# How to Exempt from Obamacare



## rpmorley (Oct 30, 2012)

Well, its tax season again. Has anybody yet deciphered how to exempt oneself from Obamacare by being a legal resident of Philippines? I have no state to claim residency in, I am here to stay. I am a dependant on asawa's PhilHealth.


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## Asian Spirit (Mar 1, 2010)

rpmorley said:


> Well, its tax season again. Has anybody yet deciphered how to exempt oneself from Obamacare by being a legal resident of Philippines? I have no state to claim residency in, I am here to stay. I am a dependant on asawa's PhilHealth.


This is a good question and one that many will be faced with. Am sticking this to the top of the list to help insure it is seen..


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## fmartin_gila (May 15, 2011)

When I moved here, I kept my enrollment in the VA(Veterans Administration) Medical Center in Phoenix. The VAMC care qualifies to the requirement of acceptable so one does not have to register for Obamacare. You do not have to be Retired from the Military but only to have served and discharged under Honorable Conditions. I might add that even though it is not useable here, it is free. Medicare is not useable here either, but I keep paying it as I may someday in the future have a need for it in the US or Guam.

Fred


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## Jim151 (Jan 4, 2015)

"Section 1501

‘‘(4) INDIVIDUALS RESIDING OUTSIDE UNITED STATES OR RESIDENTS OF TERRITORIES.—Any applicable individual shall be treated as having minimum essential coverage for any month—

‘‘(A) if such month occurs during any period described in subparagraph (A) or (B) of section 911(d)(1) which is applicable to the individual, or

‘‘(B) if such individual is a bona fide resident of any possession of the United States (as determined under section 937(a)) for such month.

Section 911(d)(1) is part of the Internal Revenue Code and provides:

“(d) Definitions and special rules

For purposes of this section—

(1) Qualified individual

The term “qualified individual” means an individual whose tax home is in a foreign country and who is—

(A) a citizen of the United States and establishes to the satisfaction of the Secretary that he has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or

(B) a citizen or resident of the United States and who, during any period of 12 consecutive months, is present in a foreign country or countries during at least 330 full days in such period."

So, you are probably asking, "What does this mean in English?" At best, it is difficult to explain, but here goes:

Whether the individual mandate to purchase health insurance and the penalties for not purchasing it will depend on whether the expatriate is either:

1) Eligible for the IRS’s foreign earned income exclusion, which means the expatriate must have a tax home (the general area of your main place of business or employment where you happen to be permanently or indefinitely engaged) in a foreign country, as well as be either a legitimate resident in that country, or


2) spend at least 330 days a year outside the United States.

https://www.dollarvigilante.com/blog/2012/7/16/expat-meet-obamacare.html


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## BBCWatcher (Dec 28, 2012)

Read the IRS's instructions associated with Form 1040 (tax year 2014) line 61 carefully. If you live outside the United States typically you would attach IRS Form 8965 to your tax return and choose reason C on that form for your exemption from "Minimum Essential Coverage."

This does NOT mean it's a good idea to avoid getting medical insurance. It's just how most overseas residents would file their tax returns since policies and public medical systems outside the United States typically do not meet U.S. MEC standards.


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## M.C.A. (Feb 24, 2013)

Hope in a couple years this program goes away, what a hassle and worse messing with ones tax returns, one more form to deal with.

Blessed I retired from the Navy and so if your a government employee retired you have the Tricare program and won't need to file anything yet but unsure about next year I think you have to fill out a form next year if you use Tricare? Unsure, I used Turbo Tax and they barely touched on the subject.


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## BBCWatcher (Dec 28, 2012)

Most types of TRICARE meet the requirements for U.S. "Minimum Essential Coverage." Consequently if you had regular TRICARE coverage for the full tax year you can simply check the box on line 61 of IRS Form 1040 (Tax Year 2014; the line might change in future tax years).

The TRICARE exceptions are "space available" and "line of duty" TRICARE. If you had either type of TRICARE, you'll need to file IRS Form 8965 with your tax return. You can use the same reason C (overseas residence and absent from the U.S.) if you qualify, or you may be able to use another reason code.

TRICARE does not report Social Security numbers to the IRS for purposes of verifying your coverage. I recommend keeping records of your TRICARE enrollment in your personal files just in case the IRS asks you for more information at some point in the future.

Note that if you do not meet the filing threshold to file a U.S. tax return then you do not need to file IRS Form 8965 either, though it may still be in your interest to file a U.S. tax return -- for example, if you can claim a refundable tax credit (otherwise known as free money from the IRS), such as the Additional Child Tax Credit.

Visit the IRS's Web site for more information.


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## mrbobo (Dec 11, 2014)

I found the IRS drafts for the 8965 (Health Coverage Exemptions) and the form with the instructions for form 8965. It looks like all expats that want to be exempt from the Affordable Care Act penalty via bona fide residency in the Philippines or the 330 physical presence test have to file the 8965. From what I have read if you do not qualify for the Foreign Earned Income Exclusion like me (retired, not on Medicare, collecting a pension and social security) you must fill out the form and file it with your 1040, 1040a, etc. It looks like it's just a matter of using exemption code "C". The "C" means that you meet the 330 physical presence test or are a bona fide resident of the Philippines. Be aware that these are just IRS drafts and I am no tax professional. I just want to give everyone a heads up that the Affordable Care Act requires more tax headaches for us in 2015.


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## rpmorley (Oct 30, 2012)

Well, I read healthcare.gov (abbreviated to hc.gov below) about exemptions before I posted. I did not know about IRS 8965. On hc.gov I, personally, am ok having lived in Guam for the last 7 years, Guam, a US Territory, is exempt. But hc.gov requires you to file to get an exemption number to put on this IRS 8965. So, maybe first step is to get this number. I guess I will read this again and then...... Appreciate!!


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## rpmorley (Oct 30, 2012)

You all (nice southern word) check my "math". "Lawfully present" is the by-word for this. There is no exemption form to get that number(healthcare.gov) so IRS 8965 (which requires that exemption number) would not be required. 

It is handled on the income tax 1040 variant you use, I guess by the address block. Like I said, check my math. This would only be with expats with no legal ties to any state.


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## BBCWatcher (Dec 28, 2012)

IRS Form 8965 and its instructions are available for tax year 2014 in final, non-draft form.

If you're concerned about filling out forms then I'd recommend you consider using tax preparation software, online or offline. TaxAct.com, as one example, offers a free edition. The tax preparation software will just ask you yes/no sort of questions, including the healthcare coverage question(s), then generate the appropriate forms for you to file.


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## Jim151 (Jan 4, 2015)

BBCWatcher said:


> IRS Form 8965 and its instructions are available for tax year 2014 in final, non-draft form.
> 
> If you're concerned about filling out forms then I'd recommend you consider using tax preparation software, online or offline. TaxAct.com, as one example, offers a free edition. The tax preparation software will just ask you yes/no sort of questions, including the healthcare coverage question(s), then generate the appropriate forms for you to file.


This is definitely a cluster! From the IRS site on form 8965 "Other coverage exemptions may be claimed on your *tax return using Part III*, Coverage Exemptions for Individuals Claimed on Your Return, of Form 8965. Use a separate line for each individual and exemption type claimed on the return.....Citizens living abroad and certain noncitizens - You are: •A U.S. citizen or resident who spent at least 330 full days outside of the U.S. during a 12-month period;
•A U.S. citizen who was a bona fide resident of a foreign country or U.S. territory;
•A resident alien who was a citizen of a foreign country with which the U.S. has an income tax treaty with a nondiscrimination clause, and you were a bona fide resident of a foreign country for the tax year; or
•Not a U.S. citizen, not a U.S. national, and not an alien lawfully present in the U.S."
Individual Shared Responsibility Provision â€“ Exemptions: Claiming or Reporting


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## BBCWatcher (Dec 28, 2012)

mrbobo said:


> From what I have read if you do not qualify for the Foreign Earned Income Exclusion like me (retired, not on Medicare, collecting a pension and social security) you must fill out the form and file it with your 1040, 1040a, etc. It looks like it's just a matter of using exemption code "C". The "C" means that you meet the 330 physical presence test or are a bona fide resident of the Philippines.


That's a bit awkwardly phrased perhaps. You do _qualify_ for the Foreign Earned Income Exclusion (FEIE). You just don't have foreign earned income, so your hypothetical FEIE is zero. But that's perfectly OK -- you're quite correct that if you can pass either of the same tests found in the FEIE you can use reason C on IRS Form 8965, whether or not you take the FEIE.

Note that you can enroll in U.S. Medicare Part A free of charge if you're 65 or older and if you qualified for Medicare, normally by making at least 10 years of non-trivial payroll tax contributions to the U.S. Medicare system. Medicare Part A is considered "Minimum Essential Coverage" all by itself, whether or not you enrolled in any other part of Medicare. Just like any other qualifying MEC, if you (and the rest of your household) had MEC for the whole tax year then all you do is check the box on line 61 of IRS Form 1040 and skip filing Form 8965.

Said another way, for those of you who do qualify for U.S. Medicare you really ought to enroll in free Part A at least. There's absolutely no reason not to, and your Part A enrollment will reduce the size of your U.S. tax return by one page (at least for tax year 2016 and beyond if you enroll in calendar year 2015).

Note that if you did not have MEC and did not qualify for an exemption (such as reason C) then you will likely be subject to additional income tax. For tax year 2014 the additional income tax is either $95 (per adult, with a family maximum of $285) or 1% of your income above your filing threshold, whichever is greater. If you don't yet have MEC for tax year 2015 (now, as I write this), you still have about 14 days to fix that problem. If you're a resident of any of the 50 states or the District of Columbia go to Healthcare.gov to find what options you have to buy a compliant medical insurance policy. Healthcare.gov will also tell you if you qualify for U.S. federal government subsidies that may pay for all or some of your insurance.


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