Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
For multinational corporations, the passage of the Affordable Care Act (ACA) has raised some uncertainty as to ACA's impact on expatriate workforces. Indeed, domestic insurance providers have complained that they suffer a disadvantage in the expatriate market on account of having to comply with ACA requirements, such as by providing free preventive care and a ban on lifetime coverage limits. This is because there has been no exemption from the ACA for U.S. expatriate coverage.
On April 29, 2014, however, the United States House of Representatives passed the Expatriate Health Coverage Clarification Act of 2014 (H.R. 4414) to exempt health insurance plans sold to expatriate workers from the ACA requirements. With bipartisan support, the bill passed by a vote of 268-150. The law is designed to level the competition between American health insurance companies and their foreign counterparts which do not have to comply with the ACA.
The new exemptions are intended to apply only to those insurance plans sold to Americans working overseas and non-U.S. persons working in America. The law defines an expatriate as someone who spends at least six months working outside of the country. It also clarifies that the expatriate plans must comply with laws that existed before the ACA went into effect.
Despite bipartisan approval from the House of Representatives, the legislation still faces a number of obstacles as it advances to the Democrat-controlled Senate. Senior Democrats have already objected to the bill, saying it contains too many loopholes and could apply to permanent U.S. residents living in the United States. Representative Henry Waxman of California also argued the law would unjustly target immigrant workers, encouraging employers to reclassify them as expatriates in order to avoid providing ACA required insurance plans. Prior to the House vote, the White House also objected to the measure in its current form, saying “it would reduce consumer protections and create even more loopholes in the tax code.” As a result, the implementation of these expatriate exemptions, at least in their current form, is still uncertain.