Important Information about the Affordable Care Act
The plan you are applying for is NOT qualifying health coverage, or MINIMUM ESSENTIAL COVERAGE (MEC), 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 applicant(s).
U.S. citizens working and living outside the United 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?
For the 2017 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.
The penalty rises yearly with inflation.
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
$695 per adult
$347.50 per child under 18
The average 2017 monthly premium for a Bronze level plan: $388
2018 and Beyond: The IRS was lenient with enforcing ACA regulations regarding healthcare coverage requirements during the 2017 tax filing season, following Executive Order 13765. In 2018, however, the IRS will automatically reject any tax returns that fail to indicate whether the filer or dependents have appropriate coverage, qualify for an exemption or will make a shared responsibility payment to comply with the tax penalty. While the individual mandate will remain in place, the tax penalty assessed for failing to meet the requirements will be canceled beginning in 2019 - removing the dollar amount and percentage of income penalties previously been imposed.
For more information on the 2018 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
- Comparison: International Coverage vs US Domestic ACA Coverage.
- Exemptions from the ACA Tax Penalty: https://www.healthcare.gov/exemptions/
- Determining Alien Tax Status: https://www.irs.gov/Individuals/International-Taxpayers/Determining-Alien-Tax-Status
- ACA Individual Mandate: https://www.healthcare.gov/fees-exemptions/fee-for-not-being-covered/
- Plan FAQ's: https://www.hthtravelinsurance.com/gl_citizen/faqs.cfm
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.