Most employers don’t know that H-2A workers are also covered by the Affordable Care Act (ACA/Obamacare). Large employers will face a tax penalty if they don’t offer health insurance to their H-2A workers and workers will be penalized if they don’t have coverage in 2018. Workers who are not offered insurance by the employer may go to the market place. Because health insurance is very expensive, subsidies are given to low and moderate income people. Almost all H-2A workers will qualify for a subsidy. Open enrollment for coverage in 2019 begins on November 1, 2018 and ends on December.15, 2018 in all states that use HealthCare.gov. State run exchanges may differ. For info on state exchange enrollment periods and how workers who arrive outside the enrollment may obtain coverage, see https://www.healthinsurance.org/faqs/what-are-the-acas-enrollment-periods-and-when-can-i-enroll-outside-of-the-open-enrollment-period/.
H-2A workers who are not in the U.S. during the open enrollment period have no more than 60 days after their arrival in the U.S. to apply for coverage and obtain a subsidy. To do this the worker must call the health care exchange for the state where he/she is working. Inform the exchange that you (the worker) has had a change in circumstance. This change in circumstance is that prior to your arrival you were outside the U.S. and were not eligible or required to have health insurance in the U.S.; with the issuance of your visa and arrival in the U.S., you are legally in the U.S., are now required to have health insurance, and are eligible to obtain it through the exchange. In general, individuals whose incomes are between 100% and 400% of a federally established poverty level receive a premium subsidy to help pay their health insurance premium.
Generally, those whose incomes are below 100% of the poverty level are not eligible to purchase insurance with a subsidy because they should be eligible for another government program called Medicaid. Workers legally in the U.S. as non-immigrants are not eligible for Medicaid and will be eligible for the subsidy even if their H-2A wages are below 100% of the poverty level. Many exchange navigators don’t know the law with respect to temporary foreign workers. If the person at the exchange is not aware of all this, ask to speak to a supervisor. Unless an exemption applies (attachment HO-1A), those who don’t get coverage upon arrival will be penalized when filing their 2018 tax returns. The individual mandate penalties will not be applied in tax years 2019-2025. Those who succeed in getting coverage now, will still need to reapply during the open enrollment period for next year. Those with coverage who are ready to leave the U.S. must contact the exchange or other insurance provider to let them know when you are leaving in order to cancel the policy. Then when you return to the U.S. again in 2019, the cycle repeats.
If it is past sixty days, workers may still obtain health insurance to reduce the penalty, but they will have to pay full premium for the months they are here. When they file their 2019 returns, they will be able to claim a premium credit which will refund to them much of the premium paid. This is recommended, because the penalties for 2018 are substantial. Those who don’t have coverage in 2018, will pay the higher of these two amounts:
- 2.5 % of yearly household income above the filing threshold. (About $12,000 for an individual & $24,000 for a joint return.)
- The $695 per adult for the year. This pro rates to $57.92 for each month without coverage.
Workers whose annual income is below the filing threshold as applied to them are exempt from the penalty, but they need to file a tax return to claim the exemption. Factors determining the filing threshold include whether the worker is a resident, nonresident or dual status resident, their marital status and whether or not they have elected to file jointly. Note that workers who received a health insurance subsidy through the marketplace must file a return regardless of their level of income.
Please make sure that your workers are in compliance with their filing requirements; those in the U.S. for more than 183 days must file resident or dual status resident returns. If in U.S. for less than 183 days, they can be residents by the third year with as few as 123 days present each year. Also, resident taxpayers with children living outside the U.S. cannot claim child tax credit unless the child is a U.S. citizen and living in the taxpayer’s home.