Obamacare and U.S. expats

ObamaAmericans who are technically residents of another country are not affected by Obamacare and its requirement to purchase health insurance coverage (plus penalties for not complying). American citizens are also exempt if he or she spends 330 days or more outside the U.S. 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 insurance. 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. Therefore, 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. Unfortunately, there is not a lot of information available on-line. Moreover, there are very few expat tax professionals that truly understand Obamacare. Let us know if you have questions.

About John Ohe
John Ohe

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: info@holaexpat.com.

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