Affordable Care Act Health Insurance Plan-Keep or Dump it?

[sqwakvfr]

I should be in CM in about a month or two on a Non-Immigrant O-A Visa(Retirement Extension).  The question I have is should I keep my ACA Health Insurance Policy?  My current ACA policy does provide some limited coverage for overseas events(mostly Emergency Medical Treatment etc and no medical evacuation coverage).  I have researched the ACA law and it appears to indicate if one moves out of the USA then one is not required to comply with the requirements of the ACA.  I have also heard from others who state that one must maintain ACA health insurance coverage until one has been out of the USA for 330 days(this seems incorrect).  Any thoughts from Veteran TV members would be appreciated.  I have an appointment with my CPA soon hopefully he will have a definitive answer.  

 

I hope the entire ACA will be history by Jan 1, 2018.  Unfortunately the ACA is still the law of the land.  

[gk10002000]

My understanding is you are "required" to have it until you meet the overseas time requirements.  Now the good thing is your cost may be very low for many reasons, your foreign income may be exempt, you aren't working, etc.   But, don't you next year when you file your taxes you may get a rebate for what you paid in premiums versus what you actually made in money and what those premiums should have been?

 

http://obamacarefacts.com/questions/330-day-rule-living-abroad-work/

[taxout]

Technically, you're not required to have qualifying insurance. But if you don't have it and don't meet one of the exemptions, then you pay a penalty.

 

One exemption follows the Section 911 earned-income exemption rule: it applies to those who are outside the U.S. for at least 330 days in any twelve-month period.

 

The Obamacare penalty is calculated by month, and you're exempt from the penalty in any month that falls within a rolling twelve-month period in which you've spent at least 330 days outside the U.S.

 

In short, if you first leave the U.S. on March 1, 2017 and don't return thereafter, then you'll meet the Obamacare exemption for all but January, 2017. Assuming you were covered by Obamacare in January while still in the U.S., you'll owe no penalty; otherwise you'll owe 1/12 of the annual penalty.

 

Of course your circumstances could change and you might return to the U.S. before meeting the 330-day test, in which case the penalty would apply if you didn't keep your Obamacare and one of the other exemptions doesn't apply.

[sqwakvfr]

Taxout, great answer.  You are completely right.  I guess the key word would be "pro-rated" penalty if any.

 

[gk10002000]

4 hours ago, taxout said:

Technically, you're not required to have qualifying insurance. But if you don't have it and don't meet one of the exemptions, then you pay a penalty.

 

One exemption follows the Section 911 earned-income exemption rule: it applies to those who are outside the U.S. for at least 330 days in any twelve-month period.

 

The Obamacare penalty is calculated by month, and you're exempt from the penalty in any month that falls within a rolling twelve-month period in which you've spent at least 330 days outside the U.S.

 

In short, if you first leave the U.S. on March 1, 2017 and don't return thereafter, then you'll meet the Obamacare exemption for all but January, 2017. Assuming you were covered by Obamacare in January while still in the U.S., you'll owe no penalty; otherwise you'll owe 1/12 of the annual penalty.

 

Of course your circumstances could change and you might return to the U.S. before meeting the 330-day test, in which case the penalty would apply if you didn't keep your Obamacare and one of the other exemptions doesn't apply.

I don't think this is quite right.  I believe you have to BE out of the states for 330 days, then at that point you are no longer required to have Obamacare.  I don't like it, but that is how I would read it.  On March 1, 2017, he wouldn't have been out of the USA for 330 days.  I understand completely what you wrote and I like it, but I am not sure it is correct.  The big difference is people could leave the USA at month 1 and NOT buy coverage because they expect to be away for 330 days, then they may be away only 220 days.  Now they would not have paid for coverage but they would NOT have been exempt.  The idea behind  Obamacare is it demands people to be always covered, until a situation or circumstance comes up that allows them to be exempt.  My two cents worth

[taxout]

What I've said is right, though of course go ahead and do your own taxes your own way.

 

The exemption is based on the Section 911 foreign earned income exemption, and that's how the Section 911 330-day test works. As the IRS says describing those who qualify for the exemption, "In general, these U.S. citizens and U.S. residents are individuals who qualify for a foreign earned income exclusion under section 911 of the Internal Revenue Code."

 

https://www.irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-individual-shared-responsibility-provision

[gk10002000]

10 hours ago, taxout said:

What I've said is right, though of course go ahead and do your own taxes your own way.

 

The exemption is based on the Section 911 foreign earned income exemption, and that's how the Section 911 330-day test works. As the IRS says describing those who qualify for the exemption, "In general, these U.S. citizens and U.S. residents are individuals who qualify for a foreign earned income exclusion under section 911 of the Internal Revenue Code."

 

https://www.irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-individual-shared-responsibility-provision

I  know what the words say, I just am not sure you are interpreting the words correctly.  Yes it is based in general on the foreign earned income situations, but those exemptions are only determined After the time periods have elapsed and you calculate your taxes.  Paying for or having medical coverage until then is not the same thing.  But as you said to each their own.

[gk10002000]

The key point is what happens on May 1, 2017 if you did not have Obamacare.  Sure you intended to be away for 330 days, but you haven't yet been away 330 days. 

[taxout]

I'm just afraid you may be confusing others here.

 

When you pay your taxes in 2018 for 2017, you look back and determine which months you either had coverage or had an exemption in 2017. You then owe a penalty for any month in 2017 when you weren't covered or exempt. Thus the penalty for 2017 is determined and paid in 2018.

 

By the time you file your return in 2018, it will be clear whether you met the 330-day test for any month. If that's not clear by the normal April 15 filling date -- perhaps you moved overseas in October, say -- then you get an extension from the IRS and file later in the year after the relevant 330-day period has elapsed.

 

The 330-day test has been around for years under Section 911, and the rules applying it are pretty well understood by now.

Edited February 4, 2017 by taxout