Important Information about the Affordable Care Act

At this time, there are no individual expatriate plans sold to Americans that meet the definition of Minimum Essential Coverage (MEC) and thus meet the individual mandate. Why is this important to you? Because the plan you are applying for IS NOT QUALIFYING HEALTH COVERAGE ("MINIMUM ESSENTIAL COVERAGE") THAT SATISFIES THE HEALTH COVERAGE REQUIREMENT OF THE AFFORDABLE CARE ACT. IF YOU DON'T HAVE MINIMUM ESSENTIAL COVERAGE, YOU MAY OWE AN ADDITIONAL PAYMENT WITH YOUR TAXES. Coverage by the insurer can be: 1.accepted 2.accepted with a rate increase, or 3.denied based on the health history of the applicants(s).

U.S. citizens working and living abroad who are outside the states for 330 days or more in a 12-month period are not required to maintain MEC. In this instance, you are deemed to have met the individual mandate. Additionally there is no tax penalty applicable to J1, F1, M1 visa holders and other populations that meet one of the exemption categories related to the ACA individual mandate.

You and your family must either have a (MEC) health plan throughout the year, qualify for an exemption from coverage, or make a payment when you file your federal income tax return.

What is the tax penalty for a non MEC plan?

  • 2016 & 2017: The higher of $695 per person (up to 3 people, or $2,085) OR 2.5% of taxable income up to the penalty cap.
  • After 2016: The same as 2016, but adjusted annually for cost-of-living increases.

For specifics on how the shared responsibility payments are calculated and more information on the ACA, visit HTH Affordable Care Act FAQ's.

ACA Background

The Patient Protection and Affordable Care Act (PPACA), also known as the Affordable Care Act (ACA), was first introduced to increase the quality and affordability of health insurance and lower the number of uninsured Americans.

Three key features make up the ACA: plans are guaranteed, community rating, and an individual mandate. Click here for an overview of the key features of the ACA.

American expats need to carefully consider their healthcare options balancing both financial and emotional risk.

Helpful Links

The information expressed above is for general, instructional purposes only and should not be considered as legal or accounting advice. Applicants should consult a tax professional for a comprehensive evaluation including whether or not a tax penalty may apply based on your own individual situation.

Affordable Care Act FAQs

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International Health Coverage and the ACA

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