A lot of people believe that Medicare coverage stops at the border. Happily, they’re mistaken.
Time and again, I get asked the question, “Can I take my U.S. Medicare coverage with me when I move overseas?” It’s a simple question, but the answer is a little more complex. In effect, the answer is: Yes. But to figure out how, we need to look at things in a bit more detail.
What is Medicare?
Medicare is the U.S. federal health insurance program for people age 65 and over. It also extends to certain younger people with disabilities and those with ESRD (permanent kidney failure).
How does Medicare work?
Medicare is divided into parts A, B, C, and D. Parts A and B make up Original Medicare and are usually received automatically at age 65. Together, they are designed to cover 80% of “Medicare-approved services.”
Part A covers hospital stays, care in a skilled nursing facility, and home health-care, under certain circumstances.
Part B covers medical services received from a doctor and supplies that are medically necessary to treat your health condition. These can include outpatient care, preventive services, diagnostic services, ambulance services, and durable medical equipment.
Part C (Medicare Advantage Plans) are a type of Medicare health plan offered by private insurance companies that contract with Medicare. Medicare Advantage Plans provide all of
Part A, Part B, and, in many cases, Part D benefits. Most Advantage Plans include worldwide emergency care services.
Part D covers prescription drug coverage. It must be purchased separately as a stand-alone Part D policy, or in a MP-PD, Medicare Advantage Plan.
Medicare Supplement Plans, also called Medi-Gap Plans, are also offered by private insurance companies that contract with Medicare. They cover certain healthcare costs not covered by Original Medicare, such as deductibles, copayments, and the 20% (after deductibles) co-insurance that Medicare alone does not cover. Some Supplement Plans offer worldwide coverage for urgently needed services and some of them do not. Read the Evidence of Coverage carefully. In addition to worldwide urgently needed services, Plans G and F provide world traveler coverage for Medicare-approved services.
Now, onto the questions I hear regularly.
What if I plan to be a part-time retiree, living four to six months abroad each year, and then returning to the States for the rest of the year—what should I do about Medicare?
In this scenario, it would be advisable to maintain your Medicare A, B, and either an Advantage Plan or a Supplement Plan (Medi-Gap). For an Advantage Plan, you are required to maintain Parts A and B active, and to reside in the coverage area for a minimum of six months per year. Most Advantage Plans have low or zero premiums, and they include worldwide emergency medical coverage. For a Supplement Plan you are required to maintain active Parts A and B, and to reside in the state that issues the Plan. Plans F and G include worldwide emergency care, as well as foreign travel coverage for Medicare-approved services. When receiving medical care during foreign travel, you must pay a $250 deductible, 20% of all service costs, and all amounts over the $50,000 lifetime maximum for world foreign travel coverage. You must pay for services upfront and submit proof of payment to your carrier for reimbursement.
I plan to live full-time overseas—but I suppose there’s always the chance I’ll return to the U.S. when I’m older, if my circumstances change. Is it worth my while to maintain any portion of Medicare, on the off chance that I’ll need it? What are the pluses and minuses of doing so?
There are two basic requirements to maintain Medicare Parts A and B. The recipient must maintain his or her citizenship or legal status in the U.S., and he/she must stay current with the Part B premiums. There is currently no residence requirement for Original Medicare (Parts A and B).
In most cases, Part A has no monthly premium and it is expensive to re-purchase later. Therefore, there is seldom any reason to drop your Part A coverage. Part B has an increasing monthly premium; for 2018, it has an average cost per month of $134. However, there are several reasons that make it worthwhile to keep Part B. These include being able to take up coverage the day you return to the U.S. or its territories, avoiding any monetary or timing penalties upon reapplication, and the freedom to apply for either an Advantage or Supplement Plan as soon as you return to the U.S.
Example 1: Janice Smith loses her husband while living in Thailand. She decides to return to the U.S. and live out her days close to her children and grandchildren. Because she has kept both Parts A and B, she will have first-day coverage when she returns to the U.S., with no penalties or premium increases for being absent from the U.S. She can immediately apply for an Advantage or Supplement Plan (depending on her health) and be covered the first day of the following month. If she applies on June 30, she will be covered on July 1. If she is over 65 and three months old she will have to undergo medical underwriting (based on the health criteria of the issuing company) in order to qualify for a Supplement Plan, but not for an Advantage Plan.
Example 2: While living in Thailand, Janice and her husband decide to discontinue their Part B coverage. A few years later, Janice loses her husband while living in Thailand. If she returns from Thailand after March 31, she must wait until January of the following year to begin Part B coverage. Whenever she returns to the U.S., she will pay a penalty when she reap-plies for Part B coverage. If she applies for a Supplement, she will have to qualify for coverage based on the health criteria of the issuing company.
Always weigh your options before dropping Part B coverage when beginning your expat life.
I plan to be a “roving retiree” and spend a few years traveling in retirement before returning to the U.S. At that point, I figure I may spend part of the year away and part of the year Stateside. What should I do about Medicare? Is it worth paying for it even while I’m traveling?
Balancing the cost of maintaining Medicare coverage while living and traveling outside the U.S. depends on individual circumstances. In the end, the decision is personal to each of us. However, certain principles apply to most situations.
If the “roving retiree” maintains residence in the U.S., he/she could maintain Parts A and B, and keep the Supplement Plan in force.
The advantages of doing that are:
- Having access to worldwide emergency and traveler coverage while out of the States, via the F or G Supplement Plans.
- If an emergency return to the U.S. is needed, being fully covered immediately upon re-entry.
- Not having to undergo health underwriting for a Supplement Plan upon return to the U.S.
The disadvantages are:
- Having to continue to pay Part B and Supplement premiums.
- Maintaining legal residence in the U.S. while traveling abroad.
If the retiree discontinues Part B, the Supplement is terminated. The retiree would then face the same time delays and monetary penalties to renew coverage that we saw in the Example 2 scenario of Janice Smith living in Thailand.
There is seldom any reason to drop Part A.
Whether you maintain residence or not, if you drop Part B, you face the same time delays and penalties when you reapply for coverage.
Do I have to keep an address in the U.S. to maintain Medicare coverage? For instance, if I am resident in Costa Rica, and I’ve arranged my finances so that I no longer have a state income tax liability (because I left the U.S. from Florida, which doesn’t have a state income tax)…do I still need to maintain some sort of Florida address in order to maintain my Medicare coverage?
This question concerns eligibility and residence.
Eligibility for Medicare Parts A and B depends on your legal status in the United States, not on residence. If you meet the requirements for Parts A and B, you are not required to maintain residence in the U.S.
Eligibility for both Medicare Supplement Insurance and Medicare Advantage Plans requires that you maintain both Parts A and B of Medicare and legally reside within the coverage area. And remember: You can only maintain Part B if you continue to pay your Part B premium.)
For Advantage Plans, you must maintain residence for a period of six months per calendar year within your policy’s coverage area. Coverage area for Advantage Plans is most commonly based on the county you live in. Medicare Supplement Plans require that you reside in the issuing state. Usually, residence is defined as the location where the consumer files his tax return. Both policies require a physical address in the coverage area and will not accept P.O. boxes.
An example: I was talking with an expat recently who informed me that he and his wife have taken out residence in Costa Rica. He then stated that they have no more liability for state tax. However, he keeps a Medicare Supplement Plan for future use in case he needs it.
This idea is a sticky one because of residence requirements. It could possibly place one at odds with Medicare fraud, waste, and abuse (Federal), as well as state tax evasion.
Although government agencies have been lax in coordinating statistics in the past, Medicare fraud is a hot-button issue, and it is expected to be increasingly enforced in the future.
Fraud, waste, and abuse is a major concern of the Centers for Medicare and Medicaid Services (CMS), and it’s a required course each year for agent renewals. Every year we see the requirements for reporting—and the penalties for nonreporting—becoming more burdensome. Once reported, most cases are aggressively investigated.