7 Years ago, Barack Obama delivered a speech declaring that Obamacare would not insure those that are here illegally. Congressman Joe Wilson yelled, ‘you lie’. Well Joe Wilson was right all along, so he deserves the apology.
CRS: The degree to which foreign nationals (noncitizens/aliens)1 should be accorded access to certain benefits as a result of their presence in the United States, as well as the responsibilities of such persons given their legal status (e.g., immigrants, nonimmigrants, unauthorized aliens), often figures into policy discussions in Congress. These issues become particularly salient when Congress considers legislation to establish new immigration statuses or to create or modify benefit and entitlement programs.
The 111th Congress enacted the Patient Protection and Affordable Care Act (P.L. 111-148), which has been amended by the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152) and several other bills. (ACA refers to P.L. 111-148 as amended by P.L. 111-152 and the other legislation.)2 The ACA created new responsibilities (e.g., the requirement that most people in the United States obtain health insurance) and new benefits (e.g., tax credits to help certain people purchase health insurance), and it addressed the eligibility and responsibility of foreign nationals for these provisions. One issue that has arisen during debates to amend provisions in the ACA and during discussions of immigration reform is the eligibility of foreign nationals for some of the ACA’s key provisions.
This report opens with a discussion of several different statutory and regulatory definitions of lawfully present. On the surface, alien eligibility for provisions under the ACA appears straightforward. In general, those who are lawfully present are eligible, and those who are not lawfully present are not eligible. However, due to differing definitions of “lawfully present” and the interaction between the treatment of noncitizens under tax law, the Immigration and Nationality Act, and the ACA, the eligibility of individuals with certain immigration statuses for these provisions can become more complicated.
This report then analyzes the eligibility of foreign nationals for key provisions in the ACA that have restrictions based on immigration status: the requirement to maintain health insurance, the ability to purchase insurance through an exchange, and eligibility for the premium tax credit and cost-sharing subsidies.3 It includes consideration of the implementing regulations and the impact of the Supreme Court’s ruling in National Federation of Independent Business v. Sebelius.4 This report concludes with information on the alien-status verification process.
Treatment of Noncitizens Under the Patient Protection and Affordable Care Act (ACA)
The following section discusses alien eligibility for the following provisions under the ACA: the health insurance mandate, the exchanges (the Marketplace), and premium tax credits and cost-sharing subsidies. In general, aliens are separated into two groups for eligibility purposes under the ACA: aliens who are “lawfully present in the United States” are eligible for these provisions, while aliens who are not “lawfully present in the United States” are ineligible.
Definition of Lawfully Present
One of the complexities of alien eligibility for the ACA stems from the difficulty of defining who is considered lawfully present. The regulations implementing the ACA define lawfully present to include immigrants, asylees/refugees, nonimmigrants, and most other noncitizens who are known to the U.S. government and have been given some type of permission to remain temporarily in the United States. (For the full list, see Appendix A.) “Lawfully present” was first defined by regulation in this context for the purposes of eligibility for the high risk pools for uninsured people with pre-existing conditions.5 Since then, all regulations regarding the ACA have referenced that definition for the health insurance mandate, the exchanges, and the premium credit and cost-sharing subsidies.6 The definition of lawfully present for the ACA is identical to the Center for Medicaid and Medicare Services (CMS) policy definition of “lawfully residing” for Medicaid and CHIP eligibility7 and is similar to the definition of “lawfully present” for Social Security eligibility.8
Nonetheless, “lawfully present” is not a term that is widely used within the Immigration and Nationality Act (INA). The INA divides foreign nationals into two general types of legal statuses for admission to the United States: immigrants and nonimmigrants. Under the INA, other aliens may have permission to be in the United States, but they do not have an immigration status. The term “lawfully present” in the INA is only defined in regards to noncitizen eligibility for Social Security.9 The INA also defines the term “unlawfully present” specifically for purposes of determining inadmissibility, but that definition is not equivalent to the definition of “lawfully present” for purposes of the ACA.
There are noncitizens who have temporary permission to remain in the Unites States under narrowly defined circumstances such as those with temporary protected status (TPS),11 withholding of removal,12 Deferred Enforced Departure,13 and parole14—often referred to as the “quasi-legal population.” This “quasi-legal” population is counted by researchers at the Department of Homeland Security (DHS) and at the Pew Research Center’s Hispanic Trends Project—the two main entities that estimate the unauthorized alien population—as part of the unauthorized (illegal) population. Although these “quasi-legal” migrants comprise a small percentage of the total noncitizen population, most are considered “lawfully present” for the purposes of the ACA.15 (For a discussion of these estimates, see Appendix B, “Estimates of the Noncitizen Population in the United States.”)
Tax Treatment of Noncitizens
For purposes of the ACA, understanding the U.S. income tax treatment of noncitizens may be important for several reasons, including that any noncitizen who is a nonresident alien—which is a tax law term—is not subject to the individual mandate.22 Also, some might be interested in understanding the tax liability of noncitizens in light of the fact that the IRS may face difficulty in enforcing the mandate against any taxpayer (citizen or resident alien) who does not receive a tax refund.
For federal tax purposes, foreign nationals are classified as resident or nonresident aliens.23 These terms are used in the Internal Revenue Code (IRC) but do not exist in the Immigration and Nationality Act (INA).24 As a result, the specific immigration statuses under the INA do not align directly with the terms resident and nonresident alien.25
In general, an individual is a nonresident alien unless he or she meets the qualifications under either residency test:
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 (counting all the qualifying days in the current year, one-third of the days in the prior year, and one-sixth of the days in the earliest year).
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.27 Another example is that an individual in the United States under an F-, J-, M-, or Q-visa—students, teachers, trainees, and cultural exchange visitors—may be treated as a nonresident alien if he or she has substantially complied with visa requirements.28 This treatment generally applies to foreign students (most foreign students are on F visas) for their first five years in the United States and to teachers and trainees for the first two years. (You can read the full report here if you can stand it.)