CDA Insurance LLC

Health, Life, Medicare & International Insurance

We are an Independent Insurance Agency offering personalized service. CDA has agents available to meet you in our office, speak with you on the phone, or work with you via the internet. We offer online quoting in all of our markets. Or if you request, we will create and email you a personalized quote.

Affordable Care Act

Now that the Affordable Care Act (Obamacare) is the law of the land in the US, it is important to understand how it will impact you as you search for coverage.

US citizens living abroad

U.S. citizens who live abroad for a calendar year (or at least 330 days within a 12 month period) are treated as having “minimum essential coverage” for the year (or period) and, therefore, are not required to purchase PPACA coverage. These are individuals who qualify for an exclusion from income under section 911 of the IRS Code. See the IRS foreign earned income exclusion test for further information on this exclusion. They need take no further action to comply with the individual mandate.

Please note that International Medical Insurance plans do not meet the definition of “minimum essential coverage” under PPACA. These plans are not intended to provide U.S. citizens residing in the U.S. with health insurance. While your International Medical Insurance plan for worldwide coverage will not be affected by PPACA, you should review the information below to see if you are exempt from the requirements of PPACA or not, and whether you will have to pay a tax penalty or not. 

Under PPACA, all U.S. citizens, nationals and resident aliens will be required to purchase minimum essential coverage (PPACA compliant coverage), unless they are exempt. Exempt U.S. citizens include U.S. citizens who reside outside of the U.S. The exemption applies to:

  • A U.S. citizen who has a tax home (your main place of work or employment, or if you don’t have a main place of work or employment, your main residence) in a foreign country, and
    • has been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire taxable year; or
    • is present in a foreign country or countries during at least 330 full days in a twelve month period.

See details under the IRS foreign earned income exclusion test.

Non-US citizens living in the US

As non-resident aliens, international students on F, J, M and Q visas (and certain family members of students) are not subject to the individual mandate for their first 5 years in the U.S. All other J categories (teacher, trainee, work and travel, au pair, high school, etc.) are not subject to the individual mandate for 2 years (out of the past six).

Since international students are not subject to the mandate, they are not required to purchase a plan that meets PPACA requirements and can purchase an appropriate IMG plan.

International Students – Exempt as Non-Resident Aliens

Under the IRS international student exemption, anyone “temporarily in the United States on an “F”, “J”, “M”, or “Q” visa for the primary purpose of studying at an accredited academic institution or vocational school (and certain family members of students), and who substantially complies with the requirements of that visa,” is exempt from being treated as a resident alien, and is therefore exempt from the individual mandate as a non-resident alien.

That exemption applies for 5 years. After 5 years, a student is no longer exempt, and the substantial presence test must be applied. See examples at

Even after 5 years in the U.S., an international student may continue to be a non-resident alien for tax purposes under the “Closer Connection” exception if they can prove that they still have a closer connection to their home country than to the U.S.

The Individual Mandate and Alien / Non-Alien Status

The IRS provides a questions and answers page on the individual mandate. Question 11 asks whether all individuals living in the U.S. are subject to the mandate. The answer is that U.S. citizens and permanent legal residents are subject to the mandate, as are “foreign nationals who are in the U.S. long enough during a calendar year to qualify as resident aliens for tax purposes.” Thus, non-resident aliens are not subject to the individual mandate, even if they have to file a tax return.

Am I a Resident or Non-Resident Alien?

The IRS states that you are a non-resident alien unless you meet either the green card test or the substantial presence test.

Under IRS Publication 519, Tax Guide for Aliens (the green card test), green card holders are resident aliens for tax purposes. The substantial presence test uses a formula to count the number of days present in the U.S. over the past 3 years. Generally, you a resident alien after six months of presence in the U.S. – unless you are exempt.

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