• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

Shared Responsibility Payment

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

sha80

New member
What is the name of your state? TX

Hello. My first post here hoping to hear from you. I am going to file federal tax return jointly with my wife. We have one dependent, two-year old son. I am permanent resident, my son is citizen, and my wife was OPT holder.

My wife went back to Korea because her Visa expired. She had health insurance coverage from January to August and didn’t have health insurance coverage from September to December.

My son went to Korea with my wife because I couldn’t take care of him by myself – my wife’s parents in Korea could help her. Like my wife, my son had health insurance coverage from January to August and didn’t have health insurance coverage from September to December.

In this case, should I pay shared responsibility payment for my wife and my son for September to December? They had Korean health insurance coverage from September to December though.
 


LdiJ

Senior Member
What is the name of your state? TX

Hello. My first post here hoping to hear from you. I am going to file federal tax return jointly with my wife. We have one dependent, two-year old son. I am permanent resident, my son is citizen, and my wife was OPT holder.

My wife went back to Korea because her Visa expired. She had health insurance coverage from January to August and didn’t have health insurance coverage from September to December.

My son went to Korea with my wife because I couldn’t take care of him by myself – my wife’s parents in Korea could help her. Like my wife, my son had health insurance coverage from January to August and didn’t have health insurance coverage from September to December.

In this case, should I pay shared responsibility payment for my wife and my son for September to December? They had Korean health insurance coverage from September to December though.
No, you should not pay the shared responsibility payment for September to December if they were covered by insurance in Korea.
 

Taxing Matters

Overtaxed Member
In this case, should I pay shared responsibility payment for my wife and my son for September to December? They had Korean health insurance coverage from September to December though.
You wouldn't need to make the payment for your wife. She is not a U.S. citizen or national and during those four months she was not an alien who was lawfully present in the U.S. As a result, she was not required to have minimum essential coverage. But you might have to pay it for your son. Exactly what do you mean when you say he was covered by "Korean health insurance coverage"? If you mean he was covered by a Korean government national health plan, that does not qualify as "minimum essential coverage". So in that case, you'd have to pay the shared responsibility payment. If you meant some other kind of health insurance coverage, then the details of that will matter.
 

LdiJ

Senior Member
You wouldn't need to make the payment for your wife. She is not a U.S. citizen or national and during those four months she was not an alien who was lawfully present in the U.S. As a result, she was not required to have minimum essential coverage. But you might have to pay it for your son. Exactly what do you mean when you say he was covered by "Korean health insurance coverage"? If you mean he was covered by a Korean government national health plan, that does not qualify as "minimum essential coverage". So in that case, you'd have to pay the shared responsibility payment. If you meant some other kind of health insurance coverage, then the details of that will matter.
How do you know that the Korean National Health Plan doesn't meet the qualifications for "minimum essential coverage"? I would say that its more likely that it does. Most national health plans are more comprehensive than our definition of "minimum essential coverage".
 

Taxing Matters

Overtaxed Member
How do you know that the Korean National Health Plan doesn't meet the qualifications for "minimum essential coverage"? I would say that its more likely that it does. Most national health plans are more comprehensive than our definition of "minimum essential coverage".
Because the Affordable Care Act (ACA) does not list foreign national health insurance plans as qualifying as minimum essential coverage. Specifically, the section on the shared responsibility payment lists the following as meeting the requirements:
  • Certain specifically identified government sponsored programs, all of which are U.S. federal or state health insurance plans;
  • Employer-sponsored plans;
  • Health plans offered in the individual markets within a State;
  • Health plans that were grandfathered health plans; and
  • Other coverage that the Secretary of Health and Human Services (HHS) recognizes as meeting minimum essential coverage for the purposes of this section.
IRC § 5000A(f)(1). When you look at what other coverage HHS recognizes as qualifying under that last category, what you find is that foreign national health plans are not generally included. Indeed, HHS has expressly stated on its Minimum Essential Coverage Page that those plans do NOT automatically qualify. "National health plans of other countries are not a Patient Protection and Affordable Care Act recognized category of Minimum Essential Coverage." A country may submit its plan to be approved by HHS if it chooses to do so, but so far only Switzerland's national health plan has made that list, likely because no others have bothered to apply.

This is one of those areas where you have to read the rules carefully to see what qualifies and what doesn't. The Act is very specific on what counts as minimum essential coverage. I've simplified it a bit here to keep this relatively short; the actual rules are much more detailed and its important to read the rules closely to get it right. Simply assuming that because a health plan is pretty comprehensive it will meet the requirements risks getting it wrong.
 

davew9128

Junior Member
What you SHOULD be looking for is to see if your wife and son meet the out of the country test for an exemption to the shared responsibility payment. As Taxing Matters notes, non-US health insurance doesn't qualify. You may need to extend the return for them to meet that test.
 

Taxing Matters

Overtaxed Member
What you SHOULD be looking for is to see if your wife and son meet the out of the country test for an exemption to the shared responsibility payment. As Taxing Matters notes, non-US health insurance doesn't qualify. You may need to extend the return for them to meet that test.
In order to do that, the son would have to be out of the country for a continuous period of at least 330 days. If they have already returned, it's too late. If they haven't, they'd need to stay a few more months to avoid the shared responsibility payment for the son. That may end up costing more than the amount of the shared responsibility payment at issue or not be worth the wait for other reasons. But it is an option to consider.
 

sha80

New member
Thank you all for your time and comments. I really appreciate it.

My wife got a new Visa and returned to the US with my son last month.

I meant "Korean health insurance coverage" Korean government national health plan. It is mandatory health plan that every Korean should have. Some people purchase additional private health insurance but it is usually to cover serious illness such as cancer and not likely for toddler. It seems that Korean government national health plan has not been granted Minimum Essential Coverage recognition.

By the way, my son has dual nationality, Korean Citizen and U.S. Citizen? Will this make any difference? If not, I think I should pay the shared responsibility payment.
 

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top