Understanding the Effects of ACA to Employees Working in Foreign Missions

ACA International Implications

The 2010 Affordable Care Act (ACA) seeks to impose new requirements for both employers and individuals in terms of health insurance coverage. However, is the ACA affecting globally mobile workers (those on long-term assignment abroad or in the U.S.), is the ACA altering the Federal Employees Health Benefits Program? The details of the ACA provisions are complex and still evolving. The ACA is altering America's healthcare landscape, affecting insurers, individuals, and employers, including the state and federal governments (Kongstvedt, 2013). Among the notable changes include new marketplaces or public exchanges where persons can buy healthcare coverage and penalties on people who lack health insurance. It is believed that penalties on employers failing to provide coverage will take effect by the end of 2015.

In terms of Federal Employees Health Benefits Program, the Act sets in motion for greatest reform in the employer-offered health benefits in the post-World War period. While the time and speed are unpredictable, studies point to a dramatic restructuring of employer-sponsored health benefits accompanying the passage of the Act. It is argued that when employers understand the many new social and economic incentives embedded in the ACA and the choice of restructuring benefits beyond keeping or dropping them, most will make drastic changes. Estimates point that roughly ten percent of employees today covered by employer-sponsored insurance (ESI) will be forced to shift to subsidized exchange plans. Nevertheless, studies focusing on workers across geographies, industries and employer sizes reveal that ACA is provoking a much bigger response.

Probably, thirty percent of the employers will stop providing ESI in the years after 2015

Among the employers who understand the reform, at least fifty percent will seek alternatives to the traditional ESI

Contrary to the prevailing assumptions, roughly 90% of the workers would remain in their jobs even after their employers stopped providing ESI: however, 50% will expect an increase in compensation

An estimated 40$ of the employers could benefit economically by dropping insurance even if they compensate workers for the change by higher salaries and benefit offerings

In the current world, companies must quickly analyze the effects of medical care change on their workforce strategies and benefits, as well as the possibilities and threats that change produces. Of course, the type and level of the changes companies make will differ by industry, collective-bargaining contracts, and other restrictions. Most companies, however, will find value-creating options between the extreme conditions of eliminating worker coverage of wellness and making no changes to the present offering. Even companies that plan to provide benefits similar to those they currently offer can take no-regrets steps, like developing programs to increase what their workers will value most about ESI. Employers seeking more extreme changes will have to reconsider health benefits offers for higher-income workers (Emanuel, 2015).

For now expats residing overseas are ineligible to buy medical care insurance through any personal plan under the ACA. This is because ACA is targeted on domestic coverage plan policies and is available only to the U.S. citizens. One note is important to bring up in this respect. One of the ACA provisions fully stops insurance providers from discriminating against individual adults with pre-existing circumstances. The American citizens residing overseas with pre-existing or serious medical issues are left out of the opportunity to buy such coverage under the ACA. As such, they should evaluate their present medical policy and follow upcoming law improvements in regards to this issue.

The ACA exempts U.S. expats residing overseas from the penalty tax. U.S. citizens residing overseas who are eligible for Foreign Earned Income Exclusion are considered to have the required amount of medical coverage. If a U.S. expatriate does not have a medical cover but is eligible for the Foreign Earned Income Exclusion, the individual will still be exempted from the penalty tax. The Internal Revenue Service (IRS) will pay more attention to a U.S. expatriate tax return later on to recognize people who unlawfully claimed the Foreign Earned Income Exclusion (FEIE). Although U.S. expats are exempt from the penalty tax, some high-income earners will have to pay an extra 4% tax on net investment income. This includes dividends, capital gains, royalties, rents, interests, and annuities. However, since the U.S. has a Totalization Contract with 24 nations that fight a dual Social Security insurance, its expatriates residing overseas might be exempted from paying an extra 0.9% health insurance tax (Herzlinger, 2004).

From the angle of ensuring adequate health care coverage, health care law promises to help. ACA promises to improve access to adequate, affordable care insurance for all seniors, especially for those with lower earnings and pre-existing health conditions. ACA's primary focus is to increase medical insurance coverage and medical care accessibility for citizens and legal immigrants. The government law is expected to transform private and public insurance coverage, the operation of care marketplaces, affordability, and accessibility of insurance, and financing of care. Some of the changes were effective the year of enactment; others are being phased in; all will be in position by the end of 2015 (Selker & Wasser, 2014).

The law includes an extension of State Medicaid programs eligibility to all those with earnings up to 138% of the poverty line, regardless of place of residence or family position (Kongstvedt, 2013). However, the Supreme Court decision made this extension optional for states, and it is currently not known how many states will take up the option. For those states choosing to participate, the costs of the extended population will be financed absolutely by the government for the first three years, after that phasing down to 90% government and 10% state funding. The Congressional Budget Office estimates that the ACA's State Medicaid programs extension would cover some 17 million uninsured, low-income Americans.