The Effect of the Affordable Care Act’s Current Tax Scheme on Nonresident Aliens, and Migrant Workers and their Employers

By: Giavanna M. Reeves, J.D.

Effective March 30, 2010, the requirement to maintain minimum essential coverage for healthcare insurance is applied to applicable individuals for each month beginning after 2013. The Affordable Care Act (“ACA”) defines “applicable individuals” as persons other than individuals who are “not a citizen or national of the United States or an alien lawfully present in the United States.” Thus, the ACA does not apply to individuals who are residing in the United States without legal status or citizenship, and no tax penalties can be assessed to these individuals for noncompliance within the ACA provisions. Even though the Act does not apply to nonresident aliens, it may apply to migrant workers and their employees. The substantial presence test, which is used to determine if a nonresident alien will be considered a resident for tax purposes, is not necessarily useful in determining if a nonresident alien must comply with the ACA.

Nonresident Aliens

The Internal Revenue Code defines a nonresident alien as an individual who is “neither a citizen of the U.S. nor a resident of the U.S.” Knowledge of immigration status is an alien’s first step in determining how he or she is affected by the Act. The White House has provided a healthcare marketplace website for the purchase of affordable health insurance and a list of immigration statuses that qualify for the Act’s mandate to have health insurance. Those who maintain certain immigration statuses are required to comply with the ACA and have at least a minimum essential healthcare insurance plan—the list of statuses are as follows :
• Lawful Permanent Resident (LPR/Green Card holder)
• Asylee
• Refugee
• Cuban/Haitian Entrant
• Paroled into the U.S.
• Conditional Entrant Granted before 1980
• Battered Spouse, Child and Parent
• Victim of Trafficking and his/her Spouse, Child, Sibling or Parent
• Granted Withholding of Deportation or Withholding of Removal, under the immigration laws or under the Convention against Torture (CAT)
• Individual with Non-immigrant Status (includes worker visas, student visas, and citizens of Micronesia, the Marshall Islands, and Palau)
• Temporary Protected Status (TPS)
• Deferred Enforced Departure (DED)
• Deferred Action Status (Deferred Action for Childhood Arrivals (DACA) is not an eligible immigration status for applying for health insurance)
• Lawful Temporary Resident
• Administrative order staying removal issued by the Department of Homeland Security
• Member of a federally-recognized Indian tribe or American Indian Born in Canada
• Resident of American Samoa

Applicants for the following statuses are also required to comply with the ACA and have at least a minimum essential healthcare insurance plan:

• Temporary Protected Status with Employment Authorization
• Special Immigrant Juvenile Status
• Victim of Trafficking Visa
• Adjustment to LPR Status
• Asylum

Even if an individual is deemed to be without a legal immigration status, or a nonresident, then the substantial-presence test may consider him or her a resident for tax purposes. There are two separate tests that will determine if an alien is a resident of the U.S. for tax purposes. The first test is the green card test. If an individual is granted a green card that has not been revoked, and is physically present in the U.S., then the individual passes the green card test is a resident for tax purposes. Lawful permanent resident is also another term affiliated with the individual who possesses a green card. The second test is the substantial presence test. Under the substantial presence test, individuals who are physically present in the U.S for 31 days during the current tax year and 183 days during the 3-year period, which includes the current year and the 2 years immediately before that, counting all the days of the present year and, 1/3 the days of the first year, and 1/6 the days of the second year.

Note, however, that the substantial presence test is used to determine income tax payment responsibility and it is not necessarily clear if the test can be used in connection with the Act’s healthcare mandate. The plain language of the ACA makes the health insurance coverage a requirement for citizens or aliens with legal immigration status. Thus, just because an alien meets the substantial presence test, that does not mean that he or she will be held responsible under the ACA for failure to maintain health insurance if he or she does not have legal immigration status, i.e. a green card, visa, or other immigration benefits granting stay within the U.S. Also, Congress has decided that access to healthcare is limited:

if an individual is not, or is not reasonably expected to be for the entire period for which enrollment is sought,
a citizen or national of the United States or an alien lawfully present in the United States, the individual shall not
be treated as a qualified individual and may not be covered under a qualified health plan in the individual market
that is offered through an Exchange.

In conclusion, the ACA will apply to citizens and aliens who have legal immigration status. The substantial presence test will deem an individual a resident for tax purposes, but without a legal immigration status, the ACA mandate will not apply to him or her.

Migrant Farmworkers and Employers of Migrant Farmworkers

Migrant farmworkers have lawful status to be physically present in the U.S. using an H-2A visa. Even though the work of a migrant farmworker is seasonal, the worker is expected to maintain minimum essential healthcare insurance. Starting in 2014, all employers that have at least 150 workers…will have to provide medical insurance for their employees, and that will have to be provided at the point of hire for new employees and retrospectively for all existing employees when the annual renewal of policy occurs. Also, working for an employer for less than 120 days in a given year, then that requirement does not apply…many workers do not work 120 days for a single employer and therefore that employer would not be obligated to provide medical insurance for them. If an employer is required to provide insurance to a migrant worker and fails to do so, the employer is penalized $2,000 per year, per employee.

In sum, migrant farmworkers, who are visa holders, are required to have minimum essential healthcare insurance. The employers of the migrant farmworkers will be required to provide a health insurance option starting in 2014. The penalty for failing to provide the farmworkers an option or making sure that they have health insurance is $2,000.00 per employee.

About teperlaw

I am an attorney practicing family law, immigration and wills and estate planning. You can find out more about me and my firm by visiting my website at: 106 W. Franklin Ave. Pennington, NJ 08534 (609) 737-3030
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