Foreign Group Health Coverage


The Individual Mandate: Who is Liable for a Penalty?

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A proposed rule from March 17, 2014 addresses when foreign group health coverage would qualify as MEC. The proposed rule would clarify that foreign group health coverage is group health coverage that is not insured by an issuer regulated by a state and is for expatriates who are U.S. citizens or nationals residing abroad, or is for expatriates who are not U.S. citizens or nationals residing in the United States. Under the proposed rule:

     • If coverage for expatriates who are U.S. citizens or nationals who
     reside abroad
is provided by a self-insured group health plan, or is
     provided by group health insurance not regulated by a state or group
     health coverage provided by a foreign national health plan, the coverage
     is MEC for any month that the U.S. citizen or national is physically absent
     from the U.S. for at least one day of the month.

     • If an expatriate is a U.S. citizen or national and is physically present
     in the U.S. for an entire month,
the foreign group health coverage is
     MEC if the coverage provides health benefits within the U.S., and is provided
     by a self-insured group health plan, group health insurance regulated by a
     foreign government (and not by a state), or group health coverage provided
     by a foreign national health plan.

     • If the foreign group health coverage is for expatriates residing in the
     U.S. who are not citizens or nationals of the U.S,
the coverage is
     designated as MEC if the coverage provides health benefits within the U.S.,
     and is provided by a self-insured group health plan, group health insurance
     regulated by a foreign government (and not regulated by a state), or group
     health coverage provided by a foreign national health plan.

The penalty will be assessed against an individual for any month during which he or she does not maintain “minimum essential coverage” (MEC) beginning in 2014 (unless an exemption applies). The requirement to maintain MEC applies to all individuals of all ages (including children), unless that individual falls within a specific exception or is exempt. An individual is treated as having coverage for a month if he or she has coverage for any one day of that month.

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