Health Care Bill Taxes American Abroad

As if the FBAR wasn't enough.

US President Obama's Universal Health Care program has already passed in the House of Representatives in Congress -- it only requires a majority in the Senate before this serious, nation-changing legislation becomes law.

Partisan politics aside, why would an American living outside the United States care?

The organization, American Citizens Abroad (ACA) has the reason; as an American citizen living outside the United States, you will be required to pay up to $1900 annually, even if you receive zero health benefits whatsoever.

Under Title 1, Subtitle D, “Shared Responsibility”, the Personal Responsibility Requirement currently states on page 28 that “Beginning in 2013, all U.S. citizens and legal residents” would be required to purchase coverage of one of the specified types of insurance coverage. This broad reference clearly includes U.S. citizens residing overseas. Yet citizens who are bona fide residents in foreign countries have health coverage plans valid in the country where they reside. If they subscribe to the U.S.-specific insurance outlined in the program – which they do not need and cannot use – they will be paying twice for health insurance. If they do not participate in the U.S. program, they will be subject to an excise tax to be levied on their IRS returns as defined in the bill on page 29.

The purpose of the excise tax is to encourage all Americans who benefit from the U.S. health program to participate in its financing. Americans residing overseas cannot benefit from the U.S. health system, so for them the excise tax is just that – a tax with no counter-part service. As per the September 22nd press release concerning the chairman’s markup, the maximum excise tax per family for non-participation, is $1,900, not a negligible amount.

This means: Even as an American living in Israel, paying monthly health care taxes in Israel, (under Israeli government mandated health care laws), you will also need to pay American Health care, even though you can get zero benefit from US Health care!

What can you do to help prevent this unfair tax? Immediately, (that means NOW) write to your congressperson in the Senate. The ACA makes our life easier as follows:

Attached is a sample letter that you can use to write to your Senator. We strongly suggest that you fax your letter as this has the most immediate effect however, you may also email or hard copy mail. Visit the following website for address information on your Senator. www.congressmerge.com

---------------sample letter---------------

The Honorable………
United States Senate
Washington, DC 20510

November , 2009

RE: America’s Healthy Future Act of 2009

Dear Senator………,

As one of your constituents who resides outside of the United States, I write you as my Senator to request that you alert Senator Baucus and the drafters of “America’s Healthy Future Act of 2009” concerning the urgent need for greater precision in the definition of those covered by the proposed legislation. In the version as released on September 16, 2009, there is wording which would inadvertently cause great hardship to American citizens living outside the United States. We hasten to bring this to your attention, so that it can be corrected early in the legislative process.

Overseas Americas should be exempted from the requirement to participate in the U.S. health plan and as a consequence, they should also be excluded to any right to claim a tax credit available for low income families in the United States under this health legislation.

Under Title 1, Subtitle D, “Shared Responsibility”, the Personal Responsibility Requirement currently states on page 28 that “Beginning in 2013, all U.S. citizens and legal residents” would be required to purchase coverage of one of the specified types of insurance coverage. This broad reference clearly includes U.S. citizens residing overseas. Yet citizens who are bona fide residents in foreign countries have health coverage plans valid in the country where they reside. If they subscribe to the U.S.-specific insurance outlined in the program – which they do not need and cannot use – they will be paying twice for health insurance. If they do not participate in the U.S. program, they will be subject to an excise tax to be levied on their IRS returns as defined in the bill on page 29.

The purpose of the excise tax is to encourage all Americans who benefit from the U.S. health program to participate in its financing. Americans residing overseas cannot benefit from the U.S. health system, so for them the excise tax is just that – a tax with no counter-part service. As per the September 22nd press release concerning the chairman’s markup, the maximum excise tax per family for non-participation, is $1,900, not a negligible amount.

Proposed solution:

A modest alteration in the present formulation would correct the legislation. Following is a suggested addition.:

“All U.S. citizens who meet the requirements of Sec. 911(d) (1)(A) or (B) of the Internal Revenue Code of 1986, without regard to the tax home requirement in Sec. 911(d)(1), are exempt from any mandate to purchase insurance in the United States and are not subject to the excise tax for non-participation in a U.S. health insurance plan.”

This modification would align the Senate bill to the "America’s Affordable Health Choices Act of 2009" (H.R. 3200) presented in the House of Representatives, which specifically exempts overseas Americans from a tax on not subscribing to a U.S. domestic health plan under Section 401 of the Act (which adds Section 59B of the Internal Revenue Code of 1986). America’s Affordable Health Choices Act of 2009 states under Part VIII – HEALTH RELATED TAXES
Subpart A -Tax on Individuals Without Acceptable Health Care Coverage
Section 59.B “Tax on Individuals Without Acceptable Health Coverage
(c) Exceptions:
(3) INDIVIDUALS RESIDING OUTSIDE UNITED STATES
Any qualified individual (as defined in section 911(d)) (and any qualifying child residing with such individual) shall be treated for purposes of this section as covered by acceptable coverage during the period described in subparagraph (A) or (B) of section 911(d)(1), whichever is applicable."

I thank you most sincerely for your attention to this important issue and trust that you will do all necessary to bring about the change in the text of the proposed legislation.

Sincerely yours,
(Your name)

Hat-tip: YMedad via Gidon

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