Americans in Hong Kong and the ACA
The last five and a half years has been interesting with regards to health care and health insurance, especially so for Americans who have seen a dramatic change in the availability of health insurance in their country due in large part to the Affordable Care Act (ACA), otherwise known as ‘Obamacare’. Officially enacted in March 2010, this act saw a fundamental overhaul to not only the American health insurance industry, but also to health care itself.
While this is great for Americans in the US, there has been continued confusion about those living abroad. To help, we have created this overview article of the ACA and important things Americans living abroad need to know about it.
Basic rules of the ACA
As we stated above, this law was officially signed into being in 2010 with the aim of providing all Americans with affordable health insurance in order to help offset the rising costs of already expensive health care. The majority of the provisions in the bill came into effect in 2014, and according to an article from Gallup, has since seen a drop in the uninsured rate from 18% in late 2013 to 11.4% in the second quarter of 2015. This is largely due in part to the fact that it is now mandatory for most Americans to have health insurance coverage.
As a citizen living abroad, am I required to have ACA sanctioned health insurance?
The US has some of the quirkiest rules when it comes to Americans living abroad. For example, most Americans are required to file, and if certain thresholds are passed, pay taxes – even on foreign income. To that end, we do get questions from Americans living or moving abroad whether the laws surrounding the ACA pertain to them and, if so, in what capacity.
Interestingly, a lot of parameters of the ACA are actually closely related to or influenced by taxation. In this case, the ACA is connected to taxation through the ‘individual shared responsibility provision’, which is overseen by the IRS. The IRS defines this provision thusly, “Starting in 2014, the individual shared responsibility provision calls for each individual to have qualifying health care coverage (known as minimum essential coverage) for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return.”
In other words, you are required to submit forms that prove you are complying with the ACA with your tax return. Luckily, this provision clearly sets out who is, and isn’t included under the ACA.
In broad strokes, “All U.S. citizens living in the United States are subject to the individual shared responsibility provision as are all permanent residents and all foreign nationals who are in the United States long enough during a calendar year to qualify as resident aliens for tax purposes.” So looking at this, Americans and even foreigners living in the US are supposed to meet the minimum requirements for health insurance coverage, which can be found here.
So, are American’s living abroad subject to this provision? In short, the answer is: Yes, they are. Kind of.
According to Healthcare.gov, if you live abroad and spend LESS than 35 days in the US in 12 months, or are a resident of another country for a full calendar year, you are not required to have ACA compliant health insurance. If you don’t meet these requirements, you are responsible for securing health insurance. However, as the IRS states, “minimum essential coverage includes a group health plan provided by an overseas employer.”
The downside of being exempt
While many expats in Hong Kong may be pleased to find they are exempt from the ACA, there is one major downside to this: If you return home for medical care you will need to pay full price for any care. This is probably something you would rather avoid, so having health insurance would be a good idea. Of course, not all health insurance sold in Hong Kong will cover medical care in the US – almost all local plans will exclude it – which leaves you with two options:
International health insurance that includes coverage in the US and international health insurance that excludes care in the US. In reality, the second option will be better for the majority of American expats, as they likely only return to the US for shorter periods of time. However, if you travel to the US for business on a regular basis – but less than the 35 days a year – it may be beneficial to secure health insurance with coverage in the country.
The experts at Pacific Prime can help with securing this and even recommending an ideal plan that is ACA compliant, so just in case you do move home you can keep the plan. Contact us today to learn more.