I hope answer some of frequently asked questions and basic facts about Obamacare and F1 Visa Students, H1B Visa holders in this article.
There’s not a lot of information available about Obamacare and it’s impact on non-immigrants in USA. Non-Immigrants include students in F1 Visa, Tourists (B2 visa) temporary visa workers like H1B, L1, L2, etc.
What is Affordable Care Act?
Affordable Care Act (ACH) is also called Obamacare, which was passed in 2010.
- Makes Health Insurance required for most people in USA (Health Insurance Mandate)
- Health Insurance is available for everyone
- Make insurance more affordable by providing tax credits for those who qualify
Here’s a short video that gives a Bird Eye View about the Affordable Care Act
Summary of changes to health insurance law as shown in the video :
- Ends Pre-Existing Condition Exclusions for Children
- Keeps Young Adults Covered under parents plan till age of 26
- Insurance company cannot cancel your coverage just because you made an honest mistake.
- You have the right to ask that your plan reconsider denial of payment.
- Lifetime limits on most benefits are banned for all new health insurance plans.
- Insurance companies must now publicly justify any unreasonable rate hikes.
- Covers Preventive Care at No Cost to You
- Choose the primary care doctor you want from your plan’s network.
- You can seek emergency care at a hospital outside of your health plan’s network.
If you don’t understand some of the terms described in the video, don’t worry. This guide will explain in plain English about the Health Insurance Basics and new changes in the law.
Off all the benefits listed of Affordable Care Act, 4 points highlighted above should have the most impact to the majority of this blog readers ( F1 visa, Tourists visiting USA in B2 Visa, H1B Workers, L1, L2 workers, etc).
What is Health Insurance?
Health Insurance is an agreement between you and your insurance company.
- You decided to buy a plan from the insurance company for certain terms.
- You pay a monthly premium (fixed) to buy the insurance coverage
- The company will pay for medical expenses based on your terms of health insurance plan
Health Insurance Before Obamacare
Here are some of the problems that existed before Obamacare law
- Pre-Existing conditions were not covered. For Example, if you had heart disease and decide to buy insurance coverage, Insurance company could deny your coverage, if you went to hospital for heart problems for initial few months.
- There were Life time plan limits on how much the plan will pay. If someone has Cancer, it’s going to cost lot of money for the treatment. If your plan had lifetime maximum of $500,000 and if expenses is more than $500,00 then additional expenses will not be covered. Could you afford to pay $200,000 in cash?
With ACA, health insurance company cannot deny coverage for pre-existing conditions or have life time plan limits.
Health Insurance After Obama Care
Obamacare care has fixed such problems with Health Insurance. Refer to the benefits in the above video.
But this new law is going to cost insurance companies lot more money.
To compensate that, Obamacare mandates all qualified people to have health insurance. That includes healthy people.
Additional premium paid by healthy people will cover additional expenses incurred by Health Insurance companies.
What is Health Insurance Mandate?
This is the most important part of the law. Obamacare requires qualified people in the USA to have mandatory Health Insurance.
If you are a qualified individual then you MUST have health insurance coverage.
If you qualified and don’t have health insurance, then you have to pay fine.
If you are qualified but can’t afford to pay for health insurance, then the government is giving tax credits to pay for insurance.
Affordable Care Act provides a new tax credit to help you pay for health insurance purchased through the Marketplace.
Where do I buy the Health Insurance?
Here are some of the way to buy the Health Insurance coverage
- Through your employer (Employed sponsored plan)
- Through Health Insurance Market Place
- State Health Exchanges ( Link to California State Exchange )
Now, let’s look into the impact of the Obamacare on Non-Immigrants in the USA.
Obamacare and F1 Visa
Can Non-Immigrants qualify for buying health insurance in Marketplace?
H-1B, F-1 and J-1 visa holders who are on work visas, student visas and exchange programs who have been in the country for less than five years are not eligible to buy insurance through the health care exchange.
I’m in F1 Student visa. Does Health Insurance Mandate Apply for me?
Here’s where it gets tricky and not easy to understand.
Health insurance mandate is controlled by IRS. According to IRS, you must be considered as Resident-Alien for Tax purpose to enforce Health Insurance Mandate. Here’s Q&A page in IRS site which answers the questions.
Are all individuals living in the United States subject to the individual shared responsibility provision?
IRS is referring Health Insurance Mandate as Individual shared responsibility provision is called Health
All U.S. citizens are subject to the individual shared responsibility provision as are all permanent residents and all foreign nationals who are in the United States long enough during a calendar year to qualify as resident aliens for tax purposes.
Foreign nationals who live in the United States for a short enough period that they do not become resident aliens for federal income tax purposes are not subject to the individual shared responsibility payment even though they may have to file a U.S. income tax return.
So, how do you know if you are a resident or a non-resident alien? You can calculate that based on two tests.
- Substantial Presence Test
- Green Card Test
IRS provides guidance for both tests in this page.
Here comes the core message Exempt Individual
A student is an individual who is temporarily in the United States on an “F, ” “J, ” “M, ” or “Q ” visa for the primary purpose of studying at an academic institution or vocational school, and who substantially complies with the requirements of that visa are exempt from Individual Mandate.
What does that mean?
If you are in F, J, M or Q visa in USA and for first 5 years you are considered to be exempt and you will be considered as a non-resident alien.
If there is a change of visa status from F1 to H1B, then you are non-exempt.
- According to IRS: Individuals in H1B status are never Exempt Individuals
IRS provides multiple examples of residency calculation for tax purpose in this page.
- Individual health insurance mandate applies to USA citizens, green card holders and resident aliens
- Individual Mandate doesn’t apply to non-resident aliens even if they file taxes
- Resident or Non-Resident Tax status is determined by the green card test or substantial presence test.
- F, J, M and Q visas holders are exempt from the substantial presence test for 5 years if there is no change in visa status (like F1 to H1B)
- Non-resident aliens in F, J, M and Q visa holders are not subject to the individual health insurance mandate.
Does that mean I don’t have to buy Health Insurance?
No way. I strongly recommend each and every person in the USA (visiting, living, studying, etc) to have health insurance coverage.
Health Care costs are very expensive. If you don’t have coverage and happen to have a major health issue, then your entire life savings and your parent’s life savings could be wiped out. If you are a student sponsored by parents for education, then make sure you get coverage through your college or buy a qualified health insurance plan.