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Americans Living Overseas Are Exempt From The Affordable Care Act

05 Mar
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Escape Obamacare—Move Overseas

One more benefit for Americans living overseas is that you are exempt from Obamacare. If you don’t want Obama’s health insurance as an American abroad, you don’t have to have it.

In fact, living overseas, you can have no health insurance whatsoever if you like.

Who wouldn’t want health insurance?

Friends have gone without health insurance for more than half of the 35 years they’ve been living overseas. They decided years ago that putting the money they had been spending on health insurance into a separate savings account, creating their own emergency medical fund, would save them money in the long run. Their plan has worked well. By their calculations, their self-insurance strategy has saved them more than US$250,000.

These friends spend a lot of time in countries where the cost of health care is a fraction the cost in the United States. That’s not hard to do. Health care is more expensive in the United States than anywhere else in the world, thanks to Big Pharma and U.S. insurance companies.

I saw a doctor in the States when I was there over Christmas. When registering for the visit, I checked the box for “self-pay.” I have insurance that would cover a doctor visit like this one but only after I meet my high deductible. This was late December. I knew I wasn’t going to meet my deductible for the year, so why bother filling out the insurance forms?

However, checking that “self-pay” box, I worried that the IRS (and maybe Homeland Security) would be notified that I wasn’t using insurance for the visit. In this Obamacare era, would that be some kind of red flag?

Fortunately, I don’t think that was the case. What did happen next, though, was enlightening.

The Affordable Care Act

After my visit, I returned to the front desk so the nurse could calculate what I owed. I could see over the counter the form she was working from and the various boxes checked. Next to each checked box, she indicated an amount to be charged—US$65 for a hearing test, US$70 for an X-ray, and US$230 for the specialist’s fee.

A total of US$365 for what I’m sure would have cost less than US$100 at the clinic where I go for medical care in Panama.

But here’s the interesting part: When she was done tabulating, the nurse divided the total by two and told me the cost would be US$182.50.

A self-pay discount.

I was delighted by the savings but appalled by the implications. Not having to claim payment from an insurance company meant the doctor could charge me half as much.

This reality has led to a fast-growing medical tourism industry around the world.

I was reminded of this recently by a consulting client who got in touch to tell me about his new business idea for Medellín, Colombia, where he and his wife have relocated. He’s launching a medical tourism service.

As this client explained to me, his first experience with medical tourism was more than a decade ago when he needed significant dental work. The U.S. dentist he visited wanted US$25K. He was able to get the work done in Costa Rica for US$3,000. The difference far more than made up for the cost of getting to Costa Rica and spending a few nights in a hotel.

I’ve heard similar stories over the years. Typically, medical tourism makes sense for nonemergency things like dental work or cosmetic surgery. You’re not going to get on a plane to Costa Rica or Thailand in need of an appendectomy, though I do know people who have flown to other countries for scheduled heart surgeries.

Of course, if you’re already living overseas, you can benefit from lower-cost health care even in the case of an appendectomy, as a friend did in Panama a few years ago. Total cost of the surgery and two days in the hospital ran about US$4,000. Depending where you’re living in the States, you’re looking at a cost of US$15,000 to US$25,000 to take care of your ruptured appendix.

Lief Simon

Mailbag

“Thanks, Lief, for the very helpful info.

“And well written to boot, especially given that you’re trying to explain the intricacies of our way overcomplicated tax system.”

A.S.

***

“Lief, what is the deadline file date for the FBAR? Is it April 15 this year, or is it around June, which I believe was the date last year?”

L.L.

It’s June 30 every year.