Health Coverage Exemption if You Live Outside the U.S.

Your Guide to State, Local, Federal, Estate + International Taxation

U.S. persons living outside the U.S. may qualify for the health coverage exemption, meaning you may not have to pay the penalty (The Individual Shared Responsibility Payment) for the months you did not have minimum essential health coverage, as long as you fall into one of the following categories:

1. You are a US Citizen who qualifies under either:

  • Physical Presence Test – You are a U.S. Citizen or resident alien who spent at least 330 days outside the U.S. during a 12 month period, or
  • Bona Fide Resident – You qualify as a bona fide resident (with a tax home of a foreign country) for a full tax year.

(IRS requirements should be reviewed carefully to confirm one qualifies under one or the other tests outlined above)

OR

2. You are a resident alien who was both:

  • A citizen of a foreign country for which the U.S. has an income tax treaty containing a no discrimination clause, and a bona fide resident of a foreign country for a full tax year.

This exemption coverage claim is reported as code “C” on Form 8965, Health Coverage Exemptions and will have to be attached to Form 1040, 1040A or Form 1040EZ.

Please note, this information is general in nature and should not be relied upon. As there are many complexities under these rules, please be sure to consult with a qualified tax professional when completing these forms.

 

By Chris Morrison