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Obamacare Tax Penalty when insured through a foreign insurer

Posted: Thu Dec 15, 2016 2:04 am
by natureexplorer
I have excellent health insurance through a foreign insurer that fully covers me in the US.

Will I have to pay the tax penalty or is there some way around it?

Re: Obamacare Tax Penalty when insured through a foreign insurer

Posted: Thu Dec 15, 2016 2:13 am
by kirent
I believe that your foreign insurance must meet the minimum essential coverage guidelines. You can call the healthcare.gov people and see if they can tell you if your insurance qualifies.

As to getting around it, will you be out of the US for more than 330 days? If so you can apply for a waiver. Do you have some sort of reason why this is being done? Depending on the reason, there are various hardship waivers you could use.

Re: Obamacare Tax Penalty when insured through a foreign insurer

Posted: Thu Dec 15, 2016 2:21 am
by natureexplorer
kirent wrote:I believe that your foreign insurance must meet the minimum essential coverage guidelines. You can call the healthcare.gov people and see if they can tell you if your insurance qualifies.
Oh this is excellence news, thanks! I will look into that. How does this look like at tax return time? Can I just assume that my plan qualifies and check a box or do the healthcare.gov people have to approve it beforehand? If yes, there there a specific letter, tax form, or certificate they have to issue?
kirent wrote:As to getting around it, will you be out of the US for more than 330 days?
No.
kirent wrote:Do you have some sort of reason why this is being done?
Because it is cheaper and better than the Obamacare plans.

Re: Obamacare Tax Penalty when insured through a foreign insurer

Posted: Thu Dec 15, 2016 7:07 am
by HueyLD
Ask your foreign insurer if its policy provides minimum essential coverage. Otherwise, you will have to pay a penalty.

"Response: We agree that the health care benefits provided by foreign governments or through foreign insurance for legally admitted non-citizens of the United States vary from country to country and may create a barrier to care if health care providers in the United States do not accept payment from such coverage. Therefore, foreign health coverage is not designated as minimum essential coverage in this final rule. However, sponsors of foreign health coverage may apply for their coverage to be recognized as minimum essential coverage in the process outlined in § 156.604 of this final rules."

https://www.federalregister.gov/documen ... tions#h-42

Re: Obamacare Tax Penalty when insured through a foreign insurer

Posted: Thu Dec 15, 2016 11:02 am
by natureexplorer
HueyLD wrote:Ask your foreign insurer if its policy provides minimum essential coverage. Otherwise, you will have to pay a penalty.

"Response: We agree that the health care benefits provided by foreign governments or through foreign insurance for legally admitted non-citizens of the United States vary from country to country and may create a barrier to care if health care providers in the United States do not accept payment from such coverage. Therefore, foreign health coverage is not designated as minimum essential coverage in this final rule. However, sponsors of foreign health coverage may apply for their coverage to be recognized as minimum essential coverage in the process outlined in § 156.604 of this final rules."

https://www.federalregister.gov/documen ... tions#h-42
HueyLD, this is very helpful, thanks!

How does this look at tax return time? Do I simply have to state on the tax return that I have insurance that provides minimum essential coverage or is otherwise eligible by ACA rules? Or is there some other mechanism that needs to be fulfilled to prevent the tax penalty?

I have become a US citizen.

Re: Obamacare Tax Penalty when insured through a foreign insurer

Posted: Thu Dec 15, 2016 11:21 am
by Rupert
natureexplorer wrote:
HueyLD wrote:Ask your foreign insurer if its policy provides minimum essential coverage. Otherwise, you will have to pay a penalty.

"Response: We agree that the health care benefits provided by foreign governments or through foreign insurance for legally admitted non-citizens of the United States vary from country to country and may create a barrier to care if health care providers in the United States do not accept payment from such coverage. Therefore, foreign health coverage is not designated as minimum essential coverage in this final rule. However, sponsors of foreign health coverage may apply for their coverage to be recognized as minimum essential coverage in the process outlined in § 156.604 of this final rules."

https://www.federalregister.gov/documen ... tions#h-42
HueyLD, this is very helpful, thanks!

How does this look at tax return time? Do I simply have to state on the tax return that I have insurance that provides minimum essential coverage or is otherwise eligible by ACA rules? Or is there some other mechanism that needs to be fulfilled to prevent the tax penalty?

I have become a US citizen.
My health insurer actually sends me a form each year stating that I have minimum essential coverage. I believe you have to have this form. You should contact your insurer.

Re: Obamacare Tax Penalty when insured through a foreign insurer

Posted: Fri Dec 16, 2016 8:47 am
by HueyLD
natureexplorer wrote:How does this look at tax return time? Do I simply have to state on the tax return that I have insurance that provides minimum essential coverage or is otherwise eligible by ACA rules? Or is there some other mechanism that needs to be fulfilled to prevent the tax penalty?
If your foreign insurance company provides at least MEC in accordance with the U.S. law, it will be required to send you and the IRS form a copy of 1095-B.

Without the 1095-B, IRS will know that you do not have any MEC and will assess a penalty known as "individual shared responsibility payment (ISRP)."

In other words, contact your foreign insurance company and hopefully it has been certified by the U.S. Otherwise, get ready to pay an ISRP.

Re: Obamacare Tax Penalty when insured through a foreign insurer

Posted: Fri Dec 16, 2016 10:45 am
by natureexplorer
HueyLD wrote:If your foreign insurance company provides at least MEC in accordance with the U.S. law, it will be required to send you and the IRS form a copy of 1095-B.

Without the 1095-B, IRS will know that you do not have any MEC and will assess a penalty known as "individual shared responsibility payment (ISRP)."

In other words, contact your foreign insurance company and hopefully it has been certified by the U.S. Otherwise, get ready to pay an ISRP.
HueyLD, ok,thanks so much!

Re: Obamacare Tax Penalty when insured through a foreign insurer

Posted: Fri Dec 16, 2016 7:08 pm
by clast
I'm interested in the outcome of this, please post a follow-up. Thank you

Re: Obamacare Tax Penalty when insured through a foreign insurer

Posted: Sun Apr 16, 2017 5:52 am
by natureexplorer
clast wrote:I'm interested in the outcome of this, please post a follow-up. Thank you
Sadly, I fear HueyLD is correct. I did contact the foreign insurer and they are not certified by the US and why would they? It's annoying, because the foreign insurance policy is incomparably better than anything available on the US market.

Re: Obamacare Tax Penalty when insured through a foreign insurer

Posted: Sun Apr 16, 2017 8:19 am
by ikowik
natureexplorer wrote:
clast wrote:I'm interested in the outcome of this, please post a follow-up. Thank you
Sadly, I fear HueyLD is correct. I did contact the foreign insurer and they are not certified by the US and why would they? It's annoying, because the foreign insurance policy is incomparably better than anything available on the US market.
Sorry that it looks like your foreign health insurance is not recognized in US for tax purposes.

I am curious. Mindful of privacy, would you expand on why you went this route? Have you used your health insurance while in US, and did it all work satisfactorily? I have seen on expat sites that foreign insurance companies often exclude coverage in the US.

Re: Obamacare Tax Penalty when insured through a foreign insurer

Posted: Mon Apr 17, 2017 12:16 am
by natureexplorer
ikowik wrote:
natureexplorer wrote:
clast wrote:I'm interested in the outcome of this, please post a follow-up. Thank you
Sadly, I fear HueyLD is correct. I did contact the foreign insurer and they are not certified by the US and why would they? It's annoying, because the foreign insurance policy is incomparably better than anything available on the US market.
Sorry that it looks like your foreign health insurance is not recognized in US for tax purposes.

I am curious. Mindful of privacy, would you expand on why you went this route? Have you used your health insurance while in US, and did it all work satisfactorily? I have seen on expat sites that foreign insurance companies often exclude coverage in the US.
I'm grand-fathered into a foreign plan that does cover me in the US. No deductibles. No network restrictions. No premium increases due to age. Some people spend money on cars, I spend it on this insurance plan.

Of course, Obamacare rules are throwing me a curve ball. I am now looking into starting a religion that objects to the use of health insurance, which would exempt me from the penalty :)

Re: Obamacare Tax Penalty when insured through a foreign insurer

Posted: Mon Apr 17, 2017 9:34 am
by curmudgeon
natureexplorer wrote: Of course, Obamacare rules are throwing me a curve ball. I am now looking into starting a religion that objects to the use of health insurance, which would exempt me from the penalty :)
I was amused to note that the local welfare office isn't sending the certificates of insurance required by ACA to their medicaid clients; they say "the IRS allows you to self-certify your coverage this year, so we won't send you the form". I dunno whether you could self-certify your own coverage. Speaking of religion, though, you might be able to join one of the "health sharing ministries" for a fairly low cost and gain an exemption that way for less cost than the penalty. And who knows whether there will be a penalty for 2017 in any case.