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Treatment of Noncitizens in H.R. 3200

Noncitizens and Provisions in H.R. 3200

Individual Mandate
Section 401 of H.R. 3200 includes an individual mandate to have health insurance unless
expressly exempted, with penalties for noncompliance effective in 2013. Individuals would be
required to maintain acceptable coverage, defined as coverage under a qualified health benefits
plan (QHBP), an employment-based plan, a grandfathered nongroup plan, Part A of Medicare,
Medicaid, military coverage (including Tricare), Veteran’s health care program, and coverage as
determined by the Secretary of Health and Human Services (HHS) in coordination with the
Health Choices Commissioner (Commissioner).11 Notably, there is nothing in H.R. 3200 that
would alter current law relevant to restrictions on certain categories of aliens (i.e., legal
permanent residents within the first five years after entry, nonimmigrants, unauthorized aliens)
receiving Medicaid. (These restrictions are discussed below.)

This provision in the legislation would be put into effect through a change in the tax law (i.e., as
an amendment to the Internal Revenue Code (I.R.C.)). Individuals who do not maintain
acceptable health insurance coverage for themselves and their children would be required to pay
an additional tax.12

Some individuals, including nonresident aliens, would not be required to obtain health insurance
under H.R. 3200 (i.e., would be exempt from the individual mandate).13 For federal tax purposes,
foreign nationals are classified as resident or nonresident aliens.14 These terms are in the I.R.C.
but do not exist in the Immigration and Nationality Act (INA)15 (i.e., immigration law). As a
result, the specific immigration statuses under the INA do not align directly with the terms
resident and nonresident alien. Based on time in the United States and treaty obligations, for
example, some foreign agricultural workers (H-2A visa holders)16 would be considered resident
aliens while others would be considered nonresident aliens for tax purposes.

In general, an individual is a nonresident alien unless he or she meets the qualifications under one
of the following residency tests
• Green card test: the individual is a lawful permanent resident of the United States
at any time during the current year, or
• Substantial presence test: the individual is present in the United States for at least
31 days during the current year and at least 183 days during the current year and
previous two years. For computing the 183 days, a formula is used that counts all
the qualifying days in the current year, one-third of the qualifying days in the
immediate preceding year, and one-sixth of the qualifying days in the second
preceding year.17

There are several situations in which an individual may be classified as a nonresident alien even
though he or she meets the substantial presence test. For example, an individual will generally be
treated as a nonresident alien if he or she has a closer connection to a foreign country than to the
United States, maintains a tax home in the foreign country, and is in the United States for fewer
than 183 days during the year.18 Another example is that an individual in the United States under
an F-, J-, M-, or Q-visa19 may be treated as a nonresident alien if he or she has substantially
complied with visa requirements.20 Other individuals who may be treated as nonresident aliens
even if they would otherwise meet the substantial presence test include employees of foreign
governments and international organizations, regular commuters from Canada or Mexico, aliens
who are unable to the leave the United States because of a medical condition, foreign vessel crew
members, and athletes participating in charitable sporting events.21 Additionally, depending on
where the individual is from, there may exist an income tax treaty between that country and the
United States with provisions for determining residency status.22

Under H.R. 3200, all legal permanent residents (LPRs),23 nonimmigrants, and unauthorized aliens
who meet the substantial presence test (defined above) would be required to obtain health
insurance.24 Noncitizens meeting the definition of nonresident aliens (e.g., temporary visitors,
temporary workers in the United States for less than 183 days in the year) would not be required
to obtain health insurance. Notably, the IRC does not contain special rules for individuals who are
in the United States without authorization (i.e., illegal or unauthorized aliens). Instead, the IRC
treats these individuals in the same manner as other foreign nationals—an unauthorized
individual who has been in the United States long enough to qualify under the substantial
presence test is classified as a resident alien; otherwise, the individual is classified as a
nonresident alien.25 Thus, it would appear that unauthorized aliens who meet the substantial
presence test would be required under H.R. 3200 to have health insurance.

Endnotes

11 The duties of the Health Choices Commissioner are defined in §142 of H.R. 3200.

12 The tax would be prorated for the time the individual (or family) does not have coverage, and would be equal to the lesser of (1) 2.5 % of the taxpayer’s modified adjusted gross income (MAGI) over the amount of income required to file a tax return, or (2) the national average premium for applicable single or family coverage. See CRS Report R40724, Private Health Insurance Provisions of H.R. 3200, by Hinda Chaikind et al.

13 Other exemptions would include individuals residing outside of the United States, individuals residing in possessions of the United States, those with qualified religious exemptions, those allowed to be a dependent for tax-filing purposes, and others granted an exemption by the Secretary of Health and Human Services.

14 It is possible for an individual to be a resident alien and a nonresident alien during the same year. For an explanation of the rules on determining residency starting and ending dates and dual-status filing, see IRS Publication 519: U.S.
Tax Guide for Aliens, which is available at http://www.irs.gov.

15 8 U.S.C. §1101 et seq.

16 The visa letter is derived from the subparagraph of section 101(a)(15) of the Immigration and Nationality Act that describes the type of visa. For further information, see CRS Report RL31381, U.S. Immigration Policy on Temporary Admissions, by Chad C. Haddal and Ruth Ellen Wasem.

17 I.R.C. §§7701(b)(1)(A) and (b)(3). A nonresident alien may elect, under certain circumstances, to be treated as a resident alien if the substantial presence test is met in the year following the election. I.R.C. §7701(b)(4). A dual-status or nonresident alien married to a U.S. citizen or resident may qualify to be treated as a resident alien for the entire year. I.R.C. §§6013(g) and (h).

18 I.R.C. §7701(b)(3)(B).

19 These individuals are temporarily admitted into the United States as students, teachers, trainees, and cultural exchange visitors.

20 I.R.C. §7701(b)(5). There are limits on how long an individual may be exempt from the substantial presence test. See id.

21 I.R.C. §§7701(b)(3)(D), (b)(5), and (b)(7).22 See, for example, Treas. Reg. §301.7701(b)-7.

23 Legal permanent residents are also referred to as immigrants in the INA.

24 In other words, all aliens who meet the definition of resident alien under the I.R.C.

25 For more on taxation of aliens, see CRS Report RS21732, Federal Taxation of Aliens Working in the United States
and Selected Legislation, by Erika K. Lunder.

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