Four years ago the uninsured population in U.S was almost 50 million, or approximately 15% of the whole population. By introducing the mandatory health insurance the number of uninsured is expected to decrease with 30 million persons. High-level areas of potential impact from this reform on the medical claims are accelerated medical costs and higher waiting time for treatments. On the other side, on a long term basis one can expect a healthier workforce, which has a positive influence on claims duration, severity and successful return to work.
The ACA regulates the obligations for an individual and members of their household to have health insurance, called the Individual Mandate. The demands on the insurance coverage contain for example compulsory preventative coverage, guarantee for renewal, no exclusion for pre-existing conditions for individual members on a plan and restrictions to annual or lifetime limits. If the individual doesn´t have the mandatory insurance coverage he or she may have to pay a penalty, within the individual´s federal income tax return.
The ACA also requires large employers with an average of 50 or more full-time employees, to provide minimum essential coverage (MEC) for their employees. A non U.S. employer can be a large employer based on the number of full time employees providing services within the USA. Failure by an applicable large employer to offer compliant health coverage may subject it to penalties under certain conditions.
The effective date of the Individual mandate was Jan 1, 2014 and for the Employer mandate Jan 1, 2015.
Expatriates and ACA
U.S. government has not yet given clear instructions on how to apply the ACA requirements for employees expatriated to and from U.S. It is for example unclear if all expatriate plans guaranteed by foreign governments will be regarded as MEC.
The Individual mandate likely applies to expatriates who are employed by a U.S. company and are sent on assignment to work abroad. There are however exclusions from this rule, e.g. depending on time limits.
The ACA regulations also include foreign nationals employed by non-U.S. companies sent to work in the U.S, although exemptions may be applicable. For example no penalty seems to apply if the assignment period is less than three months.
The individual penalties for failing to fulfill the ACA requirements may create additional costs for the employer if the company’s internal policy on assignments requires the employer to reimburse the expatriate for the tax penalties.
It is also likely that an ACA compliant insurance will become one criterion for the Immigration department to give visas in the future.
If is closely following the ACA implementation and practices. We recommend that expatriate policyholders contact their local HR experts in the U.S. Each individual expatriate employment contract should be analyzed in order to plan how to avoid tax implications and company fines.
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Lotta Jämsen International Employee Benefit specialist, If Industrial