempt.
Your reply made me even more suspicious, just canned sales talk
thanks anyway
I’m in a transitional period and am wondering about what to do. I was employed full-time for many years with good insurance coverage but decided to make a life change with a “gap year” where I’ll be completing household projects for two months (uninsured during this time) and then traveling the world for nine months, covered an international travel insurance policy. Does this insurance (via World Nomads) meet the standard for having health insurance coverage?
I am traveling through inexpensive countries backpacker style on a low budget, and don’t have money to spend on expensive US health insurance (when I won’t even be here). I live in the state of Georgia which has been resisting ACA. I won’t be in the US and needing coverage until August of 2016. Thanks for any advice.
Sevenarian,
Read the section above on minimum essential coverage requirements, and see if you particular policy meets the minimum types of coverages.
Each travel policy has it’s own quirks, so there’s no was anyone can tell a priori what you travel policy will cover during the future “gap year”.
Happy Trails, steve
*Ultimately, it may be cheaper to just pay the 2% “tax”/”fee” to the IRS for not having coverage, especially since you will have such little or no income during the “gap year” . ???
another method… if you are a legal resident in Mexico you can get covered by Seguro Popular for free (my choice). http://www.seguro-popular.salud.gob.mx/
My husband, son and I will be moving to Mexico in August, 2016. We will stay in Mexico during the school year, so we will return to the States sometime in June and leave again in August when school starts. In 2016, I will have worked in the US until we move in August so we will have health insurance while I’m working. Once we move, our income will only be that of what my husband draws from his SEP because he will only be 58.5 years old next August. Since for the majority of each year we will be in Mexico, I was planning on buying some kind of International Healthcare insurance to cover us when we are in Mexico. For 2016. will we be penalized or required to pickup ACA after I quit my job and we move to Mexico? After 2016, we will be solely living off my husbands SEP which is not much, will be required to use ACA then?
Hi Pamela,
I only know the general written/published rules for national ACA/Obamacare => I don’t know the specifics of various state plans.
US citizens who are residents of the USA are required to have qualifying healthcare insurance or pay a penalty with the 2016 Tax filing (in April 2017) as follows:
“If you don’t have coverage in 2016, you’ll pay the higher of these two amounts:
~ 2.5% of your yearly household income (net income above the IRS tax filing threshold, about $10,150 for an individual)
or
~ $695 per person ($347.50 per child under 18) ”
“In future years, the fee is adjusted for inflation.”
ALTERNATELY: ACA has a “3 month coverage gap” as paying for 1 day of coverage during month #3 of no coverage:
“Under ObamaCare, you are allowed one short coverage gap exemption which covers less than three months in a row without coverage each year. In other words you are exempt for two full months, but need to have coverage for at least one day of the third month.”
http://obamacarefacts.com/obamacare-coverage-gap-exemption/
This means that it might be cheaper overall to pay for qualifying healthcare insurance for Sept + 1 day in October… which means you would not pay any penalties for going uncovered in Nov + Dec + 30 days of October …
What do you think?
steve
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Great website and hugely interesting comment section. Now I have a question to ponder and would appreciate feedback. First some background:
I’m bona fide/physical presence resident of a European country with four kids and non-US spouse. I currently fill in tax returns as married filing separately because my spouse doesn’t have any requirement to file in US tax returns; I claim all the deductions and pay no tax on my earnings. So far, so good — I’m not liable for the ACA penalty because I’m bona fide resident of a foreign country.
This next year, things may change. I am looking to move back to the US while spouse remains behind to sell the house, and isn’t likely to join us for more than a short trip or two (doesn’t want to become tax resident in the short-term). When I move back to the States, I understand that I have 30 days to apply for health coverage, and can qualify for the special exemption to apply for an ACA plan due to my returning from abroad.
However, after playing around with the ACA site, I keep running into issues about how to fill in the form since my spouse isn’t going to be with me, and since his income isn’t US taxable.
Do I file as separated and use only my own income as cost-basis? This seems to get me some pretty good deals out there, including the option of CHiP for my kids.
Hi DSHL,
What excellent descriptions of the details of your situation.
I would call the official ACA helpline to ask how to get their website to work for your situation. If the initial clerk who answers your call does not know, they have happily directed us to technical specialists and supervisors in our past calls for information.
If you could be so kind, please return here and tell us what you discovered,
steve
I am US citizen, live in Tijuana Mexico and work full time in San Diego CA. I cross the border everyday then go back to Mexico. I live with my son (US citizen also, 9 months old) and wife (in process of getting emigrated).
Do we all need health insurance ?? Thank you.
Hi Rudy,
Unfortunately, you do not meet the IRS’s “physical presence” test for being exempt from Obamacare/ACA.
You might possibly meet the IRS’s “bona fide resident” of a foreign country, if you have lived outside the USA for 365 days at some point. Read the IRS’s requirements for “bona fide resident”.
From the sparse details, I understand that you should either get qualifying healthcare insurance or sign up for the California ACA program … but other readers living in Tijuana have said (a year ago) that California was requiring an official California address.
or… you could just pay the IRS ‘fees’ annually … for you and your son ??
Sorry we can’t help more,
All the best to you and your family,
steve
Thank you for your response Steve!
Thank you for the great blog. My wife and I live abroad. Our two children live and study in the US. One is 16 and the other is 20. We file our taxes abroad and claim both of our children. How can they get insurance if my wife and I don’t have a US address. Can they apply on their own even if we claim them on our taxes?
Hi Steve,
YOWZA ! … your circumstances are not quite specifically addressed in the ACA rules.
Let’s first assume since you are filing as a non-resident with the IRS, you likely are inside the USA for less than 35 days a year.
ACA/Obamacare is structured for each of the states where the person resides, to operate the state exchange – with their own state-specific quirks => which points you to the state(s) your kids are in. ( with you being out of the USA for at least 330 days a year disqualifies you from qualifying as a state resident0)
Are your kids legal residents of the states where they live? If so: Have your kids check with their state’s exchange to find out their options for state-$$-subsidized insurance.
or: They can always just otherwise get normal private (qualifying) health insurance.
For you to qualify, you’d have to also start paying the IRS as a US resident. Next, By the time YOU tried to prove residency in the kid’s state, and qualified, and then paid for 4 people on ACA-subsidized insurance, even the ACA subsidized coverage for 4 people would almost assuredly cost more than the cost of insurance for two kids. ?
Happy Trails,
steve
Hi Steve, I am in a really tricky situation!
I am a US citizen and am about to move back to my home town in Florida with my british husband and son who are both now green card holders. I am pretty sure we have managed to cover our situation, however my mom and dad who are both British and are looking at emigrating to the USA are having issues.
My father is over 70 and has a pre existing condition and we can’t seem to find any coverage for him. We have looked in to Bridge but this is apparently not recognised by Obama care and he would face penalties. Looking at healthcare.gov we would be looking at costs of around $20,000 a year just for him and due to some capital Gaines and investments which would be considered as income, the 2.5% fine would also be high!
I am really unsure what to suggest to them at this stage!
Any help would be greatly appreciated!
Many thanks,
Jade Hollis
Hi Jade,
Have you contacted Florida’s ACA insurance exchange?
As a non-resident moving back to the USA, you are given a 30 day window to formally apply for ACA-qualifying coverage when you return to the USA.
Re your husband: Check with your Florida exchange on what is available for the husband of a US citizen resident of Florida.
Your son should be covered under your (future) US policy, until he is 26 years old.
steve
Hi there,
Thank you so much for your fast response! Yes we have looked at Floridas ACA and my husband, son and I all qualify for a healthcare package through that but for some reason my father does not as he is over 70 and has a pre existing condition?
Hi Jade,
Since your father and mother are not Americans, then they would not be owing US taxes and they would owe no 2.5% fine for not having ACA qualifying insurance.
That means they could go out-of-pocket for medical treatments … or find an insurer that accepts pre-existing conditions for foreigners (=> $$$ ?).
Wish I could offer you more advice than this,
steve
Hi Steve,
Thanks for your advice! After spending all day looking into it I thought I would share some of the information I came across in case it helps anyone else. It appears that as ACA are unable to provide my father with a healthcare policy due to his age and as he is too old to qualify for most other ACA recognised health care policies he will not be fined the 2.5% which means he can get a health care policy through a company such as “Bridge” which specifically provides expats or seniors with insurance in the gap between becoming green card holders and the 5 years they have to wait before being eligible for Medicaid. Due to his age he will then qualify for Medicaid once he has been resident in USA for 5 years.
Fine way of describing, and pleasant paragraph to
take information on the topic of my presentation subject, which i am going to
present in academy.
Dr Fry
You seem to be a wealth of information and I’m hoping and praying you wouldn’t mind giving me a bit of advice..
I’m an American expat married to an Australian who is a green card holder.. We have been living in Malaysia for the last 5 years and his company provides basic health care coverage. This was the same when we lived in Singapore. No issues really, good health care but the policy’s only cover hospital admissions. To date we have paid out of pocket for all of our medical care and have never had to make a claim. It’s been fine as we are healthy and thankfully not had any issues.. But now we have kids and again local insurance. I was surprised to find that our insurance didn’t cover pregnancy or child birth. A bit scary but ended well as a 5 day stay for planned C- section for twins was less than 4K USD..
We travel a lot. Almost monthly to multiple countries and I’ve been buying travel insurance when we are away. I’ve found that again we’ve been lucky and blessed that we have not had any major issues.. Mostly sick kids in Thailand or Cambodia and really not worth the paperwork to get my $ 30 USD back. I’ve heard that from many people that trying to get reimbursed from these companies is almost impossible and more or less junk insurance.. So I’m concerned that I’m wasting my money on these plans and that I’m probably under insured with them anyway..
We are except from the Obama care plan so I buy the short term major medical when I’m back for the family. I usually end up paying around $500 USD for it and then about $300 more for clinic visits and meds as the kids get sick in the winter..
So I’m asking what to do..
Do I continue to “gamble” with travel insurance when we go explore and continue with the short term insurance when back in the US..
Or do I go with a Global health care plan that I’ve been getting quotes on from anywhere 5-12k USD..
My husband is a pilot so we are more or less independent contractors and don’t have a chance of getting work to cover an international plan.. And we can easily afford the every day health care here and in SE Asia.. It’s the major medical what ifs that worry me.. If critticaly injured while traveling or if one of the kids were seriously sick and I wanted to seek treatment back in my home country or either of us needed long term care that worries me..
I’m thinking that paying for a global plan is a better option and peace of mind but my husband isn’t sold.. And that being said now that I’ve been making inquires I feel like in dealing with used car salesmen! Trying to sell me plans that exclude the US and I had no idea there were so many companies out there..
We pay our taxes, own property in the states, follow the rules but I’m feeling a bit hung out to dry here.. I think if we moved back to the states to look for work or regroup we would make to much money to even do Obama care and possibly be uninsurable if one of us had a major medical issue arise while overseas.. Or what happens if we loose our job and return home it seems that when I’ve looked into the insurance options we would be in quite a mess.. I’ve gotten no place with these healthcare markets..
So thank you in advance for any expertise you can provide..
Corrie
Hi Corrie,
Wow, you do face some challenging decisions.
We’re really not in a position to advise you on what coverage you ‘need’ … but your past usage of travel insurance for your short visits to the USA does fit within ACA rules.
If you do return long-term to the USA – and re-establish formal legal full-time residency in your home state, then you would qualify for ACA (Obamacare) coverage. … In the meantime … ???
Best of luck with this,
steve
Hi Steve
Yes I’ve had some challenges with trying to figure out what will or won’t work for our situation.
I understand that you can’t give me advice as to what I should need or should purchase. I’ve tried talking to these health care markets and my questions seem to go unanswered.. Difficult to do on skype with such a time difference and poor internet.
It’s my understanding and also from our accountant we are exempt from the ACA as we have been long term expats.. I buy a short term major medical policy from a US company when I’m back in the states as a us citizens travel insurance won’t work. That seemed to be adequate from my understanding. Is that incorrect?
I only purchase travel insurance when we visit other countries.. Outside our resident country ( Malayasia).
My main concern would be if we have a global insurance plan almost all exclude the US or have a much much higher premium.. And limit days in the country..
If we were to relocate back to the states without being employed we would qualify for open enrollment.. But if they look at the previous tax year return we wouldn’t qualify for any assistance due to our income. Not a huge deal unless we have to pay a large amount of money for health care while not being employed.. I’m guessing even a healthy family of 4 could be expensive with no current employment.. Or do they look at current employment?
And if we or someone developed a prequalifying issue while abroad wouldn’t that make it almost impossible to find affordable coverage without employment upon return to the states?
My other question with these global plans is if someone needed care and we needed to go back to the states for long term care or to be with family due to an illness and we have a global plan but then stops once we arrive to the US then what?
Any advice or direction you can give me?
All I’ve come up with is global plan = coverage abroad but returing back state side it would be like we have no coverage and make to much for any basic assistance and premiums would take a huge chunk out of our income. Especially if either my husband or I couldn’t work..
Do I have any of this wrong?
Again any suggestions would be welcome..
Thanks again in advance
Hi Corrie,
“ I buy a short term major medical policy from a US company when I’m back in the states as a us citizens travel insurance won’t work. That seemed to be adequate from my understanding. Is that incorrect?”
That’s correct.
On the other issues, yes, US medical care has become wildly outrageously expensive (as US doctors demand the highest salaries in the world => 3X higher than other comparable professions) … and yes, Insurance company profits are SOARING (because they can).
Yes, without income, you would qualify for ACA subsidies.
steve
Can you provide more on the expats that want to participate in the plan
Many states like California make it hard to not be a resident. California considers you a resident if you were a physical resident and plan to return some time in the future. So you can choose to be a California resident even if you live in Mexico., So why can’t you get Obamacare and then simply travel to California for you big ticket heath treatments/appointments.
Same with Medicare, why do you have to show physical residency?
bob
Hi Bob,
Check with California’s health-insurance subsidies plan.
Find out the insurance companies’, and the California’s state plan’s requirements for qualifying… and staying qualified for the government subsidized protection.
Can you then please come back and tell us what you found. That could be a big help to others.
Happy Trails,
bob
I live in the Philippines no for 11 years i am 76 years old ,only income is Social Security monthly check i do not file any tax forms as i do not need too.I do have part A medicare but that all not part be C or D also i am a veteran Peace time and when i was living in Montana i was covered in the VA program , because of low income , I am sure i have to files papers again if i return to the US, What problems do i face if any? Thank you SIR!!!!
Hi James,
Because of your Medicare coverage, you should have no ACA-Obamacare problems.
Hope the travels go well & you find good medical care,
steve
If you, instead, want to enroll in subsidized private healthcare insurance, for coverage other than Medicare, contact your State exchange within 30 days of returning to the USA – because returning to the USA is a ‘qualifying event’ to join a program during months outside of the normal enrollment period.
Happy Trails,
steve
Which state would be best for me i use to live in Montana 11 yrs ago thanks
I wouldn’t take that fun away from you.
The coast of Maine is not only beautiful in the spring, summers, and fall, but it’s warmed by the Gulf Stream in the winter.
Colorado & NM have stunning views … Fishing or hunting?
California is chock-full-o’ fruits & nuts, earthquakes, big fires, and drought.
Illinois has… corn.
Anticipation is such a huge part of enjoying something,
steve
i mean as to health insurance rules and polices
Ooops.
Excellent question.
We don’t know which states offer the best programs,
stevev
Does anyone have any suggestions given my circumstances on the ACA: I enrolled in the ACA during the 2017 enrollment period Nov 2016 while I was living in the US, then went on holiday overseas in Dec 2016. Once I was overseas I lost my residence (I was staying with my elderly parents helping with thier care, but while I was out of the country my neice moved them to assisted living where I am only allowed to visit but can not live with them), so I decided to stay overseas and canceled my ACA plan after the first month (I was on the ACA for the month of Jan which was 100% subsidized about $700 for the month). I spoke to the ACA people and they just said to file my 2017 taxes and use my foreign address and not to worry about it because they had no forms or procedure for someone with my circumstances. Is this correct and what are the rules for someone that moves out of the country after they sign up and then cancel once they realize they’re not returning to the US for long while, I am still overseas now for the whole year? I may come back for to visit for a few weeks in Nov 2017 but don’t plan on returning to live in the US until 2018 at the soonest. What a mess trying to navigate this ACA, I don’t mind paying back the first month I was on the ACA and had gone overseas but I can’t get any answers on how to handle this situation, Paul
As described in the article above:
“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:
1. You are outside the USA for more than 330 days that year, or
2. You’re uninsured for less than 3 months of the year, or
3. You have Medicare, Medicaid, or some VA coverages, or
4. You have such low annual income that you are not required to file with the IRS: see the IRS Interactive Tax Assistant (ITA).”
Keep it simple:
Do you meet the requirements of either #1 or #4 ?
If yes, then you’re good to go for TY 2017.
If not … and if you will have a problem qualifying for exemption to ACA in 2018, then:
“Special Exemptions to Participating in the ACA / Obacare Program
There are exemptions if you are a member of an approved religious sect (rejecting medical care on conscientious grounds), member of an Indian tribe, a convict, or have “annual household income lower than the amount specified section 1412(b)(1)(B) of the Patient Protection Affordable Care Act is less than the amount of gross income specified in section 6012(a)(1) ”
Do you meet any of these IRS special exemptions for 2017 (and 2018) ?
If not, then:
Read the IRS rules on becoming ~ qualifying as a ‘bona fide permanent resident’ of another country. The rules are not straightforward, as the IRS takes 4-5 pages to try to explain how it works.
As described in the article above:
““U.S. citizens living outside the U.S.
U.S. citizens living in a foreign country are not required to get health insurance 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.
To meet this requirement/exemption, you must meet either the IRS “330 day Physical Presence Test” (outside the USA for 330 or more days a year) or meet the IRS “bona fide” residence test requirements. For details on these 2 rules/exemptions, keep reading.* href=”http://www.irs.gov/pub/irs-pdf/p54.pdf”>http://www.irs.gov/pub/irs-pdf/p54.pdf
Generally, health insurance 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 Marketplace insurance.
Questions? Call 1-800-318-2596, 24 hours a day, 7 days a week. (TTY: 1-855-889-4325) ”
https://www.healthcare.gov/am-i-eligible-for-coverage-in-the-marketplace/
How does the IRS determine whether we actually live outside the USA?
The US Govt. determines if we officially “live outside the USA” in one of 2 ways. In the simplest case, to qualify for the ACA Foreign exclusion:
*~ We can be outside of the the USA for at least 330 days in a calendar year to qualify. This is known as the “Physical Presence Test” – to prove that we are NOT residents of the USA for IRS and ACA purposes.
or
*~ We must qualify under IRS requirements to be a “bona fide resident” (permanent resident) of a foreign country. http://www.irs.gov/pub/irs-pdf/f2555.pdf
Key parts of meeting the IRS requirements for qualifying as a “bona fide resident” of another country, are covered by IRS Form 2555, Question 13:
“13 a. Have you submitted a statement to the authorities of the foreign country where you claim bona fide residence that you are not a resident of that country? See instructions. Yes or No .
(13) b. Are you required to pay income tax to the country where you claim bona fide residence? See instructions. Yes or No
If you answered “Yes” to 13a and “No” to 13b, you do not qualify as a bona fide resident. Do not complete the rest of this part. ”
For more details, see: http://www.irs.gov/pub/irs-pdf/p54.pdf and http://www.irs.gov/publications/p54/ch01.html
As we can see, we must be residents of another country to qualify – which points to Residente Temporal and Residente Permanentes only qualify for the EXEMPTION if they are out of the USA more than 330 days, in this year or past years….. while VISITORS on 6 month visas – who are not required to pay income taxes in Mexico – owe for ACA insurance coverage or pay the IRS penalty. 😦 for those with TIP cars and Visitors/visitante visas.”
Really … your written descriptions do not describe whether you meet or do not meet the basic IRS (ACA) requirements for eligibility for being exempt for ACA in either 2017 or 2018.
What answers do you have for the questions posted above?
… Do you qualify for the exemption(s)?
steve
What a wonderful website for information….thank you!
I am in the same situation as Paul above. I have read the whole of this blog and no one asked my question until Paul did (in the previous article above). Unfortunately you did not answer his question, so I am still none the wiser and neither is he.
I had ACA for the first 3 months of this year (2018) during which time I notified the Marketplace that I would be emigrating to the UK permanently at the end of March, 2018. I called them to cancel it and gave them my future UK address so that they can mail me a 1099 to file with my 2018 income tax return for the 3 months of subsidised insurance I received through the ACA. But my question is the same as Paul’s…..Will I have to repay those 3 months of subsidised healthcare insurance premiums? (The premium value was approx $1250/month). I asked them on the call and they were noncommittal. In fact no one was able to answer any questions regarding those people who go abroadto live. I also wrote to the IRS and gave them my future overseas address. (I filed my 2017 taxes before leaving the US).
I will be filing taxes for 2018 next year even though my income will be below the income threshold to file since moving to the UK, because I only have my husbands social security payments to report and no other income. I want to make sure that I comply with all IRS laws. Unfortunately neither the Marketplace or the IRS explain clearly or appear to make allowances for expats who retire abroad halfway through a year. This 330 days is ridiculous because it doesn’t allow for people in my position who leave part way though a year. I am not worried about paying the ‘non insurance’ fine since the UK has just as good a health service (or even better in many cases), so I shall qualify for having coverage for the rest of the year. It’s the 3 months of ACA which I had that bothers me.
If you know the answer to whether I’ll be required to repay these monthly subsidised premiums I’d very much appreciate hearing it.
Many thanks and I look forward to reading your reply. Meanwhile, thanks for your expert advice!
As we quoted ACA rules to Paul (info as also listed in the article above)
“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:
1. You are outside the USA for more than 330 days that year, or
2. You’re uninsured for less than 3 months of the year, or
3. You have Medicare, Medicaid, or some VA coverages, or
4. You have such low annual income that you are not required to file with the IRS: see the IRS Interactive Tax Assistant (ITA).”
Based on what you wrote above, you are formally exempt under Item #4.
Sure, I understand that you are filing, but the US Govt. language specifically says you are exempt if “You have such low annual income that you are not required to file with the IRS” …
The published rules say nothing about whether you file or not, just that you qualify for the exemption, if “you are not required to file”. Since you say you are not required to file, it seems you have your answer.
??
Why not accept the exemption?
steve
Steve,
Many thanks for your reply. I have read all of your points and believe I understand them.
So what you’re saying is because I don’t have to file under point #4 exemption, I will not have to repay the 3 months of subsidised premiums which I was granted before I decided to leave?
Correct.
That is our best understanding of the law.
I live in Mexico, have been out of the US since 1995 and am returning to the States.. how can I contact a live person other than a US based 1-800 number?
STEP 1
Dial 001, which is the international dial code to call the United States, when you have a dial tone.
STEP 2
Dial 880 if your toll-free number begins with 800. Dial 881 for an 888 number. Dial 882 for an 877 number and dial 883 for all 866 numbers. These codes only apply to calls from Mexico.
Because the 24/7 Healthcare.gov phone number in USA is 800-318-2596, Instead, from Mexico you dial ” + 001 880-318-2596 ”
STEP 3
Dial the main seven-digit telephone number normally and wait for the call to connect.
Because the 24/7 Healthcare.gov phone number in USA is 800-318-2596, Instead, from Mexico you dial ” + 001 880-318-2596 ”
steve