In a nutshell
The health care law (sometimes called “Obamacare”), required most US citizens to have had health insurance coverage through 2018, unless you were eligible for an exemption. Starting in 2019, the requirement is no longer in effect. Most of the information below is only relevant through 2018.
For the required years, the insurance benefits needed to contain certain features, known as Minimum Essential Coverage or MEC, and needed to be obtained for all members of your household. If you had neither coverage nor an exemption, you must pay a penalty called the “Shared Responsibility Payment” with your tax return. If you obtained coverage through the Health Insurance Marketplace (federal or state exchange) and if your income was below a certain level, you may have been eligible for a subsidy called a “Premium Tax Credit.” You can learn more about these issues in this IRS publication and on the IRS website.
Specifics for overseas filers
As a US citizen living abroad, you were subject to this law. However, a number of accommodations were available in this situation:
- If you met the requirements of either the Physical Presence Test or the Bona Fide Residence Test, you were given an exemption (code “C” on Form 8965 through 2017; checkbox on Form 1040 for 2018) even if you did not claim the Foreign Earned Income Exclusion. (See here for an explanation of these tests.)
- If you were covered by group health insurance from a foreign employer, you were treated as having Minimum Essential Coverage (MEC).
- Coverage you purchased directly from a foreign health insurance company or provided by a foreign government did NOT qualify as Minimum Essential Coverage unless the US Dept. of Health and Human Services (HHS) recognized them. You can research this further here.
If you did not meet the requirements through 2018, then you needed to obtain Minimum Essential Coverage or else pay a Shared Responsibility Payment.
If you obtain health insurance through the federal or state exchanges, you will receive Form 1095-A in January reporting various details about your coverage costs and any subsidy you received. If you obtain health insurance through your employer, you should receive Form 1095-B or 1095-C in January. If you receive one or more of these forms, be sure to include that along with your other tax prep documentation. If you do not receive a 1095 form, please provide other documentation of your health insurance coverage, such as a copy of your insurance cards.
Shared Responsibility Payments and Premium Tax Credits are calculated on a monthly basis. If your situation changed during the year, we will need to examine your status for each month separately.
- The Shared Responsibility Payment for 2018 is the greater of (a) $695 per adult and $347.50 per child, up to $2,085, or (b) 2.5% of your household income that is above your filing threshold. The maximum cannot be more than the national average for a Bronze level Marketplace health plan. Starting with the 2019 tax year, there is no longer a Shared Responsibility Payment.
- The Premium Tax Credit is available for those whose income is between 100% and 400% of the Federal Poverty Level for their family size. The amount varies according to income and according to the cost of health insurance in your state. It is only available to those who obtain their health insurance through the federal or state exchanges. If health insurance is available through your employer, then you will not be eligible for this credit.
- If you have Medicare A or Medicare C, you meet the requirements for Minimum Essential Coverage.