U.S. citizens who are technically residents of another country are not affected by Obamacare and its requirement to purchase health insurance coverage. Also exempt are U.S. citizens who spends 330 days or more overseas during the year.
Interestingly however, Obamacare offers an opportunity to purchase health insurance at reasonable costs. It may be advantageous for certain expats to purchase coverage. Early retirees (with no Medicare coverage and low income) are clear beneficiaries.
That is because insurance premiums are subject to income levels, which means the government provides subsidies to cover part of your insurance premiums.
While Obamacare is federally mandated, it is often operated at the state level. Generally speaking, Democrat states operate their own “Health Exchanges,” or online markets where individuals can purchase health insurance. Purchasing individual health coverage in Republican states is usually done via www.HealthCare.gov.
If you file your U.S. tax return using a U.S. address, then you should apply for Obamacare based on the state designated on your tax return. If you are currently using a foreign address on your tax return, you will need to change to a U.S. address (i.e. be a resident of a particular state) before you can apply for Obamacare. Unfortunately, expats that utilize the foreign earned income exclusion are unlikely to qualify for coverage.
Obamacare for expats is a complicated topic, involving both health insurance and tax issues. Your best bet to understand how Obamacare may be appropriate is to speak with a call center representatives employed by the health exchange. Furthermore, you should speak with your tax accountant about the implications of purchasing Obamacare subsidized health coverage.
John Ohe (IRS Enrolled Agent and Chartered Financial Analyst) is Co-founder at Hola Expat. Our firm prepares taxes for Americans living abroad. If you would like to ask a tax-related question, please email us: firstname.lastname@example.org.
Disclaimer: The answers provided in this article are for general information, and should not be construed as personal tax advice. Tax laws and regulations change frequently, and their application can vary widely based on the specific facts and circumstances involved.
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