Can I Avoid the ACA Penalty If I’m Traveling Abroad?
Navigating health insurance can be daunting, especially when you’re traveling abroad. If you’re a long-term traveler like the user in the post, understanding the Affordable Care Act (ACA) is crucial to avoid potential penalties.
The ACA and Long-Term Travel
The ACA requires individuals to have health insurance coverage or pay a penalty. However, there are exemptions to this rule, including one for individuals who are out of the country for at least 330 calendar days. This exemption does not apply if you’re abroad for less than 330 days, as in the case of the user.
Calculating Your Time Abroad
To determine if you qualify for the exemption, it’s essential to calculate your time abroad carefully. The IRS considers any consecutive 12-month period, not just January through December. This means you can combine different periods of overseas travel to meet the 330-day requirement.
The Physical Presence Test
To claim the exemption, you must meet the physical presence test. This means you must be physically present outside the United States for at least 330 consecutive days during a 12-month period. You can include multiple countries in your calculation.
Reporting an Exemption
If you qualify for the exemption, you must report it on your federal income tax return using Form 8965. You’ll need to check the boxes for each month you were overseas and select the exemption code “C.”
Consequences of Not Meeting the Exemption
If you don’t meet the exemption requirements, you will be subject to the ACA penalty, which is calculated based on your annual income and the number of months you were uninsured. The penalty for 2024 will be $1,260 or 2.5% of your household income, whichever is greater.
Seek Professional Help
If you’re unsure about your eligibility for the exemption or have other questions about ACA coverage, it’s wise to seek the assistance of a licensed insurance agent. They can guide you through the process, ensure you have adequate coverage, and avoid unnecessary penalties.
Question? or Need a Free Quote?
Contact Us
Reach out to us for free expert insurance advice and solutions. We will help you solve ACA (Obamacare) related questions and problems. Will contact you within 24 hours of receiving your message.