Questions about the Affordable Care Act. Specifically, U.S. citizens living abroad may be interested in the following Q&As.
What Is the Health Insurance Marketplace?
The Health Insurance Marketplace, sometimes known as the Health Insurance Exchange, is a new way to find quality health coverage. It can help if you do not have coverage now, or if you have it but want to look at other options. With one Marketplace application, you can learn if you can get lower costs based on your income, compare your coverage options side-by-side, and enroll. When you use the Health Insurance Marketplace, you will fill out an application and see all the health plans available in your area. You will provide some information about your household size and income to find out if you are eligible for a tax credit to reduce your share of the monthly premiums for private insurance plans. You will also learn if you qualify for lower out-of-pocket costs. Furthermore, the Marketplace will tell you if you qualify for free or low-cost coverage available through Medicaid or the Children’s Health Insurance Program.
To be eligible for health coverage through the Marketplace,
- you must live in the United States;
- must be a U.S. citizen or national (or be lawfully present);
- and must not be currently incarcerated.
For general questions about the Act, see the dedicated ACA website operated by U.S. Department of Health and Human Services (HHS) https://www.healthcare.gov/. The HHS website includes a link to information about whether U.S. citizens residing abroad are subject to ACA at https://www.healthcare.gov/am-i-eligible-for-coverage-in-the-marketplace/.
Tax Issues related to ACA: For tax issues related to ACA, see the ACA page within the IRS website http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions-Home. The IRS site provides further links/webpages, depending on whether you are an individual, employer, or other organization. For more information, see the Question and Answer page for Individuals at http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision.
Are all individuals living in the United States subject to the individual shared responsibility provision?
All U.S. citizens are subject to the individual shared responsibility provision, as are all permanent residents and all foreign nationals who are in the United States long enough during a calendar year to qualify as resident aliens for tax purposes. Foreign nationals who live in the United States for a short enough period that they do not become resident aliens for federal income tax purposes are not subject to the individual shared responsibility payment even though they may have to file a U.S. income tax return. The IRS has more information available on when a foreign national becomes a resident alien for federal income tax purposes. Learn more at http://www.irs.gov/taxtopics/tc851.html.
Are U.S. 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 an exclusion from income under section 911 of the Internal Revenue Code, even if they do not 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 section 911 exclusion. They need take no further action to comply with the individual shared responsibility provision during those months. U.S. citizens who meet neither the physical presence nor residency requirements will need to maintain MEC, qualify for an exemption, or make a payment when filing their tax return for each month of the year that they do not have MEC. For this purpose, MEC includes a group health plan provided by an overseas employer. One exemption that may be particularly relevant to U.S. citizens living abroad for a small part of a year is the exemption for a short coverage gap. This exemption provides that no payment will be due for a once-per-year gap in coverage that lasts less than three months.
Are residents of the territories subject to the individual shared responsibility provision?
All bona fide residents of the United States territories are treated by law as having MEC. They are not required to take any action to comply with the individual shared responsibility provision.