Obamacare (Affordable Care Act) and the Expat

Obamacare (Affordable Care Act) goes into effect January 1, 2014.

How will it affect Expats living in Ecuador or elsewhere outside of the US? And more specifically, how will Obamacare affect those who live here full-time but use an address in the states as your residence address for banking, tax returns and social security?

From what I have read it can affect us in our pocketbooks.

If the US government has not been informed that we are living abroad then we will be considered living in the US and we’ll be required to participate in the new health care program, not usable in Ecuador. Or pay a fine.

We have read that 15,000 to 20,000 new enforcement agents will be hired for the IRS to enforce this new law.

Anyone who is interested in researching this further can go online Expat and Obamacare.  One more question would be if you have Medicare or other insurance, does that fulfill your requirements even if you show a US residence address?


37 thoughts on “Obamacare (Affordable Care Act) and the Expat

  1. Nancy, I tried doing some research on this, and the only thing I remember and feel confident about is that if you visit the US for less than 30 days a year, you are exempt from getting a qualified health care plan. There are alsosome exclusions for being a legal resident of another country, but I skimmed over those because I’m not. They seemed pretty stringent though. I’m so sorry I don’t remember where the analysis was, because it seemed reasonably thorough.

  2. I can’t address the tax-related liabilities of a U.S. citizen living primarily abroad. That’s probably best answered by a CPA who specializes in ex-pats and I assume most ex-pats have consulted one early on. So s/he will probably have the correct answer to whether an ex-pat has to meet the coverage requirements. (Assuming the Feds have actually come to some kind of consensus on the answer!!)

    But I’m a health insurance agent in NC and I can assure you that having Medicare Parts A & B will meet the requirements of having creditable health insurance. (There is a monthly premium for Part B and I’m not sure how that is handled by over-65 expats who are using the U.S. as their legal address.)

    I’m not sure what you’re including under “or other insurance,” but if it would be considered creditable coverage under HIPAA (e.g. an employer group plan), then that should also meet the requirement. An International Health Plan (which includes coverage in the U.S.) may or may not meet the guidelines. There are specific requirement in place already that included unlimited lifetime coverage, 100% coverage of preventive care, access to free birth control, etc., that Intl. Plans may not include.

    Sorry this is a somewhat limited answer but it’s as much as I can give based on what I know. Most of us are still very early in the learning curve!

    • Hi Sharon, thanks for your comment. I think I used the word fines, we currently don’t work or have any investments making us over the IRS limit so we do not pay taxes.

      The article is to update those that live outside the US for over 330 days per year, but have not informed the IRS and/or Social Security of their Residence Address outside the US. According to what I have read they will be required to maintain Obamacare even thought they will be unable to use this health care in Ecuador. For those people who return to the US more than the allotted time specified in the law they will also be required to have this health care coverage. Most folks living outside the US think, “well I’m living outside the US so it is not necessary”…but if the government does not know that you are living outside the US they will want you to carry the Obamacare health care coverage…IF you are saying that Medicare part B will work that’s great, but there are those of us who dropped the Medicare part B because we knew we would not be going back to the US for any medical treatment. (FYI Part B is taken directly out of your Social Security check before they send you your deposit for the month). So again, if the government who sends your Social Security check to your Aunt Fanny’s address in St. Petersburg, FL or a direct deposit to a St. Petersburg bank using Aunt Fanny’s address as your primary residence THEY are thinking you are a US resident and will want you to carry Obamacare, am I understanding the law correctly? If you don’t carry the coverage you are fined…it starts out small but each year you do not carry the coverage it gets larger…this is my understanding of this new health care program. Love the comments, gets everyone thinking! Thanks, Nancy

      • It certainly does bring up issues I’d never thought ab,out, Nancy!

        Keep in mind through all this discussion that there will be government subsidies for premiums for people with modified adjusted gross incomes (or MAGI – more about that in a minute) up to 4 times the Federal Poverty Level (FPL). For a family of 2 (such as you and Joe), in 2013, that’s up to a 2013 MAGI of up to $62,000. My guess is that the reported income of most expats is well below 4X FPL! The lower the income, the higher the subsidy.

        {MAGI is essentially AGI (line 37 of the front page of Form 1040) plus any income from tax-free bonds – which I think is line 8b. Most people don’t have much or any of the latter anyway, so AGI = MAGI for most.}

        So, essentially, this may be much ado about little or nothing, since even if expats have to buy health insurance, many/most may qualify for a substantial subsidy offsetting most or all of the premium costs. I know this doesn’t make sense to force expats to buy something they don’t need and won’t use and then force U.S. taxpayers to pick up the cost, but there ya’ have it!

        Which is probably part of the reason a lot of expats left the U.S. to begin with!

        I suspect that as details are ironed out and specific situations and exceptions are addressed, there may be some kind of waiver for those who can prove they’re full-time residents abroad. Someone mentioned here a 30-day limit rule, and those may be the individuals to whom the exceptions apply – or it could be broader.

        The one piece of good news in all this is that if expats want to move back to the U.S. and they’re under age 65, getting affordable health insurance here may be less of an issue.

        • Sharon, you hit the nail on the head. Back in 2006 Joe and I left the states because we were insurance poor, home insurance, car insurance, medical and life insurance…honestly it was overwhelming. By the time you go finished with all of the insurances you have nothing to live on. We are living on Joe’s social security with almost all of our meager savings being put into this house last year. Which is a good thing becuase we are finished with looking, finished with renting, this is ours.

          Thanks so much for all the info, looks like those folks that travel back to the US, who have less than $62k in Adjusted Gross Income could have insurance coverage for nothing or very little if what you are correct… not a bad deal…

          Thanks, Nancy

  3. Oh, so many questions! Did you find a link for Expats and Obamacare? I’m going to have to do lots of research. One thing for sure, I don’t want to pay the fine for not having insurance and I don’t want to buy insurance that I can’t use. I would love to see a provision for insurance that can be used abroad. Vivian Pellas hospital in Managua accepts Blue Cross/ Blue Shield, but the cost is prohibitive for us. That’s why we purchased the hospital discount plan. I’m starting to get a little worried because we fall into no man’s land…too young for Medicare and too poor to buy Blue Cross/ Blue Shield. When we go back to the states to visit, we up the medical on our car insurance. If I broke my leg or something…I’d have to wreck our car to be covered. That’s the only thing we could do..kind of risky to return to the states.

    • Hi Deborah, There are many many articles on the internet that I saw, picking one that will answer all your questions was impossible for me. So I guess you will need to sift through a bunch of material until you find some answers. It is a sticky area..many folks have opted not to tell the IRS and Social Security that they are living outside of the US. When we lived in Panama it was common for the Expats to keep their business in Panama to themselves. That’s great until Uncle Sam decides he wants everyone with a full-time residence in the US to participate in some program just like this one. Then something has to give!

      My last trip back to the states I got sick the first week and ended up in the emergency room, total was over $2,000. I did get the hospital to cut their fee when I told them I had no insurance because I lived in Panama but it was still a great deal of money. I would not travel anywhere now without having travelers insurance…costly but not $2k worth.

      Here is an article by a young CPA that may help: http://www.artiopartners.com/blog/obamacare-taxes-americans-living-abroad/ I would think that Ms. Zhanna would answer your questions because her article does not cover some of the issues.
      thanks again for your comment. Nancy

      • Thanks, Nancy. I’m writing an Expat Guide to Obamacare for Idiotas. Can I link your post to my article? Geez! I can’t believe you had to pay so much money for medical care in the states. Wait! Yes, I can believe it. Last month when I was in the states, I had a pretty bad infection from a bite or something. I’m still not sure what it is, so I have an appointment next week with our expat hospital. Anyway, I knew I needed antibiotics to clear up the infection, but I waited until I returned to Nicaragua where I could get the antibiotics without seeing a Dr. A 7 day round of antibiotics cost me less than $4. It’s cleared up the infection quite nicely, but I’m still going to have it checked by a Dr. in Nicaragua. Thank goodness I have Drs. in my family. They can help me diagnose the problems, then I can have it treated in Nicaragua for 1/4 of the cost. Here’s another example: Cory hurt his back when he was here. He was laid up for over a week in bed. He skyped with my brother and he said it was probably sciatica, so they prescribed a 5 day Prednizone pack for him. Our Nica friend translated the medicines into Spanish and I went to the pharmacy to get them…all for less than $10. Cory slowly healed and was back to normal within 2 weeks.

        • Deborah, yes, go ahead and link my post. I know exactly what you are saying, medications are so inexpensive here but honestly back in the states it was not just the hospital bill, I received a bill from the ER doctor, a separate bill for the chest X-ray, another bill from the doctor who read the x-ray…actually several weeks after I returned to Panama after spending 6 weeks in PA my mother received yet another bill…it is actually out of control…so happy to be here. Nancy

    • You can buy short-term insurance (also called temporary insurance) when you’re traveling in the U.S. as long as you can answer ‘no’ to all the health questions. It won’t cover pre-existing conditions but should take care of those unexpecteds.

    • Don’t count on Medicare. You can’t use Medicare outside the US and possessions. I’ve been trying to research ACA and found nothing to indicate it will provide support outside the US and lots of confusion about penalties for not buying coverage. No one seems to know what ACA coverage will be for expats.

  4. You say “go online Expat and Obamacare”. Do you mean search for “Expat and Obamacare” or is there a link to a web site that has that name?

    • Hi Keith, good morning. I put in Expats and Obamacare and got 191,000 hits, so many articles I just could not find one that covered all my questions on the subject. Here is an article by a young CPA that may help: http://www.artiopartners.com/blog/obamacare-taxes-americans-living-abroad/ that may help. I don’t think that the articles on the net cover all the questions more important all the answers to the questions. BUT Sharon Nuttall, who made a comment earlier, stated that if you carry Medicare Part A & B (B you pay for out of your SS payment) that that is enough coverage so that Obamacare is not required. Again, Keith I am no expert I am just bringing up a subject that all Expats need to address for themselves. I know I am adding more worms to your already full can!!!

      thanks again for your comment. Nancy

      • Hi I’m new to your blog however I am a full time expat living in Panama.
        I am only 50 so it will be 10 to 15+ years before I will be eligible for any SS or Medicare benefits plus my income supplied by the US Gov is not taxable so I have no federal tax liability and because I am a full time resident in Panama I no longer have a state of residency for any state so a zero tax liability there.

        Now although I would seemingly not be affected by the Affordable Care Act I don’t trust Uncle Sam to leave me alone. I am not registered as an expat living overseas with the State Department nor the US Embassy or any other government agency. I do however file a federal tax return containg all zeros each year just for CYA and have never had any issues with the IRS so far. I have done some research regarding Obama care and font the following info-

        “Affordable Healthcare Act does not apply abroad
        In June 2012 the Supreme Court gave its approval to the Affordable Healthcare Act and many Americans living outside the USA are wondering if the law applies to them. The Supreme Court decision did not change anything in the law and Americans who are bona-fide residents overseas are presumed to have minimum essential coverage and as such do not have to pay a tax for not being insured in the US.
        When the law was being discussed in Congress in 2010, ACA and other action groups were able to put pressure on Congress not to include Americans abroad, especially concerning the “Requirement to maintain minimum essential coverage.” Overseas Americans are not exempted; technically speaking they are presumed to have acceptable minimal coverage.”


        Good luck and greetings from Chiriqui Provence Panama.

        • Good Morning Greg, We lived in Dolega, Chiriqui, Panama from 2006 until early 2010, we loved it but longed for a beach town so that is how we ended up in San Clemente, Manabi, Ecuador. Happy to have you as a reader.

          You are right, just like Tim (prior comment), if the Government of the US, Social Security as well as IRS know that you are living abroad you should not have a problem. What address are you using when you file your tax returns? Because if you are using Panama they know where you are…if you are using an address in the US they think you are living in the US. But many Expats have made the decision to use US addresses as their primary residence. How does the IRS or SSA know that you are living outside of the US unless you tell them? I just read an article in the Washington Post http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/15/how-hr-block-plans-to-capitalize-on-obamacare/ 44% of the folks H&R Block interviewed between 18 and 34 years old had no idea that they were facing a penalty for not having the insurance coverage starting Jan. 1, 2014, and these folks live in the US and have been hearing about Obamacare for years. I will tell you that folks living abroad are not keeping up with this issue either. Penalties (fines / tax) according to what I have read, will start on Jan, 1, 2014.

          We all need to know what we are required to do to be compliant with the law, unless we have money to burn! Hope this helps, Nancy

  5. Pingback: Obamacare = JAWS?? | Chiriquí Chatter

  6. Love the blog, brings up a lot of questions. Ones truthfully that we’ve put aside. Still irked that the “big wigs” in Washington are exempt from Obamacare, but that’s a whole different topic and way too political for a reader friendly blog as your 🙂

    • Hey John and Mary, Just a bit of information maybe that some of my readers are not aware of, a few recipes one week, some pictures the next, just a bit of everything all mixed in together…

  7. Affordable Healthcare Act does not apply abroad

    In June 2012 the Supreme Court gave its approval to the Affordable Healthcare Act and many Americans living outside the USA are wondering if the law applies to them. The Supreme Court decision did not change anything in the law and Americans who are bona-fide residents overseas are presumed to have minimum essential coverage and as such do not have to pay a tax for not being insured in the US.

    When the law was being discussed in Congress in 2010, ACA and other action groups were able to put pressure on Congress not to include Americans abroad, especially concerning the “Requirement to maintain minimum essential coverage.” Overseas Americans are not exempted; technically speaking they are presumed to have acceptable minimal coverage.

    More information is available on the US Government Healthcare website.
    see web site….http://www.americansabroad.org/issues/healthcare/obamacare-does-not-apply-abroad/

    • Hi Tim, thanks for your commnet. Your correct if the US government IRS / Social Security know that you are an Expat living abroad this does not apply. But if the Expat is using a US address as their primary residence and the government IRS / Social Security does not know that their primary address is outside of the US, they will be required to get the insurance or pay the fine (tax) for not having the insurance. Most folks are just not up to date on this law and how it would make a difference in their pocketbooks. January 1, 2014 is right around the corner…just something to be aware of and think about, Nancy

  8. Thank you for bringing up this important subject! We will definitely have to do some research. We look pretty pitiful financially on paper though, and there are definite advantages to that. Hopefully we will look too pitiful to be required to buy insurance but there is definitely homework to be done so we know what’s going on.

    • Hi Kris, we also don’t have much of a financil portfolio but we are pretty stress free so I guess that is one good thing. We have always told the IRS and SS where we were so we fit in the catagory that does not require Obamacare but if we go back to the states even for a short visit we would have to get some form of travel insurance just to be covered. Nancy

  9. Hi, Nan, just a couple things that may answer your questions:
    1) the ‘fine’ that may be imposed on non insured citizens in the U.S. will be charged as a tax starting with your 2014 tax return that will be filed in 2015.
    2) a person or couple will be fined/taxed if they do not have compliant health insurance (Medicare part A & B does comply, Part A alone does not; most travel insurance plans also do not comply) AND if their income exceeds certain minimums. I.E., a person making about $10,000 a year owes a very small amount of tax, but most likely won’t have to pay any fine/tax, if they don’t have insurance.
    3) If compliant insurance for a person per year exceeds 8% of their annual income, pre–tax, then that person (or insurance for a couple exceeds their joint income, if filing jointly) or couple will NOT have a fine/tax imposed upon them.
    4) Persons who can show proof that they are residents of a foreign country also are not going to be fined/taxed, if they don’t have compliant health insurance,
    5) I’ve seen rulings that state if you are receiving social security, and you live outside the country, you are not in compliance with Social Security if you use someone else’s address to receive your statements.
    6) Questions can be answered, such as this one:

    —-Who doesn’t have to pay the fee
    Uninsured people won’t have to pay a fee if they:

    are uninsured for less than 3 months of the year
    are determined to have very low income and coverage is considered unaffordable
    are not required to file a tax return because their income is too low
    would qualify under the new income limits for Medicaid, but their state has chosen not to expand Medicaid eligibility
    are a member of a federally recognized Indian tribe
    participate in a health care sharing ministry
    are a member of a recognized religious sect with religious objections to health insurance
    If you don’t qualify for these situations, you can apply for an exemption asking not to pay a fee. You do this in the Marketplace.
    —–How do I get an exemption?
    For religious conscience and hardship exemptions, you complete an application in the Health Insurance Marketplace and indicate that you want an exemption. Most other exemptions are claimed on your federal income tax form. Information about these procedures will be available after open enrollment begins.”

    For more info, go to https://www.healthcare.gov/what-if-someone-doesnt-have-health-coverage-in-2014/

    Per Sharon, on ‘live chat’ at healthcare,gov,website above, she says: “f you are a U.S. citizen living in a foreign country, you are not required to get health insurance coverage under the Affordable Care Act. You don’t have to pay the fee or file an exemption that other uninsured U.S. citizens may have to pay.”

    Having read this, it remains to be seen how ACA turns out. Changes are being made daily. One ruling regarding employers of 50+ employees just rolled back their requirement until 2015. It all may change.

    • I am posting your comment, you may get some calls from blog readers going back to the states. I know I will keep you in my for any trip we may take out of Ecuador. Thanks again, Nancy

  10. https://www.ahtins.com/blogs/for-your-benefit/expatriates-and-health-care-reform-aca–what-is-the-impact/

    2013 info…

    Also the 330 day requirement mentioned early in the posts sound much like the IRS Foreign Earned Income Exclusion rules. Which by the way, do not require you to be a legal resident of a foreign country to qualify. Perhaps ACA will align itself with the same guidelines as the FEIE in terms of rules that determine official expat status. With those FED tax rules you can still have a domicile in the States…

    Hope the info is helpful.

  11. ACA FINAL RULES released today. The exclusion for expats looks similar to the irs exclusions for foreign earned income.

    full document is here: http://www.ofr.gov/OFRUpload/OFRData/2013-21157_PI.pdf

    Here is the section pertaining to expats:

    “D. Foreign issuer coverage
    1. In General
    Under section 5000A(f)(4) and §1.5000A-1(b)(2) of the final regulations, an
    individual is treated as having minimum essential coverage for a month if the individual
    is a bona fide resident of a United States possession for the month,
    or if the month occurs during any period described in section 911(d)(1)(A) or section 911(d)(1)(B) that is applicable to the individual. Section 911(d)(1)(A) is applicable to a citizen of the
    United States who has a tax home outside the United States and is a bona fide resident
    of a foreign country or countries during an uninterrupted period that includes an entire
    taxable year. Section 911(d)(1)(B) is applicable to a U.S. citizen or U.S. resident (as
    defined in section 7701(b)) who has a tax home outside the United States and is
    present in a foreign country or countries for at least 330 full days during a period of 12
    consecutive months. A commentator expressed a concern that a United States citizen or national who resides outside the United States may be subject to the shared responsibility penalty even if the individual has health care coverage provided by a foreign health insurance
    issuer (sometimes referred to as a form of expatriate coverage) or the government of
    the foreign country where the individual resides. The commentator requested that
    individuals in this situation be exempt from section 5000A. Under section 5000A(f)(4), a United States citizen or national satisfying the requirements of section 911(d)(1) is deemed to have minimum essential coverage. If the individual does not satisfy those requirements, the remaining provisions of section 5000A apply. Accordingly, the final regulations do not adopt the recommendation.
    The same commentator and another commentator asked whether expatriate
    coverage or coverage provided by a foreign insurance issuer to foreign nationals
    lawfully present in the United States for an extended period of time is minimum
    essential coverage. The commentators acknowledged that some coverage provided by
    a foreign health insurance issuer is not offered in the small or large group market, or the
    individual market, within a state. However, the commentators noted that the foreign
    health care coverage may be substantially similar to other types of plans recognized as
    minimum essential coverage.
    Under section 1304(d) of the Affordable Care Act (42 U.S.C. 18024(d)) and the
    final regulations, the term state means each of the 50 states and the District of
    Columbia. Coverage or a plan provided by an issuer that is not offered within a state is
    neither an eligible employer-sponsored plannor a plan in the individual market.
    Accordingly, the final regulations do not adopt this recommendation.
    However, to provide relief in the situations that the two commentators described,
    the HHS MEC regulations provide a process by which a sponsor of a health plan,
    whether domestic or foreign, may apply for recognition as minimum essential coverage
    under section 5000A(f)(1)(E).
    See 45 CFR 156.604. “

    • Aaron, thanks so much for the follow up. Truly appreciate your kindness in sending this along. Have a great day, Nancy

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