by Tom Andrews, CPA
The Patient Protection and affordable Care act commonly referred to as the Affordable Care Act or “Obama Care” was signed into law in 2010, the major provisions of this law will be phased in starting January 2014. There has been confusion among many yacht crewmembers as to how this law will affect them and if they are required to comply. In most cases American crewmembers working on US flagged vessels and foreign flagged vessels will be required to comply, there may be some limited exceptions however this column is intended to address the broad compliance issues faced by individuals working in the yachting industry.
The most controversial aspect of the Affordable Care Act is the individual mandate, this provision of the legislation requires most American’s to be enrolled in an Affordable Care Act compliant health care insurance policy. The penalty for not enrolling in an ACA compliant policy is that the noncompliant individual will have to pay a penalty of $95 the first year or 1% of their income not to exceed $285 whichever is greater. This penalty will be increased for 2015, 2016 and 2017. Unfortunately for many yacht crewmembers the global policies offered are not ACA compliant. If the yacht crewmember owns and individual policy they will need to contact their insurance agent to confirm if their policy is ACA compliant or if the insurance is employer provided the crewmember will need to contact the yacht payroll processing company and inquire if the group policy is ACA compliant.
Most yachts I have come in contact with that provide health insurance have amended their policies to become compliant however I still recommend the crewmember inquire to be sure. The deadline for obtaining an ACA compliant insurance policy is March 31st 2014 however you will need to be enrolled by March 15th in order for that policy to be in affect by the March 31st deadline. Insurance may be purchased at the federal website healthcare.gov, it should be noted that technical difficulties have plagued this website and these glitches are expected to be ironed out by December 1st, if technical difficulties persist it is possible that the federal government may lift some of these deadlines so it will be important for you to stay aware of any changes that might be announced.
It should be noted that the ACA has several exemptions, one of those exemptions being for citizens living outside the United States. I would caution crewmembers to research this exemption before liberally applying to their individual situation, as with tax compliance living abroad generally means you are living as a resident in a foreign country not living on a foreign flagged vessel as it cruises through international water and the territorial waters of foreign countries, if you feel you are eligible for one of these exceptions I would recommend you speak with a health insurance provider to clari`