# Healthcare insurance question regarding obamacare



## Mrtcpip (Feb 15, 2014)

Hi there,

My first post:lock1: 

My wife and are moving to italy May 1st, and we had a question regarding healthcare.

I searched around the forum first but couldn't find anything. So it's my understanding that we need health insurance while living here and we would prefer to get private insurance. Currently we are retired and paying health insurance in the US. Is it possible to discontinue our US plan and get an italian insurance plan while we live in Italy? Here's the wrinkle, will we get fined by the US because we won't be meeting the requirement of obamacare to have US based health insurance? 

I hope this question is understandable.  Is anyone else running into this question while preparing to move from the US to Italy?

Thanks in advance for the help!


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## BBCWatcher (Dec 28, 2012)

Yes, it's possible.

First of all, if either or both of you are Italian citizens -- and in some cases even if not -- it would be wise to sign up for the Italian public medical system (ASL). Even if you never use it, if it's free, grab it. And even if it's not free it might be a great idea, then you can supplement ASL with either your own spending or a private supplemental insurance policy.

Leaving that aside, you are not subject to the IRS-administered non-coverage penalties if you are living outside the United States. I don't think the IRS has issued all the rules yet, but the understanding is that if you qualify for the Foreign Earned Income Exclusion you would also qualify for a waiver from the U.S. medical coverage requirement. Qualifying for the FEIE does not mean you must take the FEIE (or even that you can take the FEIE), please note. Indeed there's good reason not to take the FEIE when living in Italy. You could well be much better off taking the Foreign Tax Credit and skipping the FEIE given that Italy is a comparatively high tax jurisdiction.

Please note that once you cancel your U.S. medical insurance you won't be covered there. If you're visiting the U.S. you'll likely need to make sure you have some medical coverage.

Good luck with your move.


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## Mrtcpip (Feb 15, 2014)

Thanks for the response BBCwatcher!

I will check into those options in more detail. I also saw this in one of your previous posts on the topic. 

4. U.S. citizens living overseas generally should not purchase health insurance through a PPACA exchange. The exchange health insurance plans are much better geared to U.S. residents, and some plans do not cover medical expenses outside the U.S. _However, U.S. citizens living overseas are perfectly welcome to visit the exchange Web sites in order to get estimates -- for example, if planning a move back to the U.S. and expecting to buy a health insurance plan._

Are there any rules or requirements that I can review? For example; I think I remember seeing that to qualify as living outside the US, you must reside at 330 days per year out of the US. Do you have an idea where can I find the requirements? 

Well, thanks in advance, any help or guidance is much appreciated.

Ciao!

Shawn


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## Bevdeforges (Nov 16, 2007)

Right from the horse's mouth: Federal Benefits and Obligations

Basically you are deemed to have the minimum essential coverage once you are living overseas. 

The US Consulate in Italy has a Citizens Services section that you might find helpful: U.S. Citizen Services | United States Diplomatic Mission to Italy
Cheers,
Bev


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## Mrtcpip (Feb 15, 2014)

Thanks Bev, 

I will review those links right away. 

Merci!


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## Mrtcpip (Feb 15, 2014)

Perhaps I am overthinking this but..

When I move to italy this May, technically I will only be there 8 months during the calendar yr of 2014. (Will not meet the 330 out 365 day requirement mentioned on the affordable health care act site). If I cancel my us based healthcare insurance when I leave, will the US fine me the 1% income penalty? Any ideas on the likely scenario? I realize a lot of this hasn't happened yet, so we may be in a period of flux as things like this get flushed out.

Thanks for any and all help,

:tea:


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## Bevdeforges (Nov 16, 2007)

Have to see how it works out in practice, but generally, when moving from the US to anywhere else, you wind up having to delay filing your income tax forms until you have met either the physical presence or the bona fide resident test. (Means 330 days in any 12 month consecutive period or a full calendar year outside the US - more or less.) 

It's really doubtful they'll hit you for the 1% income penalty in the year you first move abroad - just on principle. But if you were concerned about it, you could probably take advantage of the same procedure folks use for taking the FEIE. They simply get extensions to filing until they have met the "time outside the US" requirement. Means you have to be paid up on your withholding and/or estimated payments before your extensions, but it would definitely allow you to meet the requirements before filing. (And there is plenty of precedent for doing so, based on the recommended procedure for taking the FEIE.)
Cheers,
Bev


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## Mrtcpip (Feb 15, 2014)

That is a great idea, I will run it by my tax advisor:wof:

I appreciate the helpful advice!

Ciao


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## BBCWatcher (Dec 28, 2012)

If your moving date is May 1 then you're all set. By the time you get to May next year you will have met the qualification requirements Bev mentioned. Your normal filing deadline when living outside the U.S. is June 15, assuming you attach the overseas residence statement described in IRS Publication 54.

So just prepare and file your U.S. tax return in May next year, and you're all set. No extension required.


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## Mrtcpip (Feb 15, 2014)

Yes, that makes sense, thank you very much!
:bowl:


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## Mrtcpip (Feb 15, 2014)

A few more clarifying questions please. Right now we are in Italy for 1 month, does this count toward my 2014 amount? Is it safe to understand what constitutes a non resident of the US as simply "not being in the US?" So we could for example use our month here in Italy toward the 330 out 365 day requirement? As well, we could travel within the EU or for that matter anywhere and that would count toward being out of the US, as long as we do not re-enter the US, or a US territory. (USVI, PR, etc). Is that correct? 

Also, another divergent question, I hope I am not all over the board here..

Once no longer a resident of the US, how are State tax filings typically handled? In my case I am a resident of CT. I am selling my home in April, then relocating to Italy. Would I have to continue to file CT state returns if I no longer own property or reside there? (Actually, I have a car registered there, should I register in another state? We will be storing some personal belongings in SC, furniture, etc. Perhaps I could register my car there.) Would I have to file CT state returns for the pro rata portion of my income during 2014 while I was a resident? (I plan to ask all of these questions to my tax advisor, but I would really like to understand this myself since I ultimately am responsible)

Lastly, regarding private health insurance here in Italy, in anyone's experience, is it best for me to meet and have those discussions with providers prior to leaving? I have about two more weeks here. Also, is there any useful links to learning about the various providers?

Phew..

Thanks in advance!


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## accbgb (Sep 23, 2009)

If you don't mind my asking, what part of Connecticut?


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## BBCWatcher (Dec 28, 2012)

Mrtcpip said:


> Right now we are in Italy for 1 month, does this count toward my 2014 amount? ...As well, we could travel within the EU or for that matter anywhere and that would count toward being out of the US....


Toward the physical presence test, sure, I don't see why not. But we've already established you'll be fine with a May 1st departure and a May, 2015, U.S. tax filing.



> Would I have to continue to file CT state returns if I no longer own property or reside there? ....Would I have to file CT state returns for the pro rata portion of my income during 2014 while I was a resident?


You will certainly have a Connecticut tax filing and liability for the portion of the year when you were a resident. Beyond that you'd have to turn to Connecticut's definition of tax residence (and domicile).

South Carolina also has a state income tax, and you'll want to check their definitions of residence/domicile as well.


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## Bevdeforges (Nov 16, 2007)

Don't get too tricky with trying to terminate your state residence. Normally, you file a NR return for the year in which you move out of the state. That should allow you to settle up for that part of the year in which you were resident in the state. But at that point, you should be done.

Simply storing your belongings in a state (like SC) does not make you resident there. I would maybe think about transferring the registration on your car to a family member (or just selling it outright). 
Cheers,
Bev


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## Mrtcpip (Feb 15, 2014)

Hi Bev,

Thanks as always for the responses. May I ask what would be the reasons for selling the car or transferring it to someone else? Is it because having a car registered in a state constitutes residency? Or is it to keep things simple and not leave a lot of things behind to maintain? 

TIA,

:juggle:


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## BBCWatcher (Dec 28, 2012)

Mostly the latter. It's a hassle.


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## Bevdeforges (Nov 16, 2007)

Having a car registered in the state does not constitute residency. But what address will you have it registered to? If it's to the house you sold, the state motor vehicles people may get rather annoyed should they try to reach you there for any reason. 
Cheers,
Bev


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## Mrtcpip (Feb 15, 2014)

Very good point, thanks!


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