I’m wondering if anyone can help me, because my insurance company and CPA have both told me they can’t.
Brief summary: My 21-year-old son will be moving to Beirut in August to go to school at the American University of Beirut and do volunteer work in the Syrian refugee camps (please, no warnings about how unsafe it is - I know). I know he needs overseas health insurance, which isn’t that expensive. I also know that he can get an ACA exemption if he is abroad more than 330 day in a calendar year or has less than a three-month gap in coverage. Overseas health insurance does NOT count, unfortunately.
He should be fine for 2017, because he will be in Lebanon most of the year. But in 2016, he will be out of the US for only four months.
My question:
If we pay his US premium through September, can we drop him October through November and not be penalized? Or do we need to pay through October?
We still claim him as a dependent. What would our penalty be if he can't get an ACA exemption? 2% of OUR income? He will have earned enough in 2016 that he will need to file an income tax return, if that makes a difference.
3, In the future, if he comes home for brief periods, what happens? Would he be covered in the US with the overseas policy?
Is there anything I'm missing? I feel really lost.
Thanks for any help you can give, or just advice as to whom I can call!
I guess I can offer some experience with #3. My son spent a year in Europe in 2012/13, leaving 10 days after graduating from college. Most of it was in France, on a long term student visa. In order to stay there, he had to pay a lump sum for national health coverage in France. Since we weren’t expecting him to come back here, he had no health insurance here. (He had had the college’s plan, and it didn’t seem like a good idea to add him to ours at that point.)
Anyway, long story short, he ended up having to come home for two weeks in October in order to get the correct visa, and as luck would have it had an attack of very severe abdominal pain and had to go to a specialist and have tests to determine if he had gallstones or something more dire. Thankfully, they determined that he had a small stone that would not indicate surgery and most likely would not trouble him again. (Apparently many of us do.)
We had to pay for it out of pocket, since his French insurance wasn’t effective here. I don’t recall the exact sum, but I know it was over $1K, at least.
It is possible to get some kind of monthly insurance–or at least it was then–which might not be a bad idea if a visit is anticipated. After that, we put him on our insurance, where he remained until he graduated from journalism school with a job, and went onto that insurance.
@MaineLonghorn - I just went through this with my son. My son studied abroad for 6 months (from June - December 2015). I didn’t claim my son in 2015 because I didn’t provide 50% of his support. He had ACA compliant coverage through his university through the end of July. He also had overseas coverage from June - December which was mandatory to get a long-term visa. I also purchase a short-term policy for the 10 days he was home in December.
His coverage from August through December was not considered ACA compliant. You can miss two consecutive months without being penalized, but not three or more. We were completely unaware of this while my son was studying abroad. I only became aware of it when I started working on his taxes. It is absolutely ridiculous, but that is the way it works. My son did pay the penalty. which for him, came to about $20 a month. The penalty was based on his earned income and scholarship income. He went ahead and paid the penalty because he didn’t want to deal with some kind of audit or further penalties for $150. Not sure whether or not your son would use your income or his income when calculating the penalty as you still claim him as a dependent. If he is filing a tax return, my guess is that it is his income. Do you have TurboTax? Run a simplistic scenario through TurboTax using your estimated incomes for 2016 and see which income it uses to calculate the penalty.
The overseas policy that my son purchased did not cover him for anything in the US.
You can always purchase short-term policies when he is home.
@Consolation, thanks. That’s a good point - we could get him an inexpensive bridge policy for the states. He has a bleeding disorder that would be VERY expensive to treat if he were in any kind of accident. “As luck would have it” for this particular kid almost ALWAYS applies!! We used to call him “Disaster Boy.” The only kid I knew who split his chin open in the pediatrician’s office and had to go to the ER for stitches! And great, he’s going to a war zone now. Deep breaths…
I can advise only on the easy part! One of mine lives abroad and has national health care from his resident country through his employer. It does not cover overseas health care. I believe that is the most usual scenario with policies in foreign countries, but he can check when he gets his overseas coverage. Will this be through his school? Mine buys short term insurance through the company that supplies his employer whenever he travels out of his resident country. HR at his firm helped him contact that appropriate people. He’s purchased this multiple times when vacationing in another neighboring country or back visiting the US. Thanks be to God, he hasn’t had to use the coverage - I don’t know what difficulties that may or may not entail!
I was also wondering about the medical evacuation insurance. They also have non-medical evacuation insurance, that might be worth looking into, for places with political unrest.
Any chance you can bribe him to go elsewhere? I’ve had a lot of luck with bribes since my kids were little (threats never worked). Good luck to him. I wish I could give you a hug.
@MaineLonghorn As a 21 year old dependent, is he on your family coverage now? I know you have other kids so how much extra would you pay to have him on your health insurance? It might not be that much extra $, at least in the case of my old and current insurance, adding an extra kid wasn’t that expensive relative to the cost for my husband and me. And that option would cover all the scenarios (coming home for visits and being covered, not paying an uninsured penalty, etc.) Another option might be to buy a cheap catastrophic policy (the ACA exchange has them) but as a dependent he might not be eligible.
We are in a similar predicament. Our 26 year old D ages out of our insurance at the end of this calendar year. She will be out of the country at that time, traveling after finishing a stint teaching English. She has no idea when she will return, and COBRA is much too expensive. We have no idea what to do.
Can she sign up for a plan before she leaves (in a month) to begin on Jan. 1, 2017? I’m guessing not. Any advice?
@doschicos, our son is on our family coverage. I believe his premium is about $220/month. I think what we will do is pay for the coverage through October, then drop it. We will get him overseas coverage (medical, medical evacuation, and non-medical evacuation - thanks for pointing that out) that starts in August. If/when he comes back to the US in the future for visits, we will buy him short-term insurance to cover him here.
I will check with the American University of Beirut representative in New York to see if there is national coverage in Lebanon - another good idea!
When he is no longer our dependent, he can buy cheap ACA insurance.
@busdriver11, no, he is 100% set on this course, because he wants to help Syrian refugees. He will be getting support from our church and some church members to allow him to do volunteer work. He is a Christian, but his goal is to help people who are suffering. He won’t preach at them. He’s a remarkable young man.
I am glad there are people out there like that, such generosity and desire to help others, even at their own personal risk. I wish him all the good fortune in the world.
I should add that my dad has several former engineering students who live in Beirut. One of them is a professor at AUB. Another is a former mayor of Beirut! When my dad was up here a few weeks ago, he and my son got on the phone with several of the contacts. Every one of them said, “MLson, we respect your grandfather so much that we want you to know we will treat you as our own son. We’ll pick you up at the airport when you arrive, and you are welcome to visit us anytime.” They were actually very reassuring. They said if he avoids certain areas, he’ll be fine. So I feel much better knowing that he will have people looking out for him, at least.
@MaineLonghorn I asked my H about this. He said that he would maintain your S2 on your insurance–or on an ACA policy if you could find a better one for a similar price–and get the overseas coverage with medical evacuation also, particularly in light of your son’s medical issue.
He thinks $220 a month is cheap for a good policy and this is not the place to economize. He also said that the bridge policies are not regulated and are notoriously bad, having a tremendous number of exclusions and so forth. He would not depend on one.
Lastly, he said that the ACA penalty is trivial “unless you are Warren Buffett.”
He is more knowledgeable about this stuff than most people, and looks at it from a finance perspective.
Anyway, that’s his $.02.
Oh, and this was predicated on the idea that your S will be coming home some time next year. I don’t know what he would say if that were not the case.
@Consolation, thanks so much for asking your H about this! I really appreciate it. We will try to swing the extra expense. You’re right, if there were an emergency, we would be thankful for the coverage.
It’s 330 days of a 12 month period, not of a calendar year. It’s the same physical presence test used for the foreign earned income exclusion. The day counting is weird, though, so if it’s going to be close, you need to look carefully at the rules for what counts as “physically present in a foreign country.”
@MaineLonghorn - it makes me feel better that he will have locals who will look after him. My Sil has family in Beirut and I know if my kids ever traveled there they would look after them. SIL actually went to American Univ in Beirut many years ago.
My S bought a bridge policy recently. He had a 3 month gap in coverage with a job change. His new job didn’t offer group coverage till 3 months of employment. The bridge policy had a lot of exclusions. I don’t know if they would cover your S if he needed care relating to a preexisting condition.
My nephew goes to school in Scotland. I’ll ask my sister how they handle health insurance.
If you end up buying a US plan even for the period while he is gone (if it is more economical), don’t tell the US insurance company he is gone… they may drop him. We had a terrible time just moving my college student between states last year when I moved – the previous state company wanted to drop her the day we moved, but the new state company wouldn’t insure her without proof she had moved (eg, driver’s lucense). She was at college… couldn’t establish proof of residence. I ended up lying about our move date to the first company – it was the only way to avoid an insurance gap. I coukdn’t even get a bridge plan. Probably the biggest hassle of the whole move – hours on the phone.
