Obamacare doesn’t only affect U.S. crew members, but the entire global yachting industry, including non-U.S. crew. Why? Because most U.S. and European underwriters have tightened their guidelines concerning the yacht’s time spent in and out of U.S. waters.
Most underwriters globally now require that yachts spend at least six months outside U.S. waters per year, or they will not provide insurance quotes and coverage for crew. It doesn’t matter that a yacht is registered outside the U.S. and has to adhere to the laws of that flag state, nor does it matter that the crew are all non-U.S. citizens.
Some European underwriters will not provide coverage for U.S. citizens at all anymore, or they will limit the amount of coverage available inside the U.S., with the reasoning that U.S. crew will have coverage under the ACA.
There is a first-rate crew medical policy available, where the time restriction for U.S. citizens is three month’s outside the U.S. in a 12-month period. However, this plan is not compliant with the ACA so crew members may still be subject to paying a tax penalty.
But for many internationally traveling U.S. crew, this may still be the best insurance solution, both in terms of coverage and cost. The premiums are much less than a U.S. domestic individual policy, even when adding the possible tax penalty into the calculation.
I have dealt with a couple of difficult cases lately, one involving a large U.S.-registered yacht with about 10 U.S. crew. The yacht doesn’t leave the U.S. much so the crew do not qualify for an international group policy.
One U.S. insurance company declined to provide a group quote based on the fact that there were too many crew members from a different state than the owner’s company. It’s also imperative that the crew members’ paychecks are issued from the same address and state as the owner’s (employer’s) office.
In the end, we found an insurance carrier that was willing to offer the crew a reasonable group package. Nonetheless, it’s imperative to keep in mind that a U.S. domestic policy may not provide coverage outside the U.S. for incidental trips.
Applying for individual U.S. domestic plans can also be bothersome, as the quotes are based on a residential zip code, which yacht crew typically don’t have. And the U.S. networks of doctors and hospitals are shrinking; many insurance plans don’t even offer out-of-network benefits anymore. This is a disadvantage for traveling yacht crew who may have signed up in Florida and need care in New England.
Another challenging case involves a Cayman Islands-flagged yacht with a crew of mixed nationalities. Since the yacht will remain in the U.S. the majority of the time, the crew will not be eligible for either an international group policy not international individual policies.
The most viable solution for this yacht is to offer U.S. domestic individual policies to the U.S. crew, and an international individual policies to the non-U.S. crew.
One more example involves a former stew who decided to leave yachting to be land-based. As a U.S. citizen, monthly premiums for an individual policy were more than $300 for a bronze plan with a $5,000 annual deductible and a 50% co-insurance. She is 21 years old. She was almost in tears when I told her.
She is, however, newly engaged a foreign national and since they signed the lease on an apartment together and have been a couple for five years, we were able to add her to his international policy as a “domestic partner”. Her premium is now $150 per month for an outstanding policy that works in the majority of the U.S. and overseas.
It’s still easier to arrange coverage for non-U.S. crew, but to meet eligibility for most group policies, the yacht must be outside the U.S. for six months.
Maria Karlsson is president of Superyacht Insurance Group (SYIG) and provides insurance solutions for crew members (individuals and group) and yachts (Hull, P&I).