November 11, 2013
Important Information About The Affordable Care Act (“ACA”) Requirements For Members Residing Overseas
You should know that the Affordable Care Act (“ACA”) generally requires U.S. residents to maintain minimum essential health benefits coverage (“MEC”) for themselves and all dependents they may claim on their federal income tax return. This “individual shared responsibility” obligation is effective January 1, 2014.
U.S. residents who fail to maintain coverage will be assessed a monetary penalty when they file their Federal income tax return, unless they qualify for a statutory exemption. Health insurance coverage under employer sponsored plans as the Federal Employee Health Benefits Program (including annuitant coverage and Temporary Continuation of Coverage) and public programs such as Medicare Part A, Medicare Advantage, TRICARE, and Children’s Health Insurance Program, meets the MEC requirement. For more information, See 78 Fed Reg. 53,651 (August 30, 2013) and these IRS FAQs — http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision.
The ACA also treats U.S. citizens as having MEC if their tax home is a foreign country and they live outside the U.S. for the entire tax year or for 330 days in a rolling year. Having your tax home in a foreign country is explained in IRS publication 54, at pages 12-16, available for download at http://www.irs.gov/pub/irs-pdf/p54.pdf.
Examples – You are a Foreign Service officer working and living in foreign country. You have self only Foreign Service Benefit Plan (FSBP) coverage.
- Your children are covered under your wife’s coverage in that country, e.g., a national health program. As long as you and your family live in that foreign country, you do not have to add your children to your FSBP coverage. When you rotate back to the U.S., you will be entitled to an individual open season that will allow you to change your coverage to self and family so that your wife and children have MEC. (Foreign health coverage is not MEC unless the issuer applies and receives recognition of MEC status from the Department of Health and Human Services. See 45 C.F.R. § 145.604.) For more information on the individual open season, see http://www.opm.gov/healthcare-insurance/healthcare/reference-materials/reference/enrollment/ (item 1J).
- Your spouse is a U.S. permanent resident with a green card, not a U.S. citizen. S/he is not subject to the ACA’s individual shared responsibility mandate while living abroad. However, s/he will become subject to that mandate when you and your spouse rotate back to the U.S. return to the U.S. At that time s/he should be added to your FEHB coverage in order to comply with individual shared responsibility mandate.
The Federal Benefits Open Season runs from November 11, 2013, to December 9, 2013. We encourage you to discuss the matter with your tax consultant or attorney to make sure you and your family members are in compliance with U.S. law. If you do not have one, you may want to contact:
Beers Hamerman & Co.
John F. Ermer, CPA
Phone: 203 787-6527 Ext. 309
Fax: 203 776-8745