Important Information about the Affordable Care Act

The plan you are applying for is NOT MINIMUM ESSENTIAL COVERAGE (MEC). Starting with the 2019 plan year (for which you'll file taxes by April 2020), the federal penalty if you do not have a qualifying MEC plan no longer applies. If you don't maintain MEC coverage during 2019 or later, you no longer need to meet an exemption to avoid the penalty. This is a January 1st, 2019 change to federal law, not individual state laws. If you are deemed a resident of certain states for tax filing purposes, such as Massachusetts, a penalty could still apply for not maintaining an MEC plan. Consult a tax professional if you have questions.

Note: Coverage by the insurer can be:
1. accepted 2. accepted with a rate increase, or 3. denied based on the health history of the applicant(s).

For the 2018 plan year, U.S. citizens working and living outside the United States for 330 days or more in a 12-month period were not required to maintain MEC. In this instance, they were deemed to have met the individual mandate. Additionally, during 2018, there was 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.

For the 2018 plan year, you and your family must either have maintained an MEC health plan throughout the year, qualified for an exemption from coverage, or you will need to make a payment when you file your federal income tax return (for the 2018 tax year).

What is the tax penalty for a non MEC plan?

For the 2018 plan year, the fee is calculated 2 different ways - as a percentage of your household income, and per person. You'll pay whichever is higher.

Percentage of income
2.5% of household income
Maximum: Total yearly premium for the national average price of a Bronze plan sold through the Marketplace
Per person
$695 per adult
$347.50 per child under 18
Maximum: $2,085

The average 2018 monthly premium for a Bronze level plan: $283. The 2018 penalty is paid when you file your 2018 taxes by April 2019.

For the 2018 tax year, the IRS could automatically reject any tax returns that fail to indicate whether the filer or dependents had appropriate coverage, qualified for an exemption or must make a shared responsibility payment to comply with the tax penalty. Starting with the 2019 plan year (for which you'll file taxes in April 2020), the federal penalty if you do not have a qualifying MEC plan no longer applies. If you don't have coverage during 2019 or later, you don't need an exemption to avoid the penalty.

For more information on the 2019 filing season, read the IRS's "ACA Information Center for Tax Professionals" at www.irs.gov/tax-professionals/aca-information-center-for-tax-professionals to or visit HealthAffairs.org.

For specifics on how the shared responsibility payments are calculated and more information on the ACA, visit HTH Worldwide 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.

Click here for an overview of the key features of the ACA and to check your eligibility for a traditional MEC plan (note, these plans are not built with expatriates in mind and benefits shrink or disappear when borders are crossed).

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.

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