ACA/Obamacare for American Cruisers Abroad MERGED THREADS

[colemj]

Originally Posted by Paul L

We keep health insurance while cruising to protect our assets if we get serioulsy sick. We are not looking for pre-paid medical care to cover all sorts of small things. These we pay for out of pocket and reasonable outside the US. If one of us gets seriously sick, then to get covered in the US we would have to spend down our assets, leaving the other partner essentially bankrupt -- something we don't want to do. We have friends who recently went through a life threatening heart issue and the bill came to $600k.
With the changes due to ACA our current high deductible individual policy would go up about 50% if we stayed with the same company. This is due in part because of greater coverage and lower deductible/out-of-pocket expenses apparently required by ACA. With our relatively low cruisers income we will be able to get a policy from the Exchange at about 50% less than what we are currently paying, with lower out-of-pocket maximums. So ACA, as I understand it, works out well for us and is a benefit to cruisers like us.

We view health insurance like you - it is protecting our assets right now, not our health.

From the preliminary calculators available, it appears that our policy costs under ACA will be less with better terms. However, it is not clear whether these policies only cover us "in network", or if we can get health services anywhere and anyplace - including out of USA. I strongly suspect right now that they are policies containing only specific doctors and hospitals in a local area - like HMO's. If so, then they are useless to us.

Guess we will wait until Oct. 1 to find out.

Mark

[Paul L]

Originally Posted by colemj

..... I strongly suspect right now that they are policies containing only specific doctors and hospitals in a local area - like HMO's. If so, then they are useless to us.

Guess we will wait until Oct. 1 to find out.

Mark

Not sure they are useless. You would get emergency care coverage. Then if you had a long term, high cost issue, you'd have to take care of it back home -- but at least you'd be covered. The smaller stuff you just pay for out of pocket in places like Panama City.

[Evenstar]

Originally Posted by goboatingnow

I won't comment on specifics of US healthcare
but ask yourself these questions

(a) If you are basically healthy and have no current chronic conditions, then most countries will give you free emergency healthcare. Do you need anything else

(b if you find yourself very sick, you will want medical repatriation insurance as most people want to go "home" if very ill

(c ) if you have a chronic illness or require some form of elective surgery, you will need an medical insurance that covers you aboard, Though typically these are "pay and reclaim " so there can be a big cash flow hit

(d) General medical costs like GP visits , scans and tests , drugs etc are often low cost in many countries outside the US. This factor needs to be considered.

You have to ask yourself if you need an all singing all dancing insurance cover aboard in the first place.

sorry if this is slight thread drift

Dave

It's a valid point. We carried insurance most of our first year cruising and haven't used it once. The only medical needs we had - a retainer adjustment for my 13 year old daughter - weren't covered.

The point is to avoid the major expenses of a massively bad illness or injury. We can handle routine stuff - stitches, even minor bone breaks if needs be, heck we have a physician on our boat. But serious major illnesses or trauma can bankrupt you easily in America.

Repatriation to the U.S. for a major illness without corresponding health insurance would be a financial disaster, that's the worst thing that could happen!

The challenge is that under the ACA all Americans are supposed to have some insurance or pay a penalty. We could pay the penalty and go for no courage; optimally I'd get something back for my spending.

[Evenstar]

Originally Posted by rebel heart

Floating from country to country like we cruisers are wont to do, with no fixed address, we will NOT be able to establish "Residency" in any particular country. As far as the US Government is concerned I live in Green Cove Springs, FL and travel a lot.

I don't know what the concern is there.


In summary, if you're out of the country 330 days a year, thus satisfying the Physical Presence Test of the FEIA, you're not required to buy medical insurance. If you're out of the USA less than 330 days a year, you should probably consider a US based policy that covers you overseas.

The space for expat plans is getting a lot smaller and I imagine by 2015 will be of little use to most US expats who spend any considerable time stateside.

The concern there is the "Bona Fida Residence Test" versus the "Physical Presence Test". It wasn't clear to me from the reading I've done to date whether the Residence test also applied.

[rebel heart]

Originally Posted by Evenstar

The challenge is that under the ACA all Americans are supposed to have some insurance or pay a penalty. We could pay the penalty and go for no courage; optimally I'd get something back for my spending.

That's really not true. There are a lot of exemptions and exclusions that apply to the typical cruising sailor. Any of these satisfies the "minimum essential care" clause:

- medicare part a
- medicare advantage
- most medicaid
- va medical enrollment
- out of the country for 330 days a year, qualifying for the FEIE
- not making enough income to require filing an income tax return

[rebel heart]

Originally Posted by Evenstar

The concern there is the "Bona Fida Residence Test" versus the "Physical Presence Test". It wasn't clear to me from the reading I've done to date whether the Residence test also applied.

Ah, I see what you're saying. This line references pub 54, section 911:

Questions and Answers on the Individual Shared Responsibility Provision

That pub (54) has a checkbox to be either a bona fide resident or the physical presence test.

Nothing I've seen in the PPACA is talking about being excluded if you're a bona fide resident (of a foreign country), and the IRS's own literature is talking about the 330 day rule, which is the physical presence test.

[Evenstar]

Originally Posted by rebel heart

That's really not true. There are a lot of exemptions and exclusions that apply to the typical cruising sailor. Any of these satisfies the "minimum essential care" clause:

- medicare part a
- medicare advantage
- most medicaid
- va medical enrollment
- out of the country for 330 days a year, qualifying for the FEIE
- not making enough income to require filing an income tax return

That's what I've trying to clarify.

As a family of four with two 47 year old, non veteran, non disabled, tax filing parents our only possibility is the out of country rule.

"Qualifying for the FEIE" however, is not the same as being out of the country for 330 days.

To qualify for the FEIE, according to the IRS Publican 54, in addition to being out of the country for 330 days we need to have a "Tax Home" in a foreign country and earn foreign income.

That's where some of my confusion comes from, because the other research I did states that "the FEIE qualification rules apply", and very clearly we do not qualify for the FEIE directly as a tax exemption from the IRS. Nowhere could I find reference for the tax residence rule being waived.

[Evenstar]

Originally Posted by rebel heart

Ah, I see what you're saying. This line references pub 54, section 911:

Questions and Answers on the Individual Shared Responsibility Provision

That pub (54) has a checkbox to be either a bona fide resident or the physical presence test.

Nothing I've seen in the PPACA is talking about being excluded if you're a bona fide resident (of a foreign country), and the IRS's own literature is talking about the 330 day rule, which is the physical presence test.

Yes, but the wording on form 673 (page 9) is as follows (Emphasis added, the formatting stinks because it a cut & paste from the IRS Form):

Physical Presence Test
I am a citizen of the United States. Except for occasional absences that will not disqualify me for the benefit of section 911(a) of the Internal Revenue Code, I expect to be present in and maintain my tax home in________________________
(foreign country or countries) for a 12-month
period that includes the entire tax year_________. Or, if not the entire year, for the part of the tax year beginning_______________
on______________, 20
, and ending on_____________, 20
.
Based on the facts in my case, I have good reason to believe that for this period of presence in a foreign country or countries, I will satisfy the tax home and the 330 full-day requirements within a 12-month period under section 911(d)(1)(B). Physical Presence Test
I am a citizen of the United States. Except for occasional absences that will not disqualify me for the benet of section911(a) of the Internal Revenue Code, I expect to be present in and maintain my tax home in_____________________________
(foreign country or countries) for a 12-month
period that includes the entire tax year
. Or, if not the entire year, for the part of the tax year beginning
on
, 20
, and ending on
, 20
.
Based on the facts in my case, I have good reason to believe that for this period of presence in a foreign country or countries, I will satisfy the tax home and the 330 full-day requirements within a 12-month period under section 911(d)(1)(B).

[rebel heart]

Originally Posted by Evenstar

That's what I've trying to clarify.

As a family of four with two 47 year old, non veteran, non disabled, tax filing parents our only possibility is the out of country rule.

"Qualifying for the FEIE" however, is not the same as being out of the country for 330 days.

To qualify for the FEIE, according to the IRS Publican 54, in addition to being out of the country for 330 days we need to have a "Tax Home" in a foreign country and earn foreign income.

That's where some of my confusion comes from, because the other research I did states that "the FEIE qualification rules apply", and very clearly we do not qualify for the FEIE directly as a tax exemption from the IRS. Nowhere could I find reference for the tax residence rule being waived.

My accountant has always described a tax home to me as spot on the map that you say "I'm there, sometimes." You could point to other places as well, but it's just the one you pick. The IRS's literature doesn't really have a lot of requirements on your tax home.

Foreign Earned Income Exclusion - Tax Home in Foreign Country

Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Having a "tax home" in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes.

If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live. If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work.

You are not considered to have a tax home in a foreign country for any period in which your abode is in the United States. However, your abode is not necessarily in the United States while you are temporarily in the United States. Your abode is also not necessarily in the United States merely because you maintain a dwelling in the United States, whether or not your spouse or dependents use the dwelling.

"Abode" has been variously defined as one's home, habitation, residence, domicile, or place of dwelling. It does not mean your principal place of business. "Abode" has a domestic rather than a vocational meaning and does not mean the same as "tax home." The location of your abode often will depend on where you maintain your economic, family, and personal ties.

Regarding "foreign income", I don't think there's a stipulation that the money get comes from a foreign entity. I work for a United States company, receive money via direct deposit to a US bank, and qualify for the FEIE.

Foreign Earned Income Exclusion - What is Foreign Earned Income

The foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction are based on foreign earned income. For this purpose, foreign earned income is income you receive for services you perform in a foreign country during a period your tax home is in a foreign country and during which you meet either the bona fide residence test or the physical presence test.

Earned income is pay for personal services performed, such as wages, salaries, or professional fees. The list that follows classifies many types of income into three categories. The column headed Variable Income lists income that may fall into either the earned income category, the unearned income category, or partly into both. For more information on earned and unearned income, see Earned and Unearned Income, below.

[rebel heart]

Really though, I think the PPACA is using the FEIE's physical presence test. So:

- If you qualify for the FEIE, you meet the PPACA's minimum essential care requirements.

- If you don't qualify for the FEIE, you might still meet the PPACA's minimum essential care requirements if you pass the FEIE's physical presence test.

[Evenstar]

Originally Posted by rebel heart

Really though, I think the PPACA is using the FEIE's physical presence test. So:

- If you qualify for the FEIE, you meet the PPACA's minimum essential care requirements.

- If you don't qualify for the FEIE, you might still meet the PPACA's minimum essential care requirements if you pass the FEIE's physical presence test.

That latter is what I am hoping to hear. I think I will need to speak with the healthcare.gov folks to find out how exactly I go about documenting that so I don't get dinged on taxes.

Apologies for the disjointed responses BTW, I've been a member of this board for some time but apparently not posted enough to avoid moderation of my posts so I think I have replies pending you've already answered...I'm not being daft!

Thanks for the good info!

[rebel heart]

Originally Posted by Evenstar

That latter is what I am hoping to hear. I think I will need to speak with the healthcare.gov folks to find out how exactly I go about documenting that so I don't get dinged on taxes.

Apologies for the disjointed responses BTW, I've been a member of this board for some time but apparently not posted enough to avoid moderation of my posts so I think I have replies pending you've already answered...I'm not being daft!

Thanks for the good info!

Do let me (and us) know what you hear back. I feel pretty confident in the physical presence test being the rule based on what I'm reading, but I have insurance from my employer (domestic, and it covers us internationally) so I don't have to verify it myself this year.

I think I linked to this already; not sure. Irs.gov Rereading it though, I see how the part on the bottom seems to conflict a bit with the part at the top.

12. Are US citizens living abroad subject to the individual shared responsibility provision?

Yes. However, U.S. citizens who live abroad for a calendar year (or at least 330 days within a 12 month period) are treated as having minimum essential coverage for the year (or period). These are individuals who qualify for an exclusion from income under section 911 of the Code. See Publication 54 for further information on the section 911 exclusion. They need take no further action to comply with the individual shared responsibility provision.

[zeehag]

this is where your visa status comes into play. you leave a paper trail to follow for checking on you.
medicare does not cover issues requiring an md in usvi. this i know by experience only. they do take cash. they may give a discount. maybe not.
is easy in mexico as health care costs here are small. if you seek private hospital and private md it is a lot more than if you go to see a public physician, as in cruz roja and some other locations. even the private sector health care delivery is less pricey than in usa by more than half.

as we are still awaiting anything concrete from this proposed fiasco, we will not know how it affects us. until there are actual policies written we will know nothing.

seems the visa status of expats wll need to be maintained within `proscribed limits so the governmental healthcare exemptions can be followed.

[rebel heart]

Originally Posted by zeehag

this is where your visa status comes into play. you leave a paper trail to follow for checking on you.
medicare does not cover issues requiring an md in usvi. this i know by experience only. they do take cash. they may give a discount. maybe not.
is easy in mexico as health care costs here are small. if you seek private hospital and private md it is a lot more than if you go to see a public physician, as in cruz roja and some other locations. even the private sector health care delivery is less pricey than in usa by more than half.

Your visa status doesn't matter as you could have a visa for any country, or even have dual citizenship, but it's the amount of calendar days you spend outside the USA that matters. Even if you managed all that without a visa, you're fine (from the IRS's prospective at least). The "paper trail" is your State Department passport swipes at Ports of Entry.

I don't think Medicare or Medicaid allows any foreign services unless you are driving from Alaska to the US, or are somewhere in the US where a foreign hospital is closer and there's an emergency. Other than that, no dice.

If you're covered by Medicare, even though you can't use it overseas, you satisfy the PPACA's individual mandate.

[Rubikoop]

You guys are much more familiar with the nuances of the new healthcare plan than I am. I've seen comments in this thread referring to all US citizens ____ . Are you aware that residents in the US Virgin Islands, which are indeed US citizens, are NOT included in Obamacare? Perhaps getting residency here could avoid fines, don't know, just tossing the info into your discussion for consideration.