One of the more confusing parts of being a Nomad is, if you have no permanent home, what state should you live in, what do you use for an address and how do you get mail? That’s always been fairly difficult but after 911 the heightened security around identification has made it much more complicated and then on top of that getting health insurance through Obomacare has strongly impacted your choice of state of Residence. I’ve written on this topic before but there have been so many changes it’s time for an update covering all the recent changes.
The good news is there is a fairly easy solution to all the problems but there a lot of details to cover so this will be four posts looking at each segment of the issue:
- Introduction and choosing a State of Residence
- Mail Forwarders and getting a physical address.
- Drivers Licenses and Real ID and what you need to get one.
- The impact of Health Insurance on your decisions.
Before we go into details let me give you a broad overview of the steps you need to take:
- Choose a state of residence.
- Get a mail forwarder in that state and a physical address.
- Insure and register your vehicles in the state.
- Get a Drivers License in your state.
- Sign up for health insurance in your state and get a Primary Care Physician.
Laid out like that it looks pretty simple but it can get pretty convoluted because many of your decisions are based on future actions, for example, if you qualify for Obomacare your choice of state heavily impacts the health care you can get. Auto insurance and registration also strongly impacts your choice of state. For example, if you want to convert a van, step-van, or school bus and get it registered as an RV some states make that very difficult and some make it very easy. Nevada insists my 1 ton van must be commercial which makes insurance and registration very expensive so I switched it to Arizona and now I don’t have to buy commercial insurance for my van–that saved me several hundred dollars a year.
The bottom line is you need to have an overview of all the factors clearly in your mind before you make any firm decisions. I’m going to lay out the broad reasons one state might be better or worse, but you are going to have to do the legwork of finding what will work best for you.
When all is said and done the great majority of full-time nomads chose one of these three states because they offer the most advantages:
- South Dakota
Others in contention that some chose instead are Nevada, Tennessee, Wyoming and Montana. Here are the most important factors affecting why you would chose one state over another:
1- No income tax.
If you are young and still working, then choosing a state without an income tax will save you some money every year and also save you the hassle of having to file a state tax return. The following states have no income tax:
- South Dakota,
Tennessee also doesn’t have an income tax, but it does have a 6% tax on interest and dividends. If that doesn’t apply to you, then you could include Tennessee on the list.
But it isn’t that simple because many states have an income tax, but exempt certain kinds of income. For example, if you’re only income is Social Security a total of 36 states do not tax it so you can add them to your list because they don’t tax Social Security. Of those 36, these three stand out as being good candidates in other ways:
- California (because of it’s strong social safety net of services to low-income people)
- Arizona (you can spend the whole year there and be at reasonable temperatures the whole time, low cost, 5 year, auto registration; very long time on your drivers license)
- Oregon (which also doesn’t have a sales tax, making it very desirable to Nomads)
A great web page covering the tax impact of different states is this one made by AARP:
2- Lower vehicle registration and tax rates.
Your yearly costs to pay taxes and registration on your vehicle can vary tremendously state-to-state, especially for newer vehicles, so you’ll want to call any states you’re considering and ask for a quote. Also, some states will let you pay for several years in advance and charge you less for it. That lets you save money and the headache of dealing with the DMV every year. For example, Arizona let me register my 2001 Chevy van for 5 years for less than $130 total, that’s pretty cheap. Carmax has an online tax and tag calculator for all the states, find it here:
3- Lower auto insurance costs.
You might find that you save a lot of money on your van insurance when you change states, or, you may find you end up paying much more. This is another area where you just have to do the leg work and call your insurance provider to get quotes on every state you are considering. I moved from North Carolina to Nevada, and my insurance went up. Had I moved to South Dakota instead, it would have gone down. Worse, Nevada required my 1 ton van to be registered as commercial and I could not change it. So I registered it in Arizona (even though I remained a Nevada Resident) as a non-commercial private vehicle and my insurance dropped by over $200 a year. This web page is good for choosing the best and worst states for cost of vehicle insurance:
4- No or little vehicle inspections, especially emissions inspections.
Not only are inspections expensive and a possible hassle, but if they require you to return to your state every year to get one you have to factor in the cost of driving and time to get there. If at all possible, you want a state with no inspections. However, in many states the inspections are county based, one county will require them and another won’t. That’s true of both Nevada and Arizona. The counties with the big cities require them, and none of the others do. So in both cases I chose a county without them and have never had to get an inspection in either state. This web-page does a good job of explaining the different rules of different states:
5-Some states makes it easier (or harder) to become a resident.
Because of the fast-changing Federal Rules about Real ID, many states are now requiring you to bring in physical proof of being a resident of the state and it’s only going to get worse. We’ll go into that in more detail in a later post, but suffice it to say that as of now South Dakota is among the best and only requires you to spend one night in an RV Park or Motel and bring in that receipt as proof of residency. My home state of Nevada is much more typical and requires you to bring in a receipt for 30 days rental at an apartment, motel or RV Park to get a Real ID Drivers License.
6-Health Insurance Issues:
We’ll talk about this in detail later but for now you need to know that with the passage of the Affordable Care Act (commonly called Obamacare) a whole new wrinkle was added to your choice of a state to become a resident. If you are even fairly low income, then you probably qualify for some amount of government assistance in purchasing health insurance through Obamacare (you can make a surprising amount of money and still get a lot of help with your health insurance). For example, I make $24,000 a year and the Federal government is paying $350 a month of my $400 a month insurance bill.
I’m going to cover this in detail in another post but what I want you to see now is that which state of residence you choose has a major impact on your Obamacare choices in these two ways:
- To get Obamacare you must go through the Exchange and it is based on what each state offers. One very big issue is that in many states there are no Health Insurance Policies offered that have Nationwide Coverage. They only cover care given in approved places in your state (they all must cover emergency room visits in any state). As a full-time Nomad who is rarely in your home state, essentially that means you don’t have coverage. As of right now, I don’t believe any of the Big 3 states offer a Nationwide plan–they used to, but don’t any more.
- I know how strange this is, but if your income is too low you won’t qualify for Obamacare. Instead the ACA turns over coverage of low-income health insurance to the states as Extended Medicaid. The Federal Government pays for low income people to get Health Insurance but the states must choose to offer it. The assumption was that all states would offer it–why would they deny their citizens free health care that cost the state nothing? But many states hated Obamacare so much they put the needs of their citizens behind that hatred and refuse to take the money to give to their citizens. If you are low income, you want to choose a state that offers Expanded Medicaid. More about that later. This web page shows which states do and do not offer expanded Medicaid: http://familiesusa.org/product/50-state-look-medicaid-expansion
7-Attitude toward Politics.
Wherever you fall on the political spectrum, wouldn’t you rather support a state with the same attitude? A prime example of that is guns: if you love guns finding a state that allows easy open carry and getting a Concealed Carry Permit would be very important. On the other hand, if you hate guns wouldn’t you rather be in a state that puts strict limits on open carry and concealed carry?
One reason I chose Nevada is their very Libertarian view of peoples rights. In many ways, it believes how you live your life is no ones business but your own, so they don’t bother you–including guns and home-schooling. Like me, it’s an odd mish-mash of liberal and conservative views. It’s not perfect, but it works for me.
8-Finally, and MOST Important, choose a state based on location.
In my opinion the single most important issue about state of residence is it’s location. No matter what, you’ll have to go back to your state eventually and the closer it is to where you spend your time the better. Most Drivers Licenses are good for 4-6 years and that means nearly all of us have to go back at least that often.
I chose Nevada for this very reason, I spend nearly all of my time in the West and therefore I pass nearby Nevada very often. Where I spend my winters in Arizona is only a few hours from my home base of Pahrump, NV and I can be there in an easy days drive. South Dakota has several important advantages over Nevada, but it’s 1500 miles from my winter base so I never even considered it. Texas is much too far away and I hate their politics and hope to never set foot in the state again. Florida has numerous advantages, but it’s a world away.
Location is especially important with Obamacare limited to your state of residence. I’m almost always within a days drive of Nevada and in the winter, I’m only a few hours away. It’s easy for me to get a Primary Care Provider there and go visit him every spring or fall. In an emergency I can go to the ER anywhere and then make my way over to Nevada. The weather isn’t as good as Quartzsite, but I could easily spend a winter there getting health care if necessary. It’s the only Big Four state I’d want to spend a year around in because it has high enough National Forests to be bearable.
The Bottom Line
For most people the big three (Florida, Texas, South Dakota) work well. Of those three South Dakota would be my first choice. However, none of them offer Medicaid Expansion so if you are low income you can’t get Obamacare (but Nevada does offer it). And none of them offer a Nationwide insurance policy through Obamacare so unless you are close to the state you can’t use your health insurance.
So there is a broad overview of which state to choose and in my next post we’ll talk about what to use for addresses and getting a Mail Forwarder
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