With the implementation of the Affordable Care Act going into effect on the first day of 2014, many Americans who live abroad are unsure how these changes might affect their lives. While the Affordable Care Act requires all Americans to have health insurance within the country, those who spend the majority of their time overseas might not need or benefit from this type of insurance. Discover what the government has done to address the issue and learn about how expatriates living overseas can handle the Affordable Care Act.
Affordable Care Act - Mandate for All Citizens
In order to ensure that the Affordable Care Act, often called Obamacare, is effective and implemented across the board, the government has mandated that every individual purchase some type of health insurance for themselves. Individuals who decide not to have health insurance for any reason will have to pay a small fee, which will be a certain amount deducted by the IRS on their tax refunds each year. While the initial amount is set to be quite small, it may grow over time.
What about Overseas Americans?
While the mandate above might make sense for those American citizens actually living in the United States, it causes some confusion when it comes to American citizens who live abroad. However, the IRS has eliminated the problem altogether by waiving the mandate and associated fee for Americans who live primarily in a different country, such as individuals who call Nicaragua's Gran Pacific Beach & Golf Resort their primary residence.
Fine Print about the Mandate Waiver
While the IRS waiving the mandate and fee is definitely great news to Americans living abroad, it is important to understand the fine print that accompanies this announcement. The waiver only applies to Americans who spend a minimum of 330 days each year outside of the United States. If you spend a month or more each year in America, you will be required by law to have health insurance or pay the required fee. This mandate is waived for those who meet the standards whether or not you have health insurance in the country where you primarily reside.
For Americans who spend more than 330 days abroad, the Affordable Care Act will have little, if any, impact on their finances and responsibilities. Click here to learn more about some of the financial and tax benefits of living outside of the United States.