What Americans Living Abroad Should Know About Obamacare Fines

Source: istockphoto

When you move abroad – whether for work, retirement or just adventure – the last thing that you are probably thinking about is paying to maintain expensive health care coverage in the United States. After all, you have expenses in your new country – and that often includes health insurance.

Most expats don’t think about the individual mandate under the Affordable Care Act (Obamacare) until tax time rolls around and the IRS charges them a fee for not maintaining minimum essential health coverage in the U.S. The penalties are expensive and have been increasing every year.

The law requires you and each member of your family to either have qualifying health care coverage, qualify for a coverage exemption, or make an “individual shared responsibility payment” (nice way to say pay a fine) when you file your federal income tax return. Qualifying health care coverage is also called minimum essential coverage.

Minimum Essential Coverage

You may already have some type of coverage that qualifies as minimum essential coverage. To see what qualifies and what doesn’t, you can check out the IRS guidelines HERE.

The good news for expats is that some – but certainly not all – expatriate insurance plans will qualify. To see the most recent list of approved providers, click HERE and scroll down to “approved plans”. I would have liked to link directly to the document; however, they update the information regularly and change the file name each time.


You can avoid paying the fine if you qualify for an exemption. There are numerous exemptions, click HERE to review them all in detail.

There are two in particular that are important to expats:

  1. A U.S. citizen or a resident alien who was physically present in a foreign country or countries for at least 330 full days during any period of 12-consecutive months – You can easily qualify for this one just by limiting your visits back to the U.S.
  2. A U.S. citizen who was a bona fide resident of a foreign country for an uninterrupted period which includes an entire tax year – To review the requirements to qualify as a bona fide foreign resident, click HERE.

How Penalties Are Calculated

The fees are calculated in two ways: 1) as a percentage of your household income or 2) per person — whichever is higher.

For 2016, the percentage of income is 2.5% and per person fee is $695 per adult. You can get additional information about how the fine is calculated HERE.

Let’s Wrap This Up

The high cost of health insurance back in the U.S. is one of the reasons that we decided to move to Mexico. If we had stayed there, at least one of us would have continued to work just to keep insurance.

Now that we live in Mexico, we no longer have that problem. Quality health care and health insurance are both very affordable; however, we still have to make sure that we aren’t subject to losing money under the Affordable Care Act. Every penny counts when you live on a fixed income.

If you have any questions related to your possible obligations under the Affordable Care Act, you should direct them to the IRS or consult with a tax professional.

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About the Author

Q-Roo Paul
Paul Kurtzweil (Q-Roo Paul) was a deputy sheriff in Florida for 25 years before retiring at the rank of lieutenant in 2015. He and his wife moved to Mexico looking to maximize their retirement income. In 2016, they started a blog called Two Expats Mexico (qroo.us) sharing their experiences, as well as information about the logistical and legal aspects of retiring south of the border. The blog has been viewed over two million times and the articles have been republished in numerous periodicals across Mexico.

20 Comments on "What Americans Living Abroad Should Know About Obamacare Fines"

  1. Awesome article Paul. You do a great job covering some very important information!! Thanks.

    • Thank you. We had to do the research for ourselves so we thought the information might be useful for others in the same boat. That is where a lot of the article ideas come from.

  2. How do I find out about buying ins in Mexico?

  3. “Like” or really I should say “no like” 🙂

  4. It appears that if you have Medicare Part A, then you’re considered covered and wouldn’t have to pay the ‘fine’. ?

  5. John Fosbaugh | October 12, 2016 at 4:51 pm |

    I signed enjoy the information you are sharing. My husband are l9oking to retire in Mahahual in 2020. You are making so manyb things clear.

  6. Paul, Thanks for the information. What process did you go through to make the decision about which medial coverage you have in Mexico. I will have Medicare but husband is younger and will need something type of coverage.

    • We are actually in the process to changing to a better plan now. The best way is to contact someone who can give you several options. I know an expat that does that and she is fantastic. I can email you the contact information, if you like.

      • Mark Stevens | October 14, 2016 at 10:20 am |

        Paul, that would be great. we are planning on being in Mexico early next year, so we’re getting things lined up. Thanks.

  7. Paul,

    I have been doing some research for Military retirees…It appears from what I have read that the Medical Insurance (Tricare) that retirees have in the US can be transferred to an International Tricare plan….good news for Military retirees. Some info here http://www.tricare.mil/Plans/HealthPlans/TSO.aspx

  8. If we have an international health insurance that covers the US from providers such as Bupa, and don’t purchase any health insurance in the US, will we still get Obamacare fines? Thank you.

    • Not all international plans will meet the requirements under Obamacare, you will have to check with the individual provider or the IRS.

  9. please send me the email informatiion on your contact for expat health insurance. we are considering moving to the area for part of the year. my husband & I need some affordable coverage until we are old enough for medicare. i have had problems getting a quote from a local agent when we were there last month.

  10. What is the status of fines since the Trump Administration is ditching Obamacare? I am also now 65 yrs and have Medicare A and B. Thanks so much for all your help. Spanish videos are really great. Been here over 25 yrs and I figured out the vowel sounds but have struggled with speaking. Your videos are perfect. Thank you so much!

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