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Last updated February 11, 2017 (originally published
November 8, 2009)
By Steve Greenfield
Last night, in an unusual late night session, the United
States Congress passed the most sweeping health care bill
since Medicare was introduced 60 years ago. The bill,
introduced by Democratic congressmen and shepherded by
Speaker Nancy Pelosi, contains almost 2000 pages.
Since it was introduced in its earliest version some months
ago, I have abused the remaining good eyesight I have
pouring through its iterations. In this regard, I understand
I am different from most members of Congress or the
executive branch who have passed what is becoming
known colloquially as "Obamacare".
I took the time to pour over the bill, whose official name is
H.R. 3962, because I happen to be one of the 4 million
Americans who live abroad. We pay our taxes so we will
foot the estimated $1 trillion cost of the health care system,
if it passes the Senate, but we are unique among
A,Americans in that we are unlikely to benefit at all from
the health care that will be dispensed under the new
Because we live abroad, we already have health care. We
typically have to pay for it because we are ineligible for
state insurance in our new countries of residence.
The following is my journey through H.R. 3962, the
"Affordable Health care Act", to discover how it affects
1. You Have a General Responsibility to Have Health Care
Insurance -- The "Individual Mandate"
The general responsibility under the bill. Section 401 of
Subtitle A requires all US citizens to obtain health care
coverage. We will have to be covered. Or else.
The penalty for failing to buy insurance is steep, up to
2.5% of your adjusted gross income, up to a cap equal to
the average premiums for health care available. The
government will collect the penalty by assessing you on
your tax returns.
The only thing constant about life is change. On January
20, 2017, on his first day in office, President Donald Trump
signed an Executive Order directing agencies to implement
changes and allow flexibility in administering Obamacare, a
move many interpret as the first step toward theremoval of
the penalty for not having health insurance, the individual
2. You Probably Fit Under the Expat Exception
Expats also have to be covered unless you fit an
exception. Section 501 of the bill covers "Individuals
Residing Outside the United States". It states "any
qualified individual (as defined in Section 911(d) and any
qualifying child residing with such individual shall be
treated for purposes of this section as covered by
acceptable coverage during the period described in
subparagraph (A) or (B) of Section 911(d)(1), whichever
When you thumb over to section 911(d)(1), you discover
that expats will not be required to pay the penalty if you
meet a test.
There are two parts to the test. You have to have a "tax
home" outside the United States and secondly, you have to
meet the special requirements of (A) or (B) relating to
your residency status outside the US.
3. As Dorothy in the Wizard of Oz Said, "There's No place
like a Foreign Tax Home"
The first part of the test is that you have a "Tax home"
outside the US.
What's a tax home? The bill does not define it. To get that
definition, you have to read the relevant court cases that
have interpreted the term "tax home" under the IRS
The leading cases define your tax home as "the place
where you have a regular or principal place of business or
if you have no regular or principal place of business, then
at your regular place of abode in a real and substantial
In effect, your tax home is actually where you live, where
you get your mail and your bills, pay your rent and
mortgage and sleep.
4. Do You Meet the Residency Test?
The Residency Test. The other part of the test you have to
meet is either you
-have been a "bona fide resident" of a foreign country for
an uninterrupted period that includes a full tax year (for
the year in question). The test for whether you are a bona
fide residence of a foreign country is detailed by the IRS .
The test looks at several factors, most importantly your
intent and your patterns. As the IRS states, the
determination takes "into account such factors as your
intention or the purpose of your trip and the nature and
length of your stay abroad."
-stay outside the United Sates for 330 days out of a year.
That means that you can spend , a maximum of 35 days of
the year in the US without losing your special exemption
from paying the penalty under the new bill. You simply
have to be physically present in a foreign country for 330
days in a year. The 330 days do not have to be
consecutive, by the way.
Taking a step back, it looks as though most of us expats
will have nothing to worry about under the new bill. We
typically already have a "tax home" outside the US and
most of us do not spend more than 35 days in the States a
The analysis that we have arrived at here is not in
agreement with the histrionics that you will find on other
places around the web. But, even though we have
concluded that, for now, most expats willnot have to pay
the penallty, this doesn't mean that there's no cause to
worry. Obviously, a bill is not a law. This bill will go
through more iterations once it reaches the Senate. We
have to stay on top of developments. Check back here,
and I will try to keep you updated as new versions of the
bill make their way through the Senate, in terms of how
they affect expats.
Keep using your head. Here are more articles on money
and health issues that affect you (why health articles? You
can't spend it if you're dead):
Why the Rich Get Richer/ Brother, Can You Spare a Euro?
/ Foods That Reduce Blood Pressure /10 Ways to Become
More Active /Sugar-the Disease Connection / The Gout
Diet/ Best Breakfast for Arthritis / Bowel Color-What It
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