Headed to the US for the next three or four months and concerned that the rules of Obamacare (Affordable Care Act—ACA) may affect your international private travel insurance? For now, no worries. Your travel insurance, bought in Canada, Britain, Australia, or elsewhere, is just as valid—and just as necessary—as always. Your travel insurance is there to cover unforeseen medical emergencies, pay your bills, and get you home as quickly and efficiently as possible. It is not intended to replace your comprehensive government health insurance.
Obamacare is intended to reform America’s domestic health care system; to make health insurance comprehensive and affordable to all US citizens and permanent residents; as well as to ensure that the uninsured become insured and are covered for all medically necessary services, preventive care, and pre-existing conditions, with no caps on annual or lifetime limits on services or costs. Obamacare is not available to foreign visitors on either short- or long-term bases.
To date, the initial impact of Obamacare has been felt mostly by individuals buying health insurance for the first time: millennials, people who are self-employed, or those who work for small businesses. Most Americans are covered by employer-sponsored plans whose benefits are quite good, but very expensive, and the employees generally share in those costs.
For first-time buyers, “sticker shock” is a mild way to describe their reaction—even though government subsidies in the form of tax credits are available to help low-income applicants. Despite those subsidies, applicants are finding premiums and deductibles much higher than expected and they are also dismayed by the restrictions placed on their choice of physicians, hospitals, and other providers—which belies President Obama’s promise that if they like their doctor they can keep him/her, and if they like their existing health plan they can keep that too. It didn’t take long to shoot that promise down.
And then there is the “individual mandate,” which requires all US citizens and permanent residents (Green Card holders) living in the US to buy health insurance that provides the minimum essential coverage (MEC) spelled out in ACA’s rules. If not, they will pay a tax penalty.
And it’s those rules that should give visitors pause. Right now, the ACA mandates that all health insurers provide coverage for all medically necessary services, pre-existing conditions, pregnancy and birth, annual or periodic check-ups, and so on. If any of those rules seep into insurance brought into the US by foreign visitors, then international travel insurers and their clients (you) will have a problem.
In implementing the ACA, the IRS has a pivotal role in determining if a foreign visitor is a non-resident alien for tax purposes (in which case they would be exempt from the individual mandate requirement), or a Canadian waiting for the 240-day passport (back to square one on that), or if they meet the IRS’s “substantial presence” threshold (might need to contact Uncle Sam for that).
At this point, it’s hard to believe that the primary purpose of the Affordable Care Act—making health care affordable to all sectors of society—will be fully achieved. For example, a single, 50-year-old man or woman with an annual income of $50,000, living in South Florida, can buy a Coventry HMO plan for a $258 monthly premium, but he or she would still have a $6,300 annual deductible to deal with before benefits kick in. Coventry is one of the largest health insurers in the US. (This plan is used here only as an example. There are 94 plans available on Florida’s health care exchange.)
Another common plan available in South Florida, Blue Cross/Blue Shield, will charge a monthly premium of $608 for a 40-year-old father, 30-year-old spouse, and 18-year-old daughter living together on a $50,000 income. In addition to the pretty healthy premium, it has a $12,000 annual deductible for the three-member family, and copayments of $40 each time they visit their family doctor, $60 to visit a specialist, and $10 to buy a generic drug.
Sound exorbitant? It does to me, even though it covers pre-existing conditions and there are no annual or lifetime limits on benefits applied to emergencies. So far the ACA has had a rocky start, and there will be many changes to it over the next few years. Don’t press any panic buttons. But stay abreast of developments. They may include you, in time.