The Affordable Care Act: Coverage, Penalties, Taxes

The Affordable Care Act, also informally known as "Obamacare," is an attempt to reform the US healthcare system in order to expand coverage to millions of currently uninsured Americans and rein in the soaring cost of healthcare in the US. The Affordable Care Act is not a federal entitlement program like Medicare, Medicaid or unemployment insurance. You cannot “enroll” in Obamacare. Every State now has its own “exchange” or Internet marketplace for its own State registered insurance companies. To be eligible for coverage you must be resident in the United States and must be a US citizen or national (lawfully present).  See more on eligiblity here: https://www.healthcare.gov/quick-guide/eligibility

The Affordable Care Act includes an additional Medicare tax in the form of a 3.8% Net Investment Income Tax https://www.irs.gov/newsroom/questions-and-answers-on-the-net-investment-income-tax on some net investment income of individuals, estates, and trusts that have income above the statutory threshold amounts. Individuals are subject to the NIIT if they have 1) Net Investment Income and, 2) Modified Adjusted Gross Income (“MAGI”) over certain applicable thresholds. Even if you are exempt from Medicare taxes, you may still be subject to the NIIT and foriegn taxes cannot be used as a credit against this tax.  

ACA has met with Congressional office and the tax writing committees highlighting the clear double taxation of income and proposes a change to alleviate the problem for US citizens overseas who cannot access however, must still contribute taxes to fund the program. ACA advocates for the use of foriegn tax credits to offset this supplemental tax paid to fund a program overseas US citizens cannot access. https://www.americansabroad.org/media/files/files/d50b16df/us-tax-code-niit-3-point-8.pdf