A Doctor Explains: What the Affordable Care Act Means for Expats

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October 1, 2013 saw the beginning of the enrollment period for health coverage under the Affordable Care Act (ACA). Along with the news about glitches with the health care website came lots of questions for expats: Do expats have to enroll? Will there be penalties for expats who do not enroll? Even if expats are not required to enroll, is there a benefit to enrolling?
Here are three things that every expat should know in regards to the ACA:

1. U.S. citizens who are bona fide residents of a foreign country are not required to have health insurance as mandated by the ACA.

In general, U.S. citizens living outside of the United States for at least 330 days in a given year and who meet the IRS requirements to be a bona fide resident of another country are exempt from the ACA. (You’ll find the full list of requirements for bona fide residence in Form 2555 on the IRS website.)

2. U.S. citizens living outside of the United States but who are not bona fide residents of a foreign country are required to have health insurance or face fines.

If you:

a) have told your country of residence that you are not a resident of that country

and

b) are not required to pay income tax in your country of residence,

then you are not a bona fide resident of that country.

If you don’t meet these stipulations—or any of the other listed IRS requirements—and you do not purchase health insurance, then you could face fines in 2014 of $285 per family (US$95 for individuals)—or 1% of your income, whichever is the greater amount… That amount will rise to a whopping $2,085 per family (US$695 for individuals) or 2.5% of your income by 2016.

To avoid these fines, it’s in your best interest to purchase at least minimum essential coverage.

Good news if you are entitled to Medicare, however: Medicare qualifies as minimum essential coverage. If you’re eligible for Medicare, you won’t be at risk of fines.

3. It could make sense for you to have minimum essential coverage under the ACA even if you are a bona fide resident of another country.

Many expats are fortunate to live in an area with high-quality, affordable, and easily accessible health care. Those who are bona fide residents don’t have to pay for health coverage in the U.S. But even if you are a bona fide resident of a foreign country, having extra cover in the U.S. could help you to secure your own peace of mind.

If, for any reason, you think that you or your family might have health issues that will require treatment in the United States, it’s worth thinking about purchasing a low-premium/high-deductible U.S. plan that’s coupled with a medical evacuation policy. There are several medical evacuation companies that will provide evacuation from almost any location in the world to the U.S. hospital of your choice for a reasonable membership fee.

Next steps:

The most important things you can do next are to determine whether or not you are a bona fide resident of a foreign country…and then to carefully consider your personal needs and requirements for health care.

Then, if you find you’re required under the ACA to obtain health insurance or that your circumstances make U.S. health insurance a wise choice, the next step is to shop around for the insurance plan or medical evacuation membership that best fits your needs and budget. A trusted insurance advisor who is well versed in the intricacies of the ACA can help you find the exact U.S. coverage you need.

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