New Tax For Us Expats?

[Gumballl]

In the last few months, I've been somewhat monitoring the debate in the US House of Representatives and in the Senate concerning the possibility of enacting a US Health Plan.

I have been a 'closet' supporter of this legislation because I have felt that it would provide universal health coverage for all US citizens. However in recent news summaries concerning the legislation, it would seem that this "coverage" is not universal, and that basically it mandates that all US citizens acquire health insurance, one way or another, or else Uncle Sam will penalize the dissidents.

I am far (time wise) from being an expat (in Thailand), however it would appear that US citizens that have not yet reached the 'golden' age to qualify for Medicare will need to buy into this new program. The funny thing is that buying into health insurance in the US may not provide coverage when the person is traveling, or is living as a resident, overseas. The penalty for not buying in would cost an individual $750/year.

Do any US expats here on TVF have an opinion as to whether this Health Plan is worthwhile? Will it provide "universal health coverage"? I for one would also like to hear from non-US expats in Thailand that originate from countries where they are afforded and qualify for health benefits, regardless of where they choose to live.

[JimmyTheMook]

I'm curious about this as well at best the $750 would be a tax write off if not living in USA or providing copies of your overseas insurance would waive this cost.

Either way I applaud Obama for having the stones to tackle the health insurance companies who have been getting away with ripping off the US public for years on end.

[CobraSnakeNecktie]

the devil will be in the details. So far the only thing I have noticed is that insurance and health care company stocks have really been rallying.

Yeah that's putting to those greedy companies. They are said to be fighting the legislation but you have to wonder if its not a ploy.

Is it even thought that non resident expats will have to carry the coverage when living abroad? Will non US visitors be required to have temporary health insurance when visiting the US? Will be interesting to see how this plays out.

[Jingthing]

There will be no nationalized health plan to buy into. That is false information. There will be a requirement to obtain insurance. Most Americans get insurance from employers. There will be subsidies to purchase private insurance based on income. Private insurance will be much easier to get, no more denials based on preexisting conditions; however, it will continue to get even more murderously expensive. The penalty for not doing so, starting in 2014 will be 750 dollars or 2 percent of your income, whichever is greater. I don't yet have details yet on expat exclusions. Insurance originating from non-US insurance companies does NOT qualify.

Edited December 25, 2009 by Jingthing

[Gumballl]

...

Insurance originating from non-US insurance companies does NOT qualify.

This is what I am concerned about; in such case the $750/year will amount to nothing more than a tax. Hopefully there is an exclusion for expats.

[Jingthing]

...

Insurance originating from non-US insurance companies does NOT qualify.

This is what I am concerned about; in such case the $750/year will amount to nothing more than a tax. Hopefully there is an exclusion for expats.

This came up in the senate version. They were talking about US residents buying foreign originated insurance (which is cheaper) to cover in the U.S. They specifically excluded this, clearly a win for the US insurance lobby. BTW, the US health insurance stocks rallied on the news of this bill, to the highest level in history. That should tell you who is the big winner here. I am not aware yet of any language in the house or senate versions specifically about expat exclusions. The final bill does not exist yet. It would be surprising in this massive bill if they didn't write in a non US resident exclusion. However, until we have the final language, its hard to say about the impact on expats. BTW, it is 750 penalty or 2 percent of income, whatever is GREATER, so for high income people, that would be a lot more than 750. There may also be exclusion from the penalty for low income people, but those are expected to obtain subsidized insurance. It gets pretty absurd if these rules are going to apply to legit expats.

Another detail. I know a lot of expats file taxes using a U.S. address. In my view, there are even more reasons now to use your Thai address on your tax form. These penalties if they do end up applying to expats will not kick in until 2014. If there is language for an expat exclusion, there will likely be rules about what constitutes an actual non-resident. I would also be concerned for the many of us that maintain US state driver's licenses, if you get my drift.

Edited December 25, 2009 by Jingthing

[JimmyTheMook]

^ Too early to assume any of these details.

Will my kids who also hold US Passports be "taxed" ?

Bonified expats filing and paying taxes from overseas surly will have some sort of exempt option.

It will be interesting for sure to see how this all pans out.

[Jingthing]

^ Too early to assume any of these details.

Will my kids who also hold US Passports be "taxed" ?

Bonified expats filing and paying taxes from overseas surly will have some sort of exempt option.

It will be interesting for sure to see how this all pans out.

They are rushing the bill. You never know until you see the final bill. Obama want something to brag about at his state of the union address. I am sure there will be many details of this that will have unintended consequences. One is already obvious. Many people won't bother getting insurance, penalty or no penalty, and then just buy it when they get sick (which will be allowed). That ruins the system because it depends on a huge pool of healthy people paying. Its a shame it was impossible to do it the logical, universal coverage way. Then everybody with income would pay by tax, creating the huge pool you need to make this work. This health issue, it ain't over.

Edited December 25, 2009 by Jingthing

[taxout]

Both the House and Senate bills have an expat exclusion; in general, you qualify if you meet either the 330/365 day physical presence test or the bona fide foreign resident test used to determine eligibility for the foreign earned income exclusion.

Since the expat exclusion is in both bills, it's reasonable to expect it to be in the Conference version of the bill.

[Jingthing]

Both the House and Senate bills have an expat exclusion; in general, you qualify if you meet either the 330/365 day physical presence test or the bona fide foreign resident test used to determine eligibility for the foreign earned income exclusion.

Since the expat exclusion is in both bills, it's reasonable to expect it to be in the Conference version of the bill.

Thanks very much for that. I wasn't aware.

However, that begs the question. If you stay longer than 35 days in any given year, you will be subject to the health insurance requirement (or penalty)? That is kind of a drag. I like to stay longer when I visit.

[taxout]

No, it doesn't beg the question, it answers it.

If you don't qualify under one of the two tests, then you're subject to the penalty if you don't have insurance. It's prorated for the part of the year you don't qualify. Whether 35 days spoils the 330/365 test depends on how much time you were in the States before and afterwards.

There may also be a hardship exemption in the final legislation that could apply to some.

Edited December 25, 2009 by taxout

[Jingthing]

Maybe for you, but I really do not understand the complexities of the bona fide foreign resident test.

[Gumballl]

Dump Obama! It's time for Change in America! Stop the BushO-bama farce in Afghanistan and the BushO-bama giveaways to Wall Street!

Time for a liberal third party to arise.

To do what? Sit on their thumbs and spin around?

[airplane]

Dump Obama! It's time for Change in America! Stop the BushO-bama farce in Afghanistan and the BushO-bama giveaways to Wall Street!

Time for a liberal third party to arise.

To do what? Sit on their thumbs and spin around?

That would be a very productive start!

If Bush-Obama-Cheney would stop killing innocent women and children in Iraq and Afghanistan and stop supporting an insane medical insurance industry, the US would be a far greater country.

[PeaceBlondie]

The war is off topic.

Jingthing, study the bonafide exclusion. You qualify. No counting of days.

[lopburi3]

A handful of off-topic posts have been removed.

[Pakboong]

I'm curious about this as well at best the $750 would be a tax write off if not living in USA or providing copies of your overseas insurance would waive this cost.

Either way I applaud Obama for having the stones to tackle the health insurance companies who have been getting away with ripping off the US public for years on end.

If Obama really has the stones, he can simply raise the the medication dispension limit from 90 to 180 day suppy, that alone would save 100s of billions in unnecessary doctors visits, calls, etc.. with associated fees therewith. This simple act will save more than enough to solve the problem. Killing the FDA and buying brand meds from Europe and generics from India solves the bigger problem without individual involvement.

[Alwaysright]

I'm curious about this as well at best the $750 would be a tax write off if not living in USA or providing copies of your overseas insurance would waive this cost.

Either way I applaud Obama for having the stones to tackle the health insurance companies who have been getting away with ripping off the US public for years on end.

If Obama really has the stones, he can simply raise the the medication dispension limit from 90 to 180 day suppy, that alone would save 100s of billions in unnecessary doctors visits, calls, etc.. with associated fees therewith. This simple act will save more than enough to solve the problem. Killing the FDA and buying brand meds from Europe and generics from India solves the bigger problem without individual involvement.

This special interests health bill is a joke.

[hhgz]

"If Obama really has the stones, he can simply raise the the medication dispension limit from 90 to 180 day suppy..."

It's obvious that you do not understand how legislation in the US becomes law, and that's unfortunate. The president does not write legislation - the US congress does. The president either signs or vetos the proposed legislation.

[powderpuff]

Jeez. One week we want to demonize oil companies (who pay whopping taxes) & the next week we want to demonize insurance companies.

According to the government takover of healthcare - you can't be denied for pre-existing conditions. That is like declining car insurance & then after you have a wreck you decide to buy some & you want your damage paid for.

Is that what you libs/progressives call fairness?

[Gumballl]

Jeez. One week we want to demonize oil companies (who pay whopping taxes) & the next week we want to demonize insurance companies.

According to the government takover of healthcare - you can't be denied for pre-existing conditions. That is like declining car insurance & then after you have a wreck you decide to buy some & you want your damage paid for.

Is that what you libs/progressives call fairness?

You are making the incorrect assumption that one cannot get medical care without insurance. It is possible, and it happens everyday. Oftentimes the patient fails to pay the complete medical bill, and then either the State or the Hospital must cover the loss.

The new legislation is a means to get everybody covered, one way or another. Those who elect not to get covered will be penalized for not participating in the program. I do not know what "teeth" this program will have to prevent someone for signing up for insurance after an incident has occurred. Maybe the program will be run like typical corporate programs where there is an open-season at the beginning (or end) of a fiscal year.

If one breaks their arm in July, they may have to wait until the end of the year to get insurance for the following year, and still have to pay the fine for not being insured the current year. In the meantime, their arm either dangles in pain, or they go to a Hospital for care. The patient will then be billed for the cost of this care. This is exactly how things are today.

[Jingthing]

The requirement to obtain insurance won't kick in until 2014.