The Patient Protection and Affordable Care Act, also known as the Affordable Care Act (ACA) and ObamaCare, was signed into law by U.S. President Barack Obama on March 23, 2010 — much to the chagrin of many Americans. The goal of the ACA is to ensure all Americans have access to quality, affordable health insurance, both private and public. Those opposed to the ACA questioned its constitutionality, but on June 28, 2012, the U.S. Supreme Court ruled in favor of the act. Set to be enacted between 2010 and 2020, the majority of ACA reforms became effective on January 1, 2014. ObamaCare will have an affect on American yachties and any crew who pay American taxes. Here’s what you need to know:
“First thing I can say: we need to put to rest the discussion that an owner will be affected. They will feel no impact as the ACA only apples to those who fly a U.S. flag and employ more than fifty crew,” says Mark Bononi, director, Luxury Yacht Division at MHG Insurance Brokers. Bononi maintains that any crewmember who pays U.S. taxes will have to pay attention, unless he or she is out of the States for 330 days a year.
According to Brendan Sharkey of GeoBlue Insurance, “There are five main areas of concern with regard to the ACA. First, you must be ‘lawfully present’ in the U.S. to enroll. It’s unclear what crewmembers who are unable to enroll in the U.S. will do. Second, there is unprecedented disruption [due to] the enrollment process. Third, in order to maintain low price points, the ACA has created slimmed down networks, which mean that people’s regular doctors may no longer be in network, creating an access problem. Fourth, the administration expected a great influx of young people enrolling in order to help keep prices competitive, but that has yet to happen. Last, the plans for public vs. private health insurance mean significant price sharing for members to keep an attractive rate; there is a big out of pocket expense.”
So what should U.S. crew and U.S. taxpaying crew do? For the 2014 tax year, those who do not opt to have a U.S. ACA-compliant plan will be penalized one percent of their taxable salary, if they are audited.
“If a crewmember makes $200,000 a year, the most they could have to pay out is a $2,000 penalty. A lot of the ACA-compliant insurance policies are approximately $500 a month. The conclusion a lot of people are coming to is to keep their current polices and run the risk of paying the fine,” says Bononi.
Sharkey agrees, “It really depends on your situation and wages. It’s unfortunate because there were great intentions with this plan, but people with an international lifestyle were not considered.”
GeoBlue does offer an ACA-compliant health plan, but the plan is for two or more people. It does, however, offer U.S. and non-U.S. coverage, with services outside the States covered at 100 percent and a network in 180 countries worldwide. GeoBlue has lodged its individual policy with the U.S. government and is waiting to hear if it, too, will be accepted as compliant.
“The tax penalty may be the best option for crew,” Sharkey maintains. “Crew need to go home and crunch the numbers, but it’s also extremely important to consider networks and coverage outside the U.S. Many U.S. insurance polices do not cover outside the States, which would mean paying out of pocket, then hoping for reimbursement.”
“There is still a lot of confusion,” says Bononi. “I would say if we get any guidance at all, it won’t be until fall 2015, after the 2014 tax returns have been processed.” Bottom line for all American and U.S.-taxpaying yachties, it’s up to you to crunch the numbers and decide which avenue is best for you both fiscally and insurance-wise. Keep in mind, penalties will begin going up each subsequent year; however, by then, there may be viable international plans available. Watch this space.
UPDATE:
Along with its myriad of names, ObamaCare, The Affordable Care Act, ACA, is just as confusing when it comes to regulation. Now, according to Brendan Sharkey of GeoBlue, there is more to consider, but this time, the changes are positive for U.S. crew. The Obama administration has pushed back the deadline for U.S. citizens to obtain ACA-compliant healthcare if they keep their current plans, despite not being ACA-compliant. This two year extension, which will end on October 1, 2016 has been changed on a federal level, however, the states have to decide whether to permit the extension or now. Fortunately for U.S. yacht crew, Florida accepted the previous extension and is expected to accept the new extension as well.
Have more questions about the ACA? Check out GeoBlue's FAQ page here:
https://www.geobluetravelinsurance.com/aca_faqs.cfm