When choosing to live or work abroad, navigating healthcare coverage and U.S. healthcare laws can be tricky.
As a U.S. citizen living abroad, you may wonder whether or not you still have to comply with Affordable Care Act (ACA) health insurance requirements, even though you aren’t residing in the United States for an extended period of time.
Not complying with ACA requirements can lead to facing penalties, so it is important to understand how to navigate this complex situation and what your options are as a U.S. citizen living or working internationally.
What Are the ACA Requirements?
The Affordable Care Act, enacted in 2010, introduced several key requirements aimed at expanding access to health insurance, reducing healthcare costs, and protecting consumers.
Most importantly, the ACA required that U.S citizens and permanent residents to have and maintain health insurance that meets Minimum Essential Coverage (MEC).
Prior to 2019, not maintaining a health insurance plan as a U.S. citizen or resident would result in a federal tax penalty. While this is no longer in effect, some states may apply a tax penalty if you don’t meet the ACA requirements.
Are U.S. Citizens Living Abroad Subject to ACA Requirements?
The Affordable Care Act (ACA) requirements generally do not apply to U.S. citizens living abroad for extended periods.
The ACA mandates that U.S. residents maintain minimum essential health coverage or potentially pay a penalty depending on your state of residence; however, expats who meet certain criteria are exempt from this requirement.
Expat exemptions to the ACA requirement include:
- U.S. citizens who reside abroad for at least 330 full days within a 12-month period qualify for exemption.
- Expats can also qualify for exemption if they are bona fide residents of a foreign country for an entire tax year. This means that if you can prove you genuinely live and work abroad, you will not be subject to ACA requirements.
While some expats are exempt from the coverage mandate, they must still report their income to the IRS, and they may need to claim the exemption on their U.S. tax returns.
If you return to the U.S. and establish residency again, you will be required to comply with ACA requirements and may need to enroll in a qualified health plan to avoid penalties, if applicable.
Options for Expats That Don’t Meet Exemption Eligibility
If you are an expat that doesn’t meet exemption eligibility, it is important to do your research to understand any state laws regarding ACA compliance and penalties.
If you live in a state that has a penalty for not meeting ACA requirements, you may want to consider the cost of the penalty versus maintaining an ACA-compliant health insurance policy while living abroad.
Most importantly, most U.S.-based health insurance plans will not cover you while living abroad. So while you may want to maintain a health insurance plan in the U.S. to avoid a state tax penalty, you should still consider getting expat health insurance to remain covered outside of the United States.
Health Insurance Options for Expats
When living abroad, it is crucial to make sure that you have adequate health coverage. Expat health insurance can cover you while living outside of your home country, and can cover all of your essential healthcare needs such as emergency medical care and routine care.
Not having health insurance while living abroad can pose significant issues financially when getting medical attention if you do not qualify for healthcare coverage in your host country.
With expat health insurance, you can have access to quality medical care and comprehensive coverage in your host country.
Health Coverage Abroad Is Crucial for Expats
While some U.S. citizens living abroad may not need to meet ACA requirements, it is critical to do your research and weigh your options to understand ACA exemption eligibility and potential penalties for non-compliance.
Above all, having health coverage while living abroad is crucial for expats to ensure that you have access to the medical care you need to continue living happy and healthy.
Want to learn more? Read on about expatriate health insurance or compare our available expat health insurance plans to get covered today.
