Obamacare and US Expats

Are US citizens living or working abroad required to get affordable health care insurance or pay the penalty under the Patient Protection and Affordable Care Act (PPACA)?

If you are a US citizen or resident alien abroad and you meet the bona fide resident test or the physical presence test, you are considered to have essential minimum coverage under the Act and will not be required get affordable health care insurance or pay the penalty under the PPACA for the month or months that you qualify for either of these tests (1).

Can I still purchase a US health care insurance policy if I reside outside the United States?

No. In order to buy the insurance as an individual, you must be living in the US (2)

How will ObamaCare impact me as an expat? Will I owe taxes?

If you are a taxpayer that is considered a high-income earner:

  • Single filer with an AGI (adjusted gross income) over $200,000 
  • Married filing jointly with an AGI over $250,000 
  • Married filing separately with an AGI over $125,000 
  • Head of Household with an AGI over $200,000
  • Qualifying widow(er) with an AGI over $250,000

You will have to pay an additional 3.8% tax on net investment income which includes but is not limited to:

  • interest
  • dividends
  • capital gains
  • rental income
  • royalty income
  • non-qualified annuities
  • income from businesses involved in trading of financial instruments or commodities
  • businesses that are passive activities to the taxpayer 

USC 26 §5000A(f)(4)

(4)Individuals residing outside United States or residents of territories

Any applicable individual shall be treated as having minimum essential coverage for any month—

(A) if such month occurs during any period described in subparagraph (A) or (B) of section 911 (d)(1) which is applicable to the individual, or

(B) if such individual is a bona fide resident of any possession of the United States (as determined under section 937 (a)) for such month.

PPACA § 1312(f)(1)(A)(ii))

(f) QUALIFIED INDIVIDUALS AND EMPLOYERS; ACCESS LIMITED TO CITIZENS AND LAWFUL RESIDENTS.—

(1) QUALIFIED INDIVIDUALS.—In this title:

(A) IN GENERAL.—The term ‘‘qualified individual’’ means, with respect to an Exchange, an individual who—

(i) is seeking to enroll in a qualified health plan in the individual market offered through the Exchange; and

(ii) resides in the State that established the Exchange (except with respect to territorial agreements under section 1312(f)).