1095-C and living in Singapore

[Lion EA]

Family of four living in Singapore for a few years, US Citizens, just sent me their Form 1095-C.  I have so few clients that aren't fully covered by employers and I'm so sleep deprived, that I'm not making sense of this.  When in the US, he taught at Vassar.  Vassar filled out the form for only the husband's SSN.  Column 14 has 1E for Jan-Jul and 1H for Aug-Dec.  15 has $117.51 for Jan-Jul and then blank.  16 has 2A for Aug-Dec and blanks above.  They are living and working in Singapore, but did make a lot of trips back to the US with ill, aging parents and one funeral and college visits for oldest daughter in HS.  So, they do not meet the physical presence test, and we take the foreign tax credit.  He works for the University of Singapore.

[jklcpa]

I'm not quite sure what your question is.

U.S. citizens living abroad for at least 330 days during the 12-mo period are not required to purchase health insurance for that 12-mo period. They have an exemption.   Are you saying you think they don't meet this exemption?

Then, "he works for U of Singapore"  but this form came from Vassar for most of the year. Was he here in the U.S. or was he in Singapore.

Sorry, I didn't sleep at a Holiday Inn last night, or barely slept at all anywhere.

[Lion EA]

His employer in the US was Vassar.  (With time zone differences, there's a real lag in communication with them.)  This form arrived at their house in Poughkeepsie and was sent to me by their tenants, so he hasn't even seen it yet.  Perhaps Vassar continued insurance for a year or they used COBRA; haven't heard yet.  They will NOT be abroad for 330 days during 12 months, as each adult had ill, aging parents and a funeral to attend and homes to clean out, etc.  They would be back in the states for 1-2 weeks at a time for each crisis, and the dates each traveled were different for each spouse.  Wife had more family in the states ill and dying, but husband had some things to attend to here (think his current position at U. of Singapore had some connection with his short-term assignment at Yale) such as meetings at Yale and at Vassar and college visits with his HS daughter.  The two daughters were in Singapore slightly longer than their parents, but I don't think anyone came close to 330 days with the sick parents/grandparents issues.

So, they don't get the "out of the country" exemption, right?

So, what does the form mean?  They all had an offer of insurance of some type for some months and husband only for others?  But, do the codes mean only husband was covered?  And, no one else?  And, no one at all was covered from Aug-Dec?  Penalty applies for four people for 12 months?

Would it make a difference if they have coverage through U. of Singapore?

[jklcpa]

There's one other point in the ACA regarding citizens living abroad that I found on the State Dept's site, and that is if the citizen is considered a bona fide resident of the foreign country for the entire tax year, then the person is considered to have MEC. There are different rules for determination of "bona fide resident" that use a lesser # of days for the presence test, the person must have a closer significant connection to the other country. It's covered here in pub 570. Maybe if you do some research on that premise, it will allow you to say that all of the family members have MEC for the year and be done with the issue.

Have you actually asked the client if he has MEC for everyone for all 12 months, or are they covered by Singapore's system?  FWIW, Singapore has a very successful gov't universal health system for everyone, but nothing is entirely free.

[Pacun]

Interesting. I thought you could use exception C (living abroad) from Aug-Dec since MEC is a month to month thing.

 

[Lion EA]

They definitely don't qualify as bona fide residents.  I've shot off more emails to them since receiving the 1095-C which they haven't even seen yet since their Poughkeepsie tenant mailed it this week.  I have another international situation coming up, so was trying to get a jump on both these, at least to the point that I know what questions I need to ask.  I don't know what I don't know.  And, thank goodness, most of my clients have employer coverage with few job changes.  2015 was the year for a few twists, though.

[Jack from Ohio]

What does Part III of Form 1095-C show?  If it does not show coverage for all 12 months, then you must seek verification that the client did/did not have coverage for the remaining months.

Part II of the form only shows what was offered.  Part II has no meaning when deciding if the client had coverage.  Part III does, but not on all 1095-C forms issued by employers.

1095-B is the go-to form to verify coverage.  Next year, it and 1095-A will be the only forms of verification accepted by the IRS to prove coverage.

[Lion EA]

Part III shows no one.  Ever.  It's afternoon in Singapore, so I hope they get home from work in a few hours and answer my questions.  (Jack, I emailed you since you know more about ACA than I do, and included 1095-C as an attachment.)

[Lion EA]

Heard from wife.  Definitely not meeting substantial presence test; too many trips to the US for aging parent emergencies.

No US-based healthcare during 2015.

They all have been on a National University of Singapore plan since husband started working there in August 2013.  (They were going to be there for two years, but continuing job until summer 2016.)

Does that let me say Yes on their return?

[jklcpa]

21 hours ago, jklcpa said:

Have you actually asked the client if he has MEC for everyone for all 12 months, or are they covered by Singapore's system?  FWIW, Singapore has a very successful gov't universal health system for everyone, but nothing is entirely free.

7 hours ago, Lion EA said:

Heard from wife.  Definitely not meeting substantial presence test; too many trips to the US for aging parent emergencies.

No US-based healthcare during 2015.

They all have been on a National University of Singapore plan since husband started working there in August 2013.  (They were going to be there for two years, but continuing job until summer 2016.)

Does that let me say Yes on their return?

 

Maybe.

Check this IRS page, last shaded box where it lists this as MEC:  

Other coverage:

• Certain foreign coverage

 

Also, read in Pub 974, page 13, item 4a under "Other Coverage designated by the Dept of HHS":

4. Coverage under a group health plan provided through insurance regulated by a foreign government if:

a. A covered individual is physically absent from the U.S. for at least 1 day during the month, or

b. A covered individual is physically present in the U.S. for a full month and the coverage provides health benefits within the U.S. while the individual is on expat status.

 

[Lion EA]

That may do it.  Close enough for government work, and April.  She's trying to find documentation of what they have.  I told her to save documentation for all the years in Singapore, 2013-2016.  Thank you, Judy and everyone, for your research skills.

 

 

[Lion EA]

Client (who prepared their taxes until going to Singapore) has little documentation of their health plan except that her spouse's employment contract with NUS refers to a plan.  I'm hoping that I can use Pub. 974's  "4. Coverage under a group health plan provided through insurance regulated by a foreign government if: a. A covered individual is physically absent from the United States for at least 1 day during the month, or..." because the IRS page gives no link to it's definition of "certain foreign coverage."

So, do I just check yes?  Or do I fill out forms?

(This gal had to hunt for many things, husband's compensation, etc., so went on extension.  After a US wedding, more aging family in US issues, shipping daughter back to the US for college, etc., I'm getting info from her.  And, great shrieks of how much they owe, so going over each line to see if I'm accurate.)

[jklcpa]

Not so fast there.  I don't know that these rules have been finalized yet.  The following statement is unofficial, but I found this in many places:

• "The recent guidance mentioned above would also apply to U.S. expatriates and U.S. residents working abroad.  Where the plan sponsor provides insured coverage for U.S. persons working abroad through an insurer regulated by a foreign government and complies with the notice and reporting requirements of the ACA, these participants may be deemed to have MEC."

I also found this as part of the law as entered in the Federal Register. Please see page 30314, #3 subpart G - Minimum Essential Coverage, part a for Other Coverage that Qualifies as MEC where it references sec 156.602 and in the first paragraph of the middle column where it says:

• We proposed to amend § 156.602 by adding paragraph (e) to designate certain types of foreign group health coverage for expatriates as minimum essential coverage. These proposed provisions would codify previous CMS guidance published on October 31, 2013, with some additional detail.

• We are not finalizing this section of the proposed rule at this time. We will consider finalizing the proposal in the future, and will address comments received on the proposal at that time. In the interim, stakeholders and others can rely on the published October 31, 2013 guidance.

I also found this:  See the last sentence in the first paragraph of page 2 of this guidance from HHS CMS that is dated 2/13/2015 that discusses the requirements in 156.602(e)  and also specifically footnote #5 that says:

• Section 156.602(e) of the proposed HHS regulation proposed to codify the guidance published on October 31, 2013 that designated certain types of foreign group health coverage as minimum essential coverage.  See Patient Protection and Affordable Care Act; Exchange and Insurance Market Standards for 2015 and Beyond; Proposed Rule, 79 FR 15808 (March 21, 2014).  We have not finalized this section of the proposed rule at this time. 

And finally, this in 156.604 that goes back to those reporting requirements I mentioned at the start of this post. I think the requirements for and insurer regulated by a foreign government must comply with the reporting requirements under sec 6055 to be considered MEC. Sec 156.604(a)(2) and 156.604(d) spell that out. https://www.law.cornell.edu/cfr/text/45/156.604. Please take notice of the amendment date to this in the FR is 2/27/2015.

Maybe that will give you enough references to the law as entered in the Federal Register and to the IRC to continue with your research so that you may decide how best to advise your client.

 

[Lion EA]

Reading all that, even though the 2014 cite doesn't seem to be acted on any further, looks like she stands a chance of getting something from NUS (a public university) that says their coverage qualifies as MEC.  But, she has been asking for details on their plan as it applies to US citizens since April.  (Her husband is the employee, but she's the "tax matters" person of the couple.  That might be slowing her dealing with NUS.)

Assuming she shows me more documents that convince me they have MEC, do I check the box or do I go the form route with an exception because they're overseas?

Not trying to be political, but this seems like an unintended consequence of Congress not reading a bill before voting on it.  A family with healthcare coverage, not being a burden on the US healthcare system, not costing Medicaid, etc., but potentially paying the Obamacare tax if that country has not worked harder than our own Congress to understand the ACA !!

[Lion EA]

Thank you very much, Judy, for all your research.  I had not seen two of your cites.  And, that 2015 amendment is what worried me the most being early 2015; think you or one of my boards pointed it out back then as the year began.  That looks like the language I gave client, asking her to look into their coverage that many months ago.

[Lion EA]

Again, without Forms 1095-B or -A, I should be filling out Form 8965 if taking an exception?  Or, if NUS shows they complied with CMS or whoever "qualifies" them as offering MEC, then just check the box and NO form?

(Sorry, Brazilian client for twelve hours until 2 a.m. this morning and then back to work, so I've had no sleep, brain is fried.  Trying to get a couple more returns done so I can drive to PA by Friday for a long weekend at my granddaughter's first birthday party.)

[Catherine]

2 hours ago, Lion EA said:

my granddaughter's first birthday party

Already?!?! wow! Congratulations Grandma, Mama, Dada, and babykins!

[Lion EA]

Thank you.  She's so tall like her daddy, but luckily pretty like her mommy.

Client is trying to get something definitive from NUS.

[Catherine]

What a little cuteness she is!!