International Health Insurance and Obamacare Requirements
For 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 individual countries. Additionally, you will find they are generally much less expensive.
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.
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 then you qualify 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 consecutive 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 three 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 three months but less than 330 days (see above), you should consider your options. In general, as a U.S. citizen, you are expected to have coverage that meets the minimum essential requirements. As of 2019, there is no longer a penalty if you choose to purchase a global medical plan instead of a domestic plan. If you are genuinely living abroad and only visit the U.S. occasionally, you will be ok with the expatriate health insurance plan of your choice.
Is there an ACA or Obamacare Penalty in 2019 for Internationals Living Abroad?
For insurance plans purchased prior to 2018, if you could afford health insurance but chose not to buy it, you may have been assessed a fee called the Individual Shared Responsibility Payment. (The fee is sometimes called the “penalty,” “fine,” or “individual mandate.”)
Starting with the 2019 plan year (for which you’ll file taxes in April 2020), the Shared Responsibility Payment no longer applies.
ACA compliance is a personal choice. For some, the cost of having a plan in the U.S. to meet minimum essential coverage may have been too high. Especially when you consider you most likely would not be covered by that plan if you are treated outside the U.S. For those who would choose to make shared responsibility payments, 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 would pay for not having health insurance in 2016, 2017 and 2018. Again, Starting with the 2019 plan year (for which you’ll file taxes in April 2020), the Shared Responsibility Payment, or ACA penalty, no longer applies.