Obamacare - Impact On Us Expats

[OnMyWay]

Without getting into the politics of Obamacare, I was wondering if anyone has any definitive information (or links to information) on exactly how it will impact expats as far as the requirement to have medical insurance and the penalty for not having it. I searched a bit and most of the information I found was on some expat forums, but it was from early 2010, at best. I would think that the legislation is posted somewhere, but I did not find it.

I found a few interesting tidbits but to me they are just hearsay unless backed up with some documentation. E.g., I read, if you are residing outside the US, you will be considered to have the minimum required medical insurance and will not be subject to the "tax" for not having insurance.

Some unanswered questions:

1. Is it true that expats will not be subject to the penalty tax if they do not have medical insurance with a US company, in the US? E.g., if I have no insurance in Phils or use a Phils insurance company.

2. What about the case of a split year, e.g., 5 months in the US and 7 months in Phils or vice versa? This could impact a lot of expats who are planning a move, and expats who are snowbirds, etc.

3. What is used to determine country of residence?

4. Does it matter if you are "residing" in another country, but only have a tourist visa, not a resident visa?

5. Is there any impact on residency status if you maintain a US mailing address?

I should probably know some of these answers, but I really never had to worry about all these details when I was working in Germany and the company took care of everything.

Thanks!

[Tukaram (Tim)]

Nobody here in the States knows any real answers either. That is the biggest problem with the whole mess. I have gone searching for some answers and they are almost impossible to find.

I'm moving next year, my income is non-taxable, and I have no insurance, so I am going to ignore the new law and hope for the best.

[Old55]

Wait until November. That is not an attack on the President or a political statement one way or the other. Just saying things could change.

[OnMyWay]

Wait until November. That is not an attack on the President or a political statement one way or the other. Just saying things could change.

Yes, it may get interesting but I would love to know what to expect if nothing changes! :cheers:

[Bastos]

I expect that unless you have truely expatriated you will be required to be part of obamacare. Still pay taxes to the IRS? Own property in the states? Make any money at all in the US? Bank in the US? Own stock and recieve dividends from US brokerage houses? Are you a US citizen drawing social security? If so your monthly check will be smaller.

[TheMason]

Without getting into the politics of Obamacare, I was wondering if anyone has any definitive information (or links to information) on exactly how it will impact expats as far as the requirement to have medical insurance and the penalty for not having it. I searched a bit and most of the information I found was on some expat forums, but it was from early 2010, at best. I would think that the legislation is posted somewhere, but I did not find it.

I found a few interesting tidbits but to me they are just hearsay unless backed up with some documentation. E.g., I read, if you are residing outside the US, you will be considered to have the minimum required medical insurance and will not be subject to the "tax" for not having insurance.

Some unanswered questions:

1. Is it true that expats will not be subject to the penalty tax if they do not have medical insurance with a US company, in the US? E.g., if I have no insurance in Phils or use a Phils insurance company.

2. What about the case of a split year, e.g., 5 months in the US and 7 months in Phils or vice versa? This could impact a lot of expats who are planning a move, and expats who are snowbirds, etc.

3. What is used to determine country of residence?

4. Does it matter if you are "residing" in another country, but only have a tourist visa, not a resident visa?

5. Is there any impact on residency status if you maintain a US mailing address?

I should probably know some of these answers, but I really never had to worry about all these details when I was working in Germany and the company took care of everything.

Thanks!

All the info you need is at this link....

http://www.gpo.gov/f...tleD-chap48.htm

In essence, the penalty for not having insurance is paid annually but assessed monthly. In any given month where you qualify under IRS guidelines as a non-resident, you are deemed to have met the insurance mandate. On months you do not meet the IRS guidelines, you are subject to the penalty if you do not obtain coverage while in the US.

(4) Individuals residing outside United States or residents of territories

Any applicable individual shall be treated as having minimum essential coverage for any month—

(A) if such month occurs during any period described in subparagraph (A) or (B) of section 911(d)(1) which is applicable to the individual, or

(B) if such individual is a bona fide resident of any possession of the United States (as determined under section 937(a)) for such month

So if you qualify under section 911(d)(1) of the tax code, you are not required to have insurance. Here is what section 911(d)(1) says.

(d) Definitions and special rules

For purposes of this section—

(1) Qualified individual

The term “qualified individual” means an individual whose tax home is in a foreign country and who is—

(A) a citizen of the United States and establishes to the satisfaction of the Secretary that he has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or

(B) a citizen or resident of the United States and who, during any period of 12 consecutive months, is present in a foreign country or countries during at least 330 full days in such period

A good rule of thumb is that if you qualify for the foreign income exclusion credit on your US taxes, you don't have to worry about the insurance mandate. If you do not qualify, you may be subject to some penalties. The way I read it is that months you reside overseas you are covered, months you don't, you aren't. I'm sure this will be the subject of lawsuits and further clarification will come out by the time the penalty starts. Remember, the penalties for not having insurance don't kick in until 2014.

Edited June 30, 2012 by TheMason

[MikeB]

A good rule of thumb is that if you qualify for the foreign income exclusion credit on your US taxes, you don't have to worry about the insurance mandate.

Like most, I don't work so I don't qualify for the foreign income exclusion credit. I also maintain a US mailing address for a myriad of reasons. I'm wondering how you prove that you are living here at least 333 days a year so you can opt out of this mess.

[OnMyWay]

Without getting into the politics of Obamacare, I was wondering if anyone has any definitive information (or links to information) on exactly how it will impact expats as far as the requirement to have medical insurance and the penalty for not having it. I searched a bit and most of the information I found was on some expat forums, but it was from early 2010, at best. I would think that the legislation is posted somewhere, but I did not find it.

I found a few interesting tidbits but to me they are just hearsay unless backed up with some documentation. E.g., I read, if you are residing outside the US, you will be considered to have the minimum required medical insurance and will not be subject to the "tax" for not having insurance.

Some unanswered questions:

1. Is it true that expats will not be subject to the penalty tax if they do not have medical insurance with a US company, in the US? E.g., if I have no insurance in Phils or use a Phils insurance company.

2. What about the case of a split year, e.g., 5 months in the US and 7 months in Phils or vice versa? This could impact a lot of expats who are planning a move, and expats who are snowbirds, etc.

3. What is used to determine country of residence?

4. Does it matter if you are "residing" in another country, but only have a tourist visa, not a resident visa?

5. Is there any impact on residency status if you maintain a US mailing address?

I should probably know some of these answers, but I really never had to worry about all these details when I was working in Germany and the company took care of everything.

Thanks!

All the info you need is at this link....

http://www.gpo.gov/f...tleD-chap48.htm

In essence, the penalty for not having insurance is paid annually but assessed monthly. In any given month where you qualify under IRS guidelines as a non-resident, you are deemed to have met the insurance mandate. On months you do not meet the IRS guidelines, you are subject to the penalty if you do not obtain coverage while in the US.

(4) Individuals residing outside United States or residents of territories

Any applicable individual shall be treated as having minimum essential coverage for any month—

(A) if such month occurs during any period described in subparagraph (A) or (B) of section 911(d)(1) which is applicable to the individual, or

(B) if such individual is a bona fide resident of any possession of the United States (as determined under section 937(a)) for such month

So if you qualify under section 911(d)(1) of the tax code, you are not required to have insurance. Here is what section 911(d)(1) says.

(d) Definitions and special rules

For purposes of this section—

(1) Qualified individual

The term “qualified individual” means an individual whose tax home is in a foreign country and who is—

(A) a citizen of the United States and establishes to the satisfaction of the Secretary that he has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or

(B) a citizen or resident of the United States and who, during any period of 12 consecutive months, is present in a foreign country or countries during at least 330 full days in such period

A good rule of thumb is that if you qualify for the foreign income exclusion credit on your US taxes, you don't have to worry about the insurance mandate. If you do not qualify, you may be subject to some penalties. The way I read it is that months you reside overseas you are covered, months you don't, you aren't. I'm sure this will be the subject of lawsuits and further clarification will come out by the time the penalty starts. Remember, the penalties for not having insurance don't kick in until 2014.

Thanks! This is what I was looking for. The gray area see there are those 12 month rules, when you have to apply it a partial year like when you first move overseas. Hopefully that will not apply to me by 2014.

[Steve & Myrlita]

A good rule of thumb is that if you qualify for the foreign income exclusion credit on your US taxes, you don't have to worry about the insurance mandate.

Like most, I don't work so I don't qualify for the foreign income exclusion credit. I also maintain a US mailing address for a myriad of reasons. I'm wondering how you prove that you are living here at least 333 days a year so you can opt out of this mess.

That's easy Mike. Your passport. It will show both the date of RP entry and exits.

[MikeB]

That's easy Mike. Your passport. It will show both the date of RP entry and exits.

How would they verify it, send the passport into some govt agency? I don't think they will accept a passport as foreign proof of residence. I don't think it will be that easy, from the perspective of the US govt (SS, IRS, etc) I am 100% living in Florida, USA and I had planned to keep it that way, guess not.