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The Affordable Care Act will impact US taxpayers for the first time in fiscal year 2014, for which US income tax returns are filed in 2015. Americans living overseas should be aware of the important need to attach a completed Form 8965 (new) to their 1040. Form 8965 allows you to describe your status as an overseas resident, which indicates to the IRS that you benefit from "deemed covered" status by a foreign health plan and do not need to participate in a US plan. If you do not attach Form 8965, you may be subject to the $600 penalty for not having US health coverage.

US citizens living abroad are subject to the individual "shared responsibility" provision under the Affordable Care Act. However, US citizens who are NOT physically present in the United States for at least 330 full days within a 12-month period are treated as having "minimum essential coverage" for that 12-month period regardless of whether they enroll in any healthcare coverage.

In addtion, US citizens who are bona fide residents of a foreign country for an entire taxble year are treated as having minimum essential coverage for that year. (In general, these individuals qualify for the foreign earned income exclusion under Section 911.)

Individuals may qualify for this rule even if they cannot use the Section 911 exclusion for all of their foreign earned income because, for example, they are employees of the United States Government. Individulas who qualify for this rule need take no further action to comply with the individual share responasibility provision during the months when they qualify. They will report their status with their federal income tax return on Form 8965.

US citizens who do not meet the foreign physical presence or foreign residency requirements must have essential coverage, or qualify for a coverage exemption, or make an individual shared responsibility payment when they file their federal income tax returns. Note that "minimum essential coverage" includes a group health plan provided by an overseas employer.

Instructions for Form 8965 are available here (updated Jan. 2015).