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Ask an Expat: 5 questions about how Obamacare applies to US expats

April 9, 2014

Back in November, I answered questions for The Tico Times about what U.S. expats needed to know about Obamacare. I explained that although certain caveats apply, many U.S. citizens living overseas will not be subject to the Affordable Care Act’s individual insurance mandate. (For a a recap on why, see my previous story on “the physical presence test.”)

Much has changed in the world of Obamacare over the past few months since my last post on the subject. The broken website was repaired, the low enrollment numbers turned around (7.1 million people signed up, according to the White house), and open enrollment closed at the end of March. With Tax Day fast approaching, today we take a closer look at how the Affordable Care Act will affect specific expat situations.

Below are answers to the most common questions I’ve been receiving:

I am living overseas, and I qualify for an individual mandate exemption. What do I need to do to claim the exemption?  

Answer: Right now, you don’t need to do anything. The mandate is for the year 2014. It will be assessed or exempted on your 2014 tax return, which you won’t file until 2015.

I am moving abroad in the middle of the year. Will the mandate apply to me?

Answer: It depends on when you move. The individual mandate allows you to be without insurance or an exemption for up to three months in a year without paying a penalty. So, if you moved abroad in March you would not have to worry. If you moved later than that, you would need to have minimum insurance coverage for the months between March and when you moved. Claiming the exemption on your tax return for the months where you are abroad will be more difficult under this scenario, but should be possible with the help of a qualified tax preparer.

I am moving back to the United States during the summer. Since the open-enrollment deadline was March 31, will I be able to get an Affordable Care Act plan?

Answer: You can enroll in health insurance plans through the Affordable Care Act marketplaces either during open enrollment or through a “special enrollment” period. Special enrollment is a mechanism by which Obamacare allows you to enroll if you have had a major life change. These life changes include losing health insurance because of a job loss, marriage and divorce, the birth of a child — and moving back to the U.S.

Fortunately, moving back to the United States will qualify you for a 30-day special enrollment period. When you go back you will have 30 days from the date of your arrival to enroll in an Affordable Care Act compliant plan.

I don’t qualify for an exemption. However, I do have insurance through a company located outside of the United States (or a foreign government). Will this satisfy the Affordable Care Act mandate?

Answer: Probably not. The regulations surrounding Obamacare state that foreign insurance will not satisfy the coverage requirements. Foreign insurers can apply to the government to have their specific plans cleared as compliant, so some plans may satisfy the requirement. Contact your insurer to find out if your plan is compliant.

I have an Obamacare compliant health insurance plan that I purchased through the marketplace. Will this plan cover me overseas?

Answer: Doubtful. The law only requires for a plan that covers you in the United States. Nothing in the law prevents an insurer from offering a plan that provides international coverage — but most plans will not offer it. If you require international coverage due to travel, contact your insurer.

Ross Lustman is an attorney and enrolled tax agent with U.S. Tax and Accounting, S.A. He lives in Costa Rica and offers tax services for expats. Reach him at ross@ustaxinternational.com

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