Impact of the ACA on International Students

Read this article to better understand healthcare reform in the United States and how the new mandate impacts current and future international students.

What is the ACA?

The Patient Protection and Affordable Care Act is a healthcare reform law designed to help increase the accessibility, affordability and overall quality of healthcare in the United States. Signed into law by President Obama, the ACA requires that all U.S. citizens and some residents maintain health insurance coverage meeting certain criteria, or pay a fine when filing taxes. While U.S. citizens do have the opportunity to be without appropriate health insurance for up to 90 days of the year without facing a penalty, most international students are exempt from the Affordable Care Act all together.

For more information on the ACA, read our article "How Insurance is Regulated in the USA "

Exemption to the Individual Mandate

Since international students generally aren't in the U.S. for an extended period of time, the Internal Revenue Service (IRS) looks at their federal tax status to determine if and when these students are subject to the ACA. While still considered a “non-resident alien” for tax purposes they are not subject to the ACA, but as soon as the transition to “resident alien” is made, international students must buy an appropriate plan or pay fines when filing taxes.

Luckily, international students on F, J, Q and M visas have a “non-resident alien” tax status and likely won’t have to purchase an insurance plan that is compliant with the ACA until after their first five years in the U.S.!

This is great news for international students and scholars since a plan suited for a permanent citizen in the U.S. is not ideal for a short term visitor studying abroad. There are many insurance plans available to cover many different things, and just as you would never purchase just a short-term travel plan to provide permanent coverage, buying a domestic option as an international or expat is far from ideal and very costly.

ACA-compliant plans are designed to provide lifetime coverage, so they offer a wide range of benefits that international students would rarely have the opportunity to use, but would still be expected to pay for. For example, it’s now required that all long-term domestic insurance policies immediately provide coverage for wellness and preventative care. While getting immunizations and yearly checkups are important, having them covered by an insurance plan raises the premiums drastically. Most insurance plans that have been designed with international students in mind don’t cover wellness or preventative care, but allow the student to pay out of pocket for these services, helping to keep the prices well within the budget of an international student.

Not only do these plans provide an unnecessary amount of coverage at a high price, ACA-compliant insurance plans don’t offer many benefits that an international student needs while studying away from home. International student insurance plans, on the other hand, come standard with emergency medical evacuation, emergency reunion coverage, and even have a benefit called repatriation – which would pay to have the student’s body brought back home if he or she passed away while on the plan. Of course no one ever wants to need these benefits, but they are essential. These options also include travel-related benefits like lost checked luggage, trip delay and trip interruption – all very important for someone attending school outside of their home country.

Insurance Options for International Students

While international students may be exempt from the ACA for a time, there may be other health insurance requirements that must be met, depending on their high school, college or university. Take a look below to determine what requirements you may need to meet while studying in the United States.

F, Q and M Visa Holders do not have any government regulated requirements, but must follow any insurance minimums set forth by their institution. View our School Requirements Database for more information on your college or university.

J Visa Holders and their dependents have a strict list of government insurance requirements that must be met throughout the duration of their stay and may be required to meet additional school requirements, depending on the college or university.

There are a few different ways that schools can handle health insurance coverage for their international students or scholars, all of which being appropriate options:

• Group Health Insurance Plan - Some schools require that all international students purchase the insurance plan provided by the school with no option to buy an alternative policy.
• Group Health Insurance with Option to Waive – Other institutions will give you the option to purchase your own health insurance or opt into the group health insurance plan offered by the school.
• Individual Health Insurance Plan – This happens rarely, but some schools don’t offer a group insurance plan, so you have the option to compare coverage and choose the best insurance plan for your situation.

School Requirements Database

Our Student Secure plan is an excellent option for international students and is accepted by most schools, but be sure to check the School Requirements database to see which level of is best for your college or university. If can choose your own plan we have an array of great articles in the Insurance Explained section about health insurance options – most of which are specifically designed for international students.

How the ACA Impacts OPT

International students during their Optional Practical Training period are still exempt from the ACA for the first five calendar years in the United States, because they are likely still considered a “non-resident alien” for tax purposes. After graduation, they are also no longer have to purchase a plan compliant with their college or university requirements, and have the freedom to purchase any insurance plan they would like.

In the most ideal situations, an employer will provide an individual with health insurance either for free, or at a reduced cost for their employees – including individuals on their OPT, but this is not always the case. If insurance is not provided, you have many options to purchase health insurance, but an international plan is still ideal because it will provide a lot of additional coverage that won’t be included in domestic options, like emergency medical evacuation .

If you do need to purchase your own policy, The Atlas Travel plan is a great place to start. It offers comprehensive coverage for up to 364 days and will cover traditional medical costs like doctor visits and hospitalizations, but also comes standard with valuable travel coverage. It can also meet all of the J1 visa requirements, has many deductible and policy maximum options, and offers a visa letter upon purchase.

What If I’m in the U.S. for More Than 5 Calendar Years?

As mentioned earlier, international students are generally in the U.S. for a short period of time and most are never required to purchase a health insurance plan compliant with the Affordable Care Act. After their first five calendar years in the United States, international students need to apply a technical analysis involving the “Substantial Presence Test” to determine their tax status and when they must buy appropriate coverage. Generally within six months (or a little shorter for someone continuously in the country) after you are considered a “resident alien” you will be required to purchase a health insurance plan compliant with the Affordable Care Act – just like a U.S. citizen.

Even if the Substantial Presence Test was passed, you can still be treated as a nonresident alien if you qualify under what is called the “Closer Connection” exemption. This exemption requires you to prove a closer connection to your home country, and that you plan on returning after your time in the U.S. For more information, please visit the IRS website.

Contacting a licensed insurance agent is always a great way to ensure an international student or scholar buys appropriate health insurance coverage. Not only can they verify a plan meets specific college or visa requirements, they are happy to answer questions about health insurance coverage in general and provide visa letters, when necessary. For more information on international student insurance be sure to read more in the Insurance Explained section.

Return to our "Insurance Explained" section for more information and help