It’s a growing trend, statistics say: more and more Americans are finding their dream retirement by moving abroad. They are drawn by lower living costs, beautiful scenery, a more leisurely pace, and the cultural appeal of living in a foreign city or town. But if you’re about to retire and looking outside of the U.S. for your future home, you need to ask the right questions about medical coverage. You’re almost certain to find that the Medicare plan you’ve relied on here will be of little use once you relocate abroad.
Medicare Doesn’t Travel Well in Times of Emergency
Just last week we read this important article in the New York Times about this vital topic. “Dream of Retiring Abroad?” read the headline. “The Reality: Medicare Doesn’t Travel Well.” The article tells the story of several Americans living as retirees in other countries and explains a few strategies you may want to consider to ensure that you’ll be covered, especially in times of medical emergency. “As the number of American retirees living overseas grows, more of them are confronting choices…about medical care,” the Times explains. “If they were living in the United States, Medicare would generally be their coverage option. But Medicare doesn’t pay for care outside the country, except in limited circumstances.”
One 67-year-old woman living in a small town in Mexico had to make just such a decision when she broke her leg in multiple places earlier this year: should she be airlifted back to Ohio for surgery and rehabilitation or use local services? She decided to stay in Mexico. Her surgery in a hospital in nearby Guadalajara was covered by an insurance policy through Allianz for which she pays about $300 per month. (She also pays for an additional policy that would have covered medical evacuation to the States, which costs about $600 annually.) In addition she pays about $135 per month for Medicare Part B, which she can use when she visits family in the United States. After successful surgery and months of healing, she’s almost back to normal. Her private plan covered the surgery costs – about $20,000 – and she had initial out of pocket expenses of about $2,400. She’s still working on getting reimbursed for visiting nurses, physical therapy, and medications. “She estimates she has spent $10,000 and has been reimbursed for about two-thirds of that so far,” says the Times, but overall, she is pleased.
Medicare Doesn’t Travel Well, but Does Deliver Comprehensive Care, Affordable Cost
According to the Social Security Administration, in 2017 there were over 413,000 retired workers living in foreign countries and receiving Social Security benefits. That’s up by 15 percent since 2012. Canada tops the retirement destination list for Americans (nearly 70,000), followed by Japan (45,000) and the Mexico (nearly 30,000 retired Americans). Practically every American retiree has to navigate some complicated waters when it comes to health care. “Expatriate retirees might find private insurance policies and national health plans in other countries,” says the New York Times. “But these may not provide the high-quality, comprehensive care at an affordable price that retirees expect through Medicare. Faced with imperfect choices, some retirees cobble together different types of insurance, a mix that includes Medicare.” Unfortunately, while commercial health care policies may provide decent coverage, there’s little recourse when coverage is denied and often no coverage for preexisting conditions. People can also be charged higher rates for medical reasons. Some policies also come with upper age limits, with coverage that expires when a pre-set threshold is reached.
Then there are the premiums. The New York Times report cited one policy that charges a 70-year-old policy-holder $1,900 per month with a $1,000 deductible. “A plan with a $5,000 deductible might run $1,400 monthly,” says the Times. And by the way, “That doesn’t include coverage for services in the United States.” Rates can also vary by several hundred dollars per month depending on the country you’re living in: one example shows that a policy holder retired in Costa Rica pays $250 per month more than the same person with the same coverage living in France. Add another few hundred dollars if you want your coverage to be effective during visits home to the U.S. Fortunately, routine care is generally good and widely available in many foreign locales, so retirees often look for catastrophic coverage and opt to pay out of pocket for minor services. (“Rules on whether noncitizens can enroll in a national health plan vary by country,” the article states.)
Medicare Doesn’t Travel Well – but Should You Skip Enrolling?
The New York Times article hints at one more issue retirees must consider, but we think this concern deserves more attention. You may be tempted when retiring overseas to skip enrolling in Medicare entirely, but unless you’re absolutely certain you’ll never again live here in America, this can be a very expensive choice. The Medicare website describes it this way. “In most cases, if you don’t sign up for Part B when you’re first eligible, you’ll have to pay a late enrollment penalty. You’ll have to pay this penalty for as long as you have Part B.” Basically for every 12-month period that you delay enrolling after your eligibility begins – unless you’re exempt because of certain situations such as employer-sponsored health coverage – your monthly Part B premium goes up by 10 percent. For example, if you had skipped enrolling for the past five years and returned to the States this year, your Part B premium of about $135 per month would have ballooned to more than $200, and that penalty never goes away.
Depending on when you move back home, you may also experience a long gap in Medicare coverage. As a late enrollee, warns the New York Times, “you may have to wait until the General Enrollment Period (from January 1 to March 31) to enroll in Part B. Coverage will start July 1 of that year.” The result could be a coverage delay of many months on top of higher premiums – so think long and hard before ignoring Medicare enrollment.
Whether Retirement is “Foreign” or “Domestic,” You Need the Right Plan
No matter where you plan to retire, a solid and well-conceived plan is imperative. Do you want to look forward to retirement with less anxiety and stress and more optimism and peace of mind? Do you long for a sense of purpose in retirement instead of just letting life happen as you age? Are you eager for a retirement plan that enhances your sense of security in a turbulent world? Then we encourage you to accept Rajiv Nagaich’s invitation to join him at an upcoming LifePlanning Seminar. A LifePlan is our name for a retirement plan that is uniquely complete and wide-ranging, blending all the critical elements of life as you age – finances, legal protection, medical coverage, housing choices, even family communicati0n – into one seamless retirement strategy. A LifePlan truly is the plan you need for the rest of your life.
It’s easy to find out when and where our upcoming seminars are being held: simply visit our Live Events page and register there for the seminar of your choice, or call us if we can assist you by phone. Don’t approach retirement without a plan – a LifePlan from AgingOptions. Age on!
(originally reported at www.nytimes.com