Impact of the ACA on International Students

The Patient Protection and Affordable Care Act, also known as PPACA, ACA, or ObamaCare, was signed into law on March 23, 2010 by President Barack Obama. While this legislation changed the US healthcare system for US citizens and green card holders, it remains largely the same for international students.

Most international students are considered non-resident aliens for tax purposes and are exempt from having an ACA-compliant plan, and therefore free to buy the policy that works the best for them without any concern about compliance or tax penalties.

International Students Exempt From The Mandate
All international students holding a F, J, Q and M visa are exempt from the individual mandate for their first 5 calendar years in the US.

The Individual Mandate Explained

The Affordable Care Act has an “individual shared responsibility provision", commonly referred to as the individual mandate, that requires US citizens and certain non-US citizens to have an insurance plan that meets “minimum essential coverage.” Those individuals that do not have an insurance plan meeting these essential benefits will be charged a tax penalty when filing their taxes. But, if you are an international student, the individual mandate will likely not apply to you!

Exemption to the Individual Mandate

All international students holding a F, J, Q, and M visa are exempt from the individual mandate for the first 5 calendar years that they are in the United States. This means that if you are an international student, you can choose any plan you would like without being subject to the tax penalty.
This is good news for international students since an ACA-compliant plan would likely be inappropriate for you. These insurance policies can be very expensive and are designed to provide lifetime coverage to Americans. ACA policies typically have very high deductibles, do not include medical evacuation and repatriation benefits, and are often more coverage than students need for the short while that they are in the US.

International Student Insurance Options

Since international students are exempt for the first 5 calendar years that they are in the US, they have many options available to them when it comes to finding comprehensive coverage. If you are on a F, Q or M visa, your school may have minimum requirements your insurance plan will need to meet. If you are on a J visa, you will need to meet the J visa requirements and any health insurance minimums set forth by your school.
These options include:

• Group health insurance - Some schools require that you purchase their group health insurance plan.
• Group health insurance with option to waive - Some schools will give you the option to purchase your own health insurance or to opt into their school’s group health insurance plan.
• Individual health insurance plan - Some schools require you to purchase your own health insurance plan.

With clarity on the Affordable Care Act, any of these three options will work for you without having to worry about paying a tax penalty. Think about what you need during your time in the US, and then you’ll be able to find the most suitable plan. Our Student Secure plan is an excellent option for international students and is accepted by most schools and you can check out your School Requirements to see if our plan will work for your school.

ACA and its impact on OPT

If you are on OPT, then the same rules will apply to you! If you have been in the US for less than 5 calendar years, you can purchase the insurance plan of your choice and you’ll be exempt from the tax penalty. In some cases your employer may provide you with health insurance coverage, and if not, you can purchase your own individual insurance plan to cover you while you remain in the US. If you need to purchase your own insurance plan, our Student Secure or Atlas Travel plans are excellent options for students on OPT.

What If I’m in the US for More Than 5 Calendar Years

Even after the five year period, international students may still be exempt from the individual mandate under the “Closer Connection” exception which requires you to prove a closer connection to your home country rather than to the US.
After that five year or longer period where you are no longer exempt, the substantial presence test is used. This formula determines when the “resident alien” tax status kicks in (generally in about 6 months or a little longer for someone continuously in the US). If you are a resident alien for tax purposes, then you will need to have a health insurance plan that meets the minimum essential benefits or pay the tax penalty.