ACA and International Health Plans

Does my International Health Insurance Cover Obamacare Requirements

Obamacare and International Health InsuranceFor U.S. citizens planning an extended trip outside of the U.S., retirees abroad, and expatriates–some new questions have to be answered when considering an international health insurance plan:

  • Does this plan meet the minimum essential coverage for the Patient Protection and Affordable Care Act (ACA)?
  • Do I need a plan that qualifies as minimum essential coverage (MEC, sometimes called “qualifying health coverage”)?

The short answer to the first question is generally no. Most international plans do not meet that ACA compliance benchmark. They are typically designed for any international living in a foreign country and do not attempt to meet the specific requirements of certain countries.

The answer to the second question is a little more complicated… The U.S. government understands that it would be incredibly hard, if not impossible, to monitor and manage all international plans. Therefore, they have made accommodations for those of you planning a trip or move–or who are currently living–abroad.

Review: Health Insurance for US Citizens Abroad

330 Day Rule: ACA Exemptions for U.S. Citizens Abroad

330 Day Rule: U.S. citizens who spent at least 330 full days outside of the U.S. during a 12-month period are not required to maintain health insurance that meets the requirements of minimum essential coverage (MEC). If you're uninsured and living abroad under this definition, you qualify for a health insurance exemption. This means you don’t have to pay the the tax penalty that other uninsured people must pay.
See question 12 on this IRS website to learn more about the rules for people living abroad.

Note: Once you return to the US, you will be immediately eligible to apply for domestic insurance, with no-exclusions for pre-existing conditions. If it is an open enrollment period, you will be eligible as everyone else is. If it is not open enrollment, than you are eligible for Special Enrollment Period as you have both 1) recently moved and 2) you have had a material change of status (you have moved and lost your exemption).

Are There Other Exemptions for International Travelers

If you are abroad for up to 2 uninterrupted months without coverage in one tax year or are otherwise covered by an eligible plan, then you should be fine. There is something called the short coverage gap. Specifically, if you went without coverage for less than 3 consecutive months during the year. Coverage for one day of a month counts as coverage for the entire month. For more information, see question 22 on this IRS Q&A website.

What About Longer Trips Abroad

For those who are out of the U.S. for more than 3 months but less than 330 days (see above), you should consider your options.

U.S. citizens who meet neither the physical presence nor residency requirements will need to maintain minimum essential coverage, qualify for a coverage exemption or make a shared responsibility payment for each month of the year.

In general, as a U.S. citizen, you are required to have coverage that meets the minimal essential requirements. If you are truly living abroad and only visit the U.S. less than a month a year, you will be ok with the expatriate health insurance plan of your choice–or none at all. Otherwise, you should find an acceptable (ACA compliant) plan through your state’s insurance marketplace or make shared responsibility tax payments.

How Much is the Obamacare Penalty?

ACA compliance is a personal choice. For some, the cost of having a plan in the U.S. to meet minimal essential coverage is too high. Especially when you consider you most likely won’t be covered by that plan if you are treated outside the U.S. For those who would rather make shared responsibility payments (pay the tax penalty), here are some important points:

  • Penalties assessed and calculated by month (1/12 of annual penalty for each month uncovered) but assessed annually during the tax filing process
  • Coverage for one day of a month counts as coverage for the entire month
  • Liens, levies or criminal penalties are not applied for failure to purchase MEC coverage
    The IRS will deduct any amounts owed from current and future tax refunds

The rules governing shared responsibility payments change each year. Visit HealthCare.gov for help determining how you’ll pay for not having health insurance in 2016 and 2017.

Additional ACA and Expat Resources