Today is the last day of open enrollment under the Affordable Care Act, and for United States citizens and permanent residents to meet their responsibility to contract minimum essential coverage under federal law. Expats who plan to meet the bona fide residence test or the physical presence test, on their 2014 tax return return do not have to worry about the mandate. However, perpetual tourists or those who live just part time in Costa Rica should have a plan for how to deal with the requirement.
The good news, at least for those receiving benefits from Social Security is that Medicare Part A meets the legal requirement for minimum essential coverage, under the United States Code at 26 U.S.C. 5000A (f)(1)(A)(i).
(f) Minimum essential coverage
For purposes of this section—
(1) In general
The term “minimum essential coverage” means any of the following:
(A) Government sponsored programs
(i) the Medicare program under part A of title XVIII of the Social Security Act,
In addition to the law, authoritative explanations are provided in several other sources.
- irs.gov – Questions and Answers on the Individual Shared Responsibility Provision
- cms.gov – Minimum Essential Coverage
The question of Medicare Part A vs. Part B is also addressed in the Federal Register, in rules published by the Internal Revenue Service on March 10th, 2014.
Medicare Part A, known as hospital insurance covers hospital care, skilled nursing facility care, nursing home care, hospice, and home health service.
Part A doesn’t provide comprehensive coverage like most visits to a doctors and a prescription drug benefit, which is why many retirees who live in the United States pay for Medicare Part B, Medicare Advantage or prescription coverage under Part D. Many expats decline the complete package because benefits are only available within the borders of the United States.
For expats receiving benefits, Medicare Part A meets the requirements of the individual mandate and is “premium-free” in most cases. You just have to sign up for it. According to Medicare.gov, You usually don’t pay a monthly premium for Medicare Part A (Hospital Insurance) coverage if you or your spouse paid Medicare taxes while working.
Premium-free Part A, should not be confused with Medicare Part B, which costs $147 per month. According to United States Code at 26 U.S.C. 5000A (f)(1)(A)(i), Medicare Part A is Minimum essential coverage for the purposes of the Affordable Care Act. So even those who plan to spend their retirement in Costa Rica should sign up for Medicare Part A. Doing so means being compliant with the law should an individual decide to visit or relocate to the United States. It also means not having to deal with the hassle of the bona fide residence test or the physical presence test on a tax return.
Expats who do not yet qualify for Social Security Benefits should read, Individual Health Care Mandate for U.S. Citziens: Just 13 Days Left.