International scholars at MIT should be aware that they may be responsible for meeting health insurance guidelines set by different government agencies under:
- The Affordable Care Act
- The U.S. Department of State's J-1 Exchange Visitor Program (EVP)
The Affordable Care Act (ACA), also known as “Obama Care,” is a national health care law that took effect January 1, 2014. Under this law, every person who is a resident alien for tax purposes is required to have health insurance that meets "minimum essential health coverage" guidelines. Minimum essential health coverage includes:
Ambulatory patient services; Emergency services; Hospitalization (such as surgery); Maternity and newborn care (care before and after the baby is born); Mental health and substance use disorder services, including behavioral health treatment; Prescription drugs; Rehabilitative and habilitative services and devices; Laboratory services; Preventative and wellness services and chronic disease management; Pediatric services.
Failure to get ACA compliant minimum essential health coverage will result in the individual being required to pay a penalty called a “shared responsibility payment” at the time of filing tax forms, starting next year (tax year 2014).
J-1 Exchange Visitors in non-student categories (such as Research Scholar/Professor/Short-term Scholar) are exempt from the mandate to have health insurance that meets the ACA requirement if their federal tax residency status is “non-resident alien.” J-1 exchange visitors are usually non-resident aliens for the first two calendar years (the year they first enter the U.S. and the following year). However, this may not be true if the exchange visitor has a previous U.S. visa history. Determining your tax residency status is rather complicated; thus, it is recommended that you use the Thomson Reuter tax preparation software to confirm your tax residency status if you are not sure. Once you and your family members become “resident aliens” for federal tax purposes, you are required to have health insurance that meets the ACA requirements in order to avoid paying the penalty.
- International scholars who have health insurance coverage through MIT benefits (MIT Traditional Health Plan, MIT Choice) or the MIT Affiliate Health Plan meet the requirements of both ACA and the U.S. Department of State Exchange Visitor Program. Therefore, they do not need to take any additional action and will not be subject to penalty payment at the time of filing tax forms.
- International scholars who have health insurance from sources in their home countries may not (and most likely do not) meet the requirements of the Affordable Care Act. If/when these international scholars are/become residents for tax purposes in 2014, they will have to pay a penalty at the time of filing their tax forms. Although health insurance from foreign companies and governments may comply with the J-1 Exchange Visitor Program regulations about health insurance, as long as it meets specific criteria, the ACA generally does NOT recognize foreign health coverage as meeting the minimum essential coverage.
ACA Tax Penalties (Whichever is Higher):
- 2014: 1% of your yearly income or $95 per person for the year
2015: 2% of your yearly income or $325 per person for the year
- 2016: 2.6% or your yearly income or $695 per person for the year
Options to Avoid the Tax Penalty:
- Contact the MIT Benefits Office or the Affiliate Health Plan Office (based on your eligibility) to enroll in an MIT health plan. Generally, it is only possible to make changes or enroll in a new plan during the “Open Enrollment” period; however, some exceptions may apply. It is best to consult with the Benefits Office/Affiliate Health Plan Office. Again, those who are already covered by MIT Health Plans do not need to do anything as they meet both the ACA and DOS (J-1) requirements.
- You may enroll in a health plan that meets the ACA requirements through the Health Insurance Marketplace/Exchange. It provides four different levels of service coverage (called Platinum, Gold, Silver, and Bronze). “Platinum” plans require higher premiums but provide better coverage than “Bronze” plans. The co-insurance percentages and deductibles vary within each level.
Since the health insurance plans offered through the Marketplace/Exchange are intended for U.S. residents, J-1 exchange visitors will have to purchase separately any coverage required by the J-1 exchange visitor regulations that are not typically included in standard health plans (such as medical evacuation and repatriation coverage). ISchO has a short list of health insurance providers that provide medical evacuation and repatriation coverage separately.
Open enrollment in the health insurance Marketplace ends March 31, 2014 and the next proposed open enrollment period starts November 15, 2014. Please also note that international scholars who do not have Blue Cross Blue Shield health plans (such as MIT Health Plans) are not eligible to use MIT Medical facilities (except Urgent Care for employees and affiliates).
Current U.S. Department of State J-1 Exchange Visitor Program Health Insurance Guidelines:
All MIT-sponsored J-1 Exchange Visitors must have:
- Medical benefits of at least $50,000 per accident or illness;
- In case of death, repatriation of remains in the amount of $7,500;
- In case of serious illness or injury, payment of expenses associated with the medical evacuation of the Exchange Visitor to his or her home country in the amount of $10,000*;
- A deductible not to exceed $500 per accident or illness.
- Co-insurance (co-pay) not to exceed 25%.
Please note that MIT international scholars are required to sign the “Statement of Compliance with Exchange Visitor Health Insurance Requirements” form upon their arrival at MIT, and this serves as a proof that they have attested that they (and their J-2 dependents, if any) will be covered by health insurance that meets the J-1 EVP requirements while participating in MIT’s J-1 program.
Failure to have health insurance that meets the J-1 EVP guidelines may result not only in international scholars paying “out-of-pocket” for extremely high medical costs, but also in termination from MIT’s J-1 program. As a J-1 program sponsor, ISchO is required by the regulations to terminate J-1 EV’s immigration status if the J-1 EV does not comply with this requirement.
Please contact ISchO if you have any questions.
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Last Updated: May 2014