PPACA / ACA and international group health insurance:
What you need to know about your overseas organization or non-profit, international staff on assignment and PPACA insurance guidelines
The following is a general overview. As always, we encourage you to email or call Good Neighbor, your carrier, and your accountant with specific questions regarding your group insurance plan and taxes.
The ACA and international group health insurance:
We have received a number of questions in regards to how the Affordable Care Act relates to International group insurance and staff.
“To what extent is expatriate group health insurance coverage subject to the provisions of the Affordable Care Act?” Or stated from an individual perspective, “Is an individual residing outside of his/her home country and covered under an employer group plan subject to the PPACA?” and “Am I subject to penalties if I return to the U.S.A. longer than 30 days?” or “If I return to the USA for good, will I be eligible for insurance or have to wait until the next open enrollment period (to have coverage begin the following January 1st)?”
Here are the facts as communicated (so far) by the U.S. Government, by one of our Insurance carriers, as well as by our expert consultants:
- Minimal Essential Coverage (MEC) is required for all U.S. citizens
All U.S. citizens are required to have insurance coverage that meets the Minimal Essential Coverage requirements of the Affordable Care Act, unless they are exempt.
- Exempt U.S. citizens – Includes those U.S. citizens who reside outside of the U.S. for over 330 days a year or are bone fide residents of a foreign nation.
- IRS Penalty for Expats relieved until 2016 for those on individual insurance plans
Expats who return to the U.S., and stay longer than 3 months without getting ACA-compliant insurance, will be subject to an IRS penalty under the Individual Mandate of the PPACA. However this penalty will not be enforced for expats through December 31, 2015. Further clarification for those on individual insurance plans residing outside the USA can be found here. (Expats are defined as “individuals residing outside of their home country for at least 330 days of the calendar year and any covered dependents.)
- The following ruling from the U.S. Dept. of Labor applies to U.S. expatriates on International Group Plans (“Expatriate Health Plans”):
If you are a US citizen and have lived overseas for at least 6 months of the plan year on group insurance, you are considered an expat. As such you will not be subject to the IRS penalty when you come home on furlough.
- If/when employees return home from an overseas assignment, they will be eligible to enroll due to their qualifying “status change” even if they miss the Open Enrollment period. Events that qualify as a “status change” include: Adoption, Birth, Change of spouse’s employment/benefits, Death of a dependent, Death of a spouse, Divorce, Gain or loss of employment, Legal separation, Loss of eligibility for coverage as a result of reduction in hours, leave of absence, Marriage, Qualified Medical Child Support Orders (QMCSOs), relocation after living overseas/expatriate.
- For more, please see the Expatriate Health Coverage Clarification Act of 2014 – H.R. 4414
For smaller organizations and businesses with under 50 FTEs:
July, 2015 – All organizations (even those with under 50 full-time employees) are subject to up to $100 per violation, per person per day, for payments or reimbursements of either “individual policy premiums or for other out-of-pocket medical costs) that do not comply with ACA market reforms” according to “FAQs about Affordable Care Act Implementation (Part XXII)” prepared jointly by the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury published on November 6, 2014. Read article here.
Expatriate organizations and businesses with staff overseas:
On March 8, 2013, the Departments of Labor, Health and Human Services and Treasury issued a Frequently Asked Question (FAQ) announcing that, for expatriates on international group plans, compliance with most PPACA provisions is being delayed until January 1, 2016. The relief from compliance applies for plan years 2014 and 2015 on plans that meet the following definition:
“Insured group health plans with plan years ending on or before December 31, 2015, in which enrollment is limited to individuals residing outside of their home country for at least six months of the plan year and any covered dependents.”
International Group Insurance and the new PPACA/ACA laws – Questions and Answers
“I’ve heard different dates regarding tax penalties for those who do not meet the minimum requirements (have PPACA-compliant insurance). What is correct?”
Answer: Individual and group health insurance policies are regulated differently based on differing standards.
For those on a international employer or group plan (“Expatriate Health Insurance”), please contact your POC (point of contact) within your organization or direct questions to email@example.com.
“Is there a group mandate as well as an individual mandate?”
Answer: Yes. The individual mandate applies to all individuals starting Jan 1st 2014 whether they are part of a group or not. It will be administered at tax time…but penalties are no longer being enforced. The group (employer) mandate applies to large employers (50 or more units). This mandate applies to those groups that have 50 or more W-2’s. Part-time employees do count towards that 50 based on a formula. That formula helps you determine if you have to meet the employer mandate or not. The mandate simply says if you are eligible as an employer, you must furnish health insurance for your group and that coverage must meet certain standards in affordability and coverage. No groups are affected this year, meaning groups like yours won’t have to make any immediate changes.
Mark J. Mazur, the assistant secretary for tax policy at the U.S. Treasury Department, made the announcement regarding the delay via the Treasury Notes blog late in the day on July 2, 2013. Mazur said the mandate’s delay is intended to “provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.” The postponement of the employer “shared responsibility” mandate—sometimes referred to as “pay or play”—is linked to a delay (announced at the same time) until 2015 in implementing two PPACA penalty-related information-reporting provisions: Section 6055, which requires reporting by insurers, self-insuring employers and other parties that provide health coverage; and Section 6056, which requires reporting by certain employers concerning the health coverage they offer to their full-time employees.
“What if our group has more than 50 employees, but a number of them live/reside outside of the U.S. most of the year?”
Answer: There has not been a definitive answer to this question yet. We expect to hear something in early 2015.
“I live abroad (outside the U.S. and have international group insurance that is not-compliant. I have been told it does not need to be since it is for international use, not full-time U.S. residents residing in America. Does the “Individual Mandate” apply to me?”
Answer: No. The Individual mandate states that U.S. citizens who live abroad for a calendar year (or at least 330 days within a 12 month period) are considered as having “minimum essential coverage” if they have credible international health coverage, and, therefore, are not required to purchase PPACA-compliant coverage. As an employee with health coverage through your organization, you are excluded from penalties. So as long as you don’t move back to the USA, or leave your current employer, you don’t need to worry about complying with the individual mandate.
I am a Non-U.S. citizen covered under an international Insurance Plan. Does the U.S. individual mandate apply to me?
Under PPACA, only U.S. citizens, nationals and resident aliens residing in the USA will be required to purchase minimum essential coverage (PPACA compliant coverage), unless they are exempt. Most international health plans do not meet the definition of “minimum essential coverage” under PPACA, nor do they need to be. If you live, or intend to live in the USA for more than 3 months this year, you should review the information below to see if you are exempt from the requirements of PPACA or not.
The IRS provides a questions and answers page on the individual mandate. Question 11 asks whether all individuals living in the U.S. are subject to the mandate. The answer is that U.S. citizens and permanent legal residents are subject to the mandate, as are “foreign nationals who are in the U.S. long enough during a calendar year to qualify as resident aliens for tax purposes.” Thus, non-resident aliens are not subject to the individual mandate, even if they have to file a tax return.
Am I a Resident or Non-Resident Alien?
Answer: The IRS states that you are a non-resident alien unless you meet either the green card test or the substantial presence test.
According to IRS Publication 519, Tax Guide for Aliens, under the green card test, green card holders are resident aliens for tax purposes. The substantial presence test uses a formula to count the number of days present in the U.S. over the past 3 years. Generally, you are a resident alien after six months of presence in the U.S. – unless you are exempt.
Exempt non-U.S. citizens include:
- A non-U.S. citizen who is not a permanent legal resident (the green card test) or has not been in the U.S. for 183 days over the last three year period.
- A non-U.S. citizen temporarily present in the United States as a foreign government-related individual under an “A” or “G” visa.
- A non-U.S. citizen teacher or trainee temporarily present in the United States under a “J” or “Q” visa.
- A non-U.S. citizen student temporarily present in the United States under an “F,” “J,” “M,” or “Q” visa.
- A non-U.S. citizen professional athlete temporarily in the United States to compete in a charitable sports event; and
- Expatriate employees living outside of their home countries for six months or more of a year.
- A person who is required to, but does not have minimum essential coverage for up to three months during the year (only one three-month period allowed each year).
Employer-Sponsored Health Insurance: Recent Trends and Future Directions, NIHCM, October 2013 Report (.pdf) – http://www.nihcm.org/images/pdf/Employer-Sponsored-Health-Insurance-v2-data-brief.pdf
THE INFORMATION OFFERED ABOVE IS THE MOST ACCURATE AND PUBLIC INFORMATION WE HAVE AT THE MOMENT (OF PUBLICATION) AND IS OFFERED “AS IS” WITHOUT WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED. WE CANNOT GUARANTEE THIS INFORMATION TO BE ERROR-FREE, IN TERMS OF IT’S CORRECTNESS, ACCURACY, RELIABILITY, OR OTHERWISE. WE ENCOURAGE EVERY CLIENT TO DO THEIR OWN DUE DILIGENCE IN REGARDS TO POLICIES, APPLICABLE LAWS, ETC. AS IT AFFECTS THEIR PERSON AND ORGANIZATIONS.
Under no circumstances, shall Good Neighbor Insurance be held liable for any indirect, special, incidental, consequential or other damage, including, but not limited to, loss of health or profits, which result from the use of, or the inability to use, the information published on this site, which is published solely for informational purposes to educate, inform and assist clients and organizations make informed, timely decisions regarding their health insurance needs.