The NHS covers you. Your American return still asks the question

Figures relate to tax year 2025-26 (UK) · 2025 (US)

You registered with a GP within a month of landing and have not thought about medical cover since. The NHS is there, the prescriptions are cheap, and nobody asks for a card at reception.

Then the American return arrives with questions about coverage. The federal penalty has been zero for years, which removes most of the worry. But a few states kept their own rules, and health insurance is one of the last places a state can still reach you abroad.

Key takeaways

• The federal penalty for going without cover has been zero since 2019.
• Americans living abroad usually count as having qualifying health insurance.
• That treatment depends on meeting one of the foreign residence tests.
• A few states kept their own mandate and still charge a penalty.
• Premium subsidies are not available to somebody living outside America.
• Medicare does not generally cover treatment received in Britain.

What is the coverage requirement?

It was a rule obliging Americans to hold qualifying health insurance or pay a charge with their return. Per IRS guidance, the federal payment for going without was reduced to zero from 2019, so the charge no longer applies at federal level.

The rule itself was never repealed, only the money attached to it.

That distinction matters because several states kept charging.

Does the NHS count as coverage?

Not directly, and it does not need to. Americans who live abroad and meet one of the residence tests are treated as holding qualifying health insurance for the year, whatever they actually use for medical care. The exemption follows your residence rather than your policy.

So nobody has to argue that the NHS qualifies as a plan.

It is the living abroad that does the work.

Which tests do you have to meet?

The same two used for the earnings exclusion. Either you were a genuine resident of a foreign country for a full tax year, or you were physically outside America for at least 330 days in a twelve month period.

Most people settled in Britain clear both comfortably.

Our guide to Form 2555 and the exclusion explains the tests in detail.

A worked example

The figures below are illustrative and use round numbers to show the mechanics.

Katie moved from Boston to Bristol in 2022 and has lived there since. She uses the NHS, holds no American policy, and files a federal return each year.

Federally she owes nothing on coverage, both because the charge is zero and because she meets the residence test comfortably.

Her problem sits elsewhere. She never filed a final state return in Massachusetts, which operates its own mandate, and the state still treats her as resident.

Which states still charge a penalty?

A small group kept their own requirement after the federal charge went to zero, including Massachusetts, New Jersey, California, Rhode Island and the District of Columbia. Each sets its own rules, its own exemptions and its own penalty.

Most recognise a foreign residence exemption in some form.

Rules change from year to year, so check the position for the year you are filing.

But you usually have to claim it, which means filing.

The position at a glance

Why does the state question matter so much?

Because a state that still counts you as resident applies all of its rules, not just the coverage one. It wants a return, it wants tax on your income, and it gives little or no relief for British tax paid.

The health penalty is a small part of a larger problem.

Fix the residence position once and the coverage question answers itself.

Our guide to US state tax for expats covers how to break the connection properly.

Can you claim premium subsidies from abroad?

No. The credit that reduces marketplace premiums is only available to people living in America, so somebody in Britain cannot claim it and should not hold a subsidised policy while abroad.

Keeping one after you move can create a repayment at year end.

A single phone call closes the policy and stops the credit accruing.

Tell the marketplace when you leave rather than letting it run.

What about Medicare?

It does not generally pay for treatment received outside America, so premiums while living in Britain buy you very little day to day. Dropping it and rejoining later can add a permanent surcharge of about 10% for each year you were eligible and not enrolled.

Dropping and rejoining later can attract a permanent surcharge.

Weigh it against how likely a permanent return really is.

That penalty makes the decision worth taking properly rather than casually.

Do you need private cover in Britain?

Not for tax reasons. Plenty of Americans buy private health insurance for waiting times rather than for any American requirement, and that choice has no bearing on the federal position.

Employer-provided cover is a taxable benefit in Britain.

Our guide to benefits in kind and US tax covers how that appears on both returns.

What about the immigration health surcharge?

It is a visa cost rather than a tax, paid up front when you apply to come or stay. The charge runs to roughly £1,035 a year for most applicants in 2025-26, with a lower rate for students and children. America gives no deduction or credit for it.

British citizens and settled residents do not pay it.

Refunds are possible in limited cases, such as a withdrawn application.

Budget for it as a visa expense, not a medical one.

Does your employer cover count for anything?

Not for the American test, which looks at where you live rather than what your employer provides. British private medical cover is a nice benefit and it changes nothing on the federal side.

It does add a taxable benefit to your British payslip.

That figure then feeds into your American income too.

What if you travel to America regularly?

Then watch the day count carefully. Frequent trips can break the 330 day test, and somebody splitting their year between the two countries may fail it without ever realising, which reopens the whole question for that year.

The bona fide residence test can still rescue the position.

Keep a simple travel log either way. It answers several questions at once.

Do you need travel cover for trips home?

Almost certainly, and for practical rather than tax reasons. American treatment is expensive, and neither the NHS nor a standard British policy will usually pay for it once you are on the other side of the Atlantic.

Check whether your British policy covers trips abroad at all.

Many exclude America specifically, or charge extra for it.

How to handle your position

1. Confirm which residence test you meet for the year.
2. Check whether you ever filed a final return in your last American state.
3. Find out whether that state operates its own coverage mandate.
4. Claim the foreign residence exemption on any state return you must file.
5. Cancel any subsidised American policy you still hold.
6. Decide deliberately whether to keep paying Medicare premiums.
7. Keep evidence of the days you spent outside America.

What if you split the year?

Then the answer gets more careful. Somebody who moved in June may not meet the physical presence test, so the health insurance question stays open for that calendar year, and a state mandate can apply to the months they were still resident there.

The twelve month window can straddle two calendar years.

Our guide to dual-status tax returns covers the year of the move.

Does it affect your children?

Only through their own returns, and most children abroad file nothing. Where a child does file, the same residence logic applies to them as to you, so a family settled in Britain is generally covered.

The state question can reach them too if the family never left cleanly.

A child with no American income usually has nothing to file at all.

Deal with it once for the household rather than person by person.

What happens when you move back?

Health insurance becomes a real question again from the day you arrive. A gap between landing and starting a job can leave you without health insurance at all, and the marketplace treats a move from abroad as a qualifying life event.

That event opens a window to enrol outside the usual season.

Our guide to moving back to the US covers the wider return.

Does any of this go on your British return?

No. HMRC has no interest in American coverage rules, and nothing about the NHS appears anywhere on a self assessment return. This question runs in one direction only, from the American side towards you.

Private cover from an employer does appear, as a benefit.

So the only British angle is the benefit, not the coverage.

What records are worth keeping?

A record of your travel days, your final state return if you filed one, and any correspondence confirming you cancelled an American policy. Those three cover almost every question that arises.

Boarding passes and passport stamps settle the day count.

Keep them with your tax papers rather than in a drawer.

What if you are self-employed in Britain?

The coverage answer is the same, because it turns on where you live rather than how you earn. What changes is the deduction that self-employed Americans can sometimes claim for premiums, which needs American income to work against.

Somebody excluding all their earnings has nothing left to deduct from.

So the deduction rarely helps an expat, even a self-employed one.

Does a green card holder face the same rules?

Yes, while the card remains in place. A green card holder living in Britain files as an American and meets the same residence tests, so the coverage position matches that of a citizen.

The state question can differ, depending on where they last lived.

Our guide to green card holders in the UK covers the wider position.

Mistakes and penalties we see with health insurance

The first is assuming a state follows the federal health insurance rules. Several of them deliberately do not.

The second is keeping a subsidised policy running after leaving America. That produces a repayment.

The third is dropping Medicare without checking the surcharge for rejoining later.

The fourth is never filing a final state return. It is the root of most problems in this area.

How US UK Tax Accountants helps

We confirm which residence test you meet, check whether your last state still has a health insurance claim on you, and deal with any mandate that applies. Then we make sure no subsidised policy is quietly running in the background.

Where a state was never left properly, we handle the exit. Our US federal return service covers the federal filings.

If you moved from a state with its own rules, get in touch. The coverage question is small. The residence question behind it is not.

Last reviewed 30 September 2026. This article is general information and not personal tax advice. Every situation turns on its own facts, so take advice on yours before acting.